Since 2010 it has been the California property manager’s responsibility to “police” the collection of taxes on rents earned by out of state property owners and to transmit those taxes to the state on a quarterly basis. Recently the FTB has ramped up their audits on California property managers and the majority of these audits don’t end well. Most of the brokers audited are being fined thousands of dollars ($20,000 is frequently the amount, but I’ve seen it be even more than that). Are you either getting a waiver approved by the FTB for your out of state clients or are you collecting and transmitting the 7% every quarter? If you aren’t, you had better start now. They are coming! (And, don’t forget, for out of country/foreign national owners, unless you have the proper documentation, you have to withhold and transmit 30% to the IRS every year.)
