Has anyone else heard about this? The Franchise Tax Board has decided to revise a tax law effective 1/2009 making it a property manager's responsibility to collect and remit 7% of rents collected out-of-state landlords.
While there is some ambiguity in the explanation of the law as it pertains to residential tenants vs. commercial tenants, we are faced with a serious problem in that the law has one obvious loophole: If a landlord fires their property manager and collects the rent directly from the tenant, no withholding is required.
Fortunately, we are a small company that would only feel these effects on about 1 dozen clients, but that is still a significant loss. In our state's misguided efforts to fill coffers, they are dealing a serious blow to small business owners like us that will not be the legislature's tax collecting puppet.
Currently we are researching this issue (gathering info from the CA Apt. Assoc., CPAs, etc.) and will report back on any findings. In the meantime, if anyone out there has useful info on this, please do share it.
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