What is the 593 form?

The 593 form is a California specific form used to determine whether or not there should be state tax withheld on a property sale by the seller (individual, business entity, trust, estate, or REEP). Withholding declaration is required by law. Depending on the situation, the seller can withhold either 3 1/3% (.0333) of the sales price, or an alternative withholding calculation %, the maximum personal income tax rate is 12.3%.

Real estate withholding is not required when any of the following apply:

• The sales price is $100,000 or less.
• The property is in foreclosure.
• The property is in foreclosure.
• The transferor is a bank acting as a trustee (except for a deed of trust).
• The seller or transferor certifies to an exemption on Form 593, Part III.

Based on the information submitted on the 593, the tax withholding in made via escrow on form 593-V. Both forms must be sent to the Franchise Tax Board by the 20th day of the calendar month following the month in which escrow closes.

While most taxpayers want to avoid paying tax, it may not be a bad idea to pay to avoid penalties and interest at a later date. The seller has the option of full, partial or no withholding tax depending on the circumstance. This form is mandatory whenever a sale occurs.

Once the form is completed, we’ll file the 593 usually with the escrow company.