FTB Requiring New CalFIRPTA Reporting Beginning 1/1/20
Friday, December 6, 2019
December 6, 2019
When the (California Foreign Investment in Real Property Act (CalFIRPTA) was first created, escrow professionals with title companies were only required to report to the Franchise Tax Board (FTB) on transactions where the seller was subject to state withholding in the following situations:
- If withholding was required, the title escrow professional remitted funds to the FTB upon close of escrow.
- If the seller in the transaction signed FTB’s forms claiming they were entitled to an exemption from withholding, the title escrow professional wasn’t required to do anything else.
New Rules as of 1/1/20:
Beginning 1/1/20, we have been informed that the FTB will now require all title escrow professionals to REPORT ALL SALES, regardless of whether or not CalFIRPTA withholding applies.
- The FTB is now requiring “seeing the work” for every seller, on every sales transaction, including the seller’s computation of any loss.
(NOTE: As in the past, there MAY be an FTB exception for sales under $100k, but the FTB has not specifically stated this to be true and title companies would be wise to proceed with caution.)
This New Requirement May Affect CURRENT Transactions:
- Title company escrow officers that currently have open transactions in the works that are meant to close in December but could roll over into 2020 would be affected.
- Open transactions already scheduled to close after 1/1/20 would be affected.
- Prior versions of FTB forms will NOT work for 2020 closings.
For additional details: Register for the California Escrow Association's Webinar on Tuesday, December 10th from 12pm to 1pm by clicking here. Further information can also be found on the FTB website here, or by viewing the FTB explanatory video here.