Disbursements - State Tax Withholding from Nonwage Payments to Nonresidents of California - D-371-77 - Policy

Sep 19, 2026

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University of California Policy D-371-77 establishes requirements and procedures for withholding, reporting, and remittance of California state income tax on nonwage payments made by the University to nonresidents of California. The policy defines key roles, including payer/withholding agent and payee, and explains withholding as a mechanism for prepayment of state income or franchise tax. It covers covered payment types such as compensation, prizes and awards, royalties, and scholarship grants, and describes how nonresident status is determined for individuals and entities.

LanguageEnglish

CategoryLetters

FormatPDF

Pages11

Reading Time4 min

AccessFree to download

Policy Summary

Definitions

Policy Text

Introduction

Determination of Nonresident Status

Tax Withholding Procedures—Performing Entities

University of California Policy D-371-77 Disbursements: State Tax Withholding from Nonwage Payments to Nonresidents of California | Responsible Officer: | EVP-Chief Financial Officer | | --- | --- | | Responsible Office: | FO-Financial Operations | | Issuance Date: | 7/31/2013 | | Effective Date: | 8/1/2013 | | Scope: | This policy applies to campuses and the Lawrence Berkeley National Laboratory. | | Contact:
Email:
Phone \#: | John Barrett [john.barrett@ucop.edu](john.barrett@ucop.edu)[ ](john.barrett@ucop.edu)[510-987-0903](510-987-0903) | | --- | --- | | I. POLICY SUMMARY | | --- | | It is the policy of the University to comply with California laws and regulations regarding the withholding, reporting and remittance of California Income Tax for individuals and entities who are not residents of California. | | II. DEFINITIONS | Franchise Tax Board The Franchise Tax Board (“FTB”) collects California's state personal income tax and corporate income tax. Payee. Generally, the payee is the person or entity that receives items of income from a payer. It also includes partners, beneficiaries , shareholders, or members that receive payments or distributions from a pass-through entity, estate, or trust. A payee may also include vendors that provide services to the payer. Disbursements: State Tax Withholding from Nonwage Payments to Nonresidents of California Page 1 of 11 University of California Policy D-371-77 Payer. Generally, the payer is the person or entity that pays an item of income or makes a distribution to a payee. The payer is also referred to as the “withholding agent.”For purposes of this chapter, the University is the payer. Withholding Agent. A withholding agent is any person or entity with the control, receipt, custody, disposal, or payment of California source income. The withholding agent is also referred to as the “payer.” For purposes of this chapter, the withholding agent is the University. Withholding. Withholding is a mechanism for prepayment of California state income or franchise tax (similar to wage withholding) . III. POLICY TEXT A. Introduction This policy sets forth the requirements and procedures applicable to withholding California state income tax from nonwage payments made by the University to nonresidents of California ( nonresident) . The tax treatment of nonwage payments made to U.S. residents of California is covered in Accounting Manual chapter D-371-12.1 , Disbursements: Accounting For and Tax Reporting of Payments Made Through the Vendor System. In general , California does not distinguish between U.S. citizens, residents , and nonresident aliens with respect to requiring state income tax withholding. Therefore, for determining whether to withhold taxes, the term “nonresident” also includes residents of a foreign country (see Section III. D.3 for more information) . Moreover, California does not generally conform to federal tax treaties; thus , residents of foreign countries who perform services in California or who receive income from California sources are usually subject to state income tax withholding. The following types of payments are covered in this chapter: Entertainment: Payments to performing entities; General: Compensation for services rendered in California, such as fees for professional services (e.g. , honorariums, consulting fees, fees for architectural services, fees for conducting seminars, etc. ) ; Prizes and awards, premiums, rewards, and winnings from contests within California; Disbursements: State Tax Withholding from Nonwage Payments to Nonresidents of California Page 2 of 11 University of California Policy D-371-77 Royalties paid for the right to use natural resources located in California, and royalty or residual payments made for services originally performed in California; and Scholarship and fellowship grants.1 Corporate: Payments made to corporations, S corporations, partnerships, or limited liabilit

FAQs

What is the purpose of University of California Policy D-371-77?

It sets the requirements and procedures for withholding, reporting, and remitting California state income tax for nonresidents receiving nonwage payments from the University.

Who is considered the payer and withholding agent under the policy?

The University is the payer and withholding agent for purposes of the chapter, defined as the entity with control, receipt, custody, disposal, or payment of California source income.

Which nonwage payment types are covered by this chapter?

The chapter covers payments such as compensation for services in California, prizes and awards from California contests, certain royalties, and scholarship and fellowship grants, along with corporate payments to nonresident entities.

Sep 19, 2026

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