Resources on tax exemption, forms and other requirements for UC Davis suppliers.
- UC Davis Tax Information
- Sales/Use tax Explained
- Sales / Use Tax Rates
- R&D Partial Sales Tax Exemption Explained
- Non-cash Awards and Prizes
- Non-resident Withholding
- Non-California Withholding
- When is the university required to withhold California State income taxes? Is there a mechanism to avoid California withholding?
- When the university pays a vendor who is not registered with the California Secretary of State for work performed within California, the university must withhold seven percent of all payments that exceed $1,500 in a calendar year.
If a vendor is not registered with the Secretary of State, they can apply to the franchise tax board for reduced withholding (form 589) or a waiver from withholding (form 590) before performing work for the university. If the FTB authorizes withholding other than seven percent, the applicable FTB form, 589 or 590, must be attached in KFS.
- How do I determine if the payee is registered with the California Secretary of State and not subject to the 7% withholding?
- The Franchise Tax Board (FTB) provides specific methods to determine if a company is registered:
> The university may rely on a completed FTB form 590, Withholding Exemption Certificate, stating the corporation has a permanent place of business in California.
> The university may rely on the businesses listed by the California Secretary of State. The company name listed on the Secretary of State website must match the invoice.
- The vendor just provided me the completed form 590/589 and we already paid them. Can we give them a refund of the withholding?
- No. The Franchise Tax Board (FTB) requires the university to withhold seven percent (of the gross California source payment) if the FTB approval for reduced withholding is not received before the nonresident is paid for their services.