What California Form 3832 (2020) Is For
California Form 3832 (2020) allows a nonresident member of a Limited Liability Company to consent to California income tax on their distributive share. This consent confirms California’s authority to assess tax under the California Revenue and Taxation Code. The form applies to each California LLC with nonresident members earning income sourced to the state.
The consent requirement supports compliance with tax law for members who are outside the United States or California. It helps the Franchise Tax Board match reported income with each taxpayer's identification number—the form lists identifying details, such as Social Security Numbers or Individual Taxpayer Identification Numbers, for accurate reporting.
When You’d Use California Form 3832 (2020)
Form 3832 is required for any tax year when a California LLC includes one or more nonresident members. The form must be submitted with Form 568 during the filing process for the applicable fiscal year. It ensures each nonresident member acknowledges California’s jurisdiction for California income tax.
You also use Form 3832 when adding new nonresident members because their consent must be obtained promptly. The form is necessary even when entity classification differs for federal tax purposes. The form becomes part of the LLC’s annual tax forms, which the California Franchise Tax Board maintains.
Key Rules or Details for 2020
Each member listed on Form 3832 must sign, unless they have already consented in a prior year. Married members or Registered Domestic Partners must also sign because California applies community income rules. Missing signatures may cause the LLC to owe nonconsenting tax computed through Schedule T on Form 568.
The Franchise Tax Board may review the form along with related filings, such as Form 540NR, for individual members. Corporate members may also file Form 1120 or other applicable federal forms, depending on entity classification. Proper completion ensures alignment with Internal Revenue Code requirements and relevant Internal Revenue Service reporting.
Step-by-Step (High Level)
- Step 1 - Identify nonresident members: Staff should determine which individuals lacked California residency during the fiscal year. Preparers confirm taxpayer identification details for each California LLC participant. This review ensures accuracy to support proper tax return preparation.
- Step 2 - Complete LLC Information. The form requires entry of the Limited Liability Company name and the California Secretary of State file number. The filer includes the Employer Identification Number for federal tax purposes. All entries must match the applicable tax forms.
- Step 3 - List Required Members: The preparer provides the names and identification numbers for each listed member, including Federal Employer Identification Numbers (FEINs) when applicable. The list should also include members who left midyear. The LLC maintains records for the California Franchise Tax Board.
- Step 4 - Obtain Signatures: The preparer collects all required signatures from the members and their spouses. The preparer uses Form FTB 3832 when preparing consent documentation for nonresident members. Supporting items are attached to Form FTB 8453-LLC when the filing is submitted electronically.
- Step 5 - Attach the form: The LLC submits Form 3832 with Form 568. The LLC provides each member with a copy of the agreement. The LLC retains documentation for future income tax return filings.
Common Mistakes and How to Avoid Them
Filing reviews frequently identify preventable documentation issues that slow California Franchise Tax Board processing. Addressing these mistakes strengthens compliance and improves accuracy across required state and federal tax forms. Correcting these issues supports consistent reporting for the applicable fiscal year.
- Unsigned Form FTB 3832: This error appears when required signatures are absent on consent pages. Tax preparers must verify every required signature before attaching the form to Form 568 for the applicable tax year.
- Mismatched Identification Numbers: This issue arises when the identifying data on Form 1040, Form 1065, or Form 540NR differs from the data submitted to the state. Preparers must confirm that all information used for federal tax purposes matches recorded state data.
- Incorrect Effective Date Entries: This mistake occurs when the effective date listed in Part I does not match supporting tax return records. Preparers must align all reported dates with the dates shown on the filed documents.
- Omitted Required Schedules: This issue arises when Schedule R or other mandated attachments are excluded from the filing packet. Preparers must ensure that all schedules required under tax law accompany each submission.
What Happens After You File
The Franchise Tax Board reviews Form 3832 in conjunction with Form 568 to verify matching identification details and signature completeness. The Franchise Tax Board verifies income reporting through member schedules and related state filings. Identified discrepancies may result in correspondence requesting clarification.
Members later claim credits for nonconsenting tax through their income tax return. The Franchise Tax Board matches reported information with federal forms such as Form 1040 or Form 1065. Timely filing helps avoid penalties calculated in accordance with California Revenue and Taxation Code requirements.
FAQs
Who must sign Form FTB 3832?
Form FTB 3832 requires signatures from all nonresident members for the applicable fiscal year. Each member must provide identifying details consistent with federal tax purposes. The California Franchise Tax Board uses the form to validate required tax forms.
Does signing remove filing obligations for the member?
Signing the consent does not replace any required income tax return. A nonresident member must still file Form 540NR for California-source income. Federal forms, such as Form 1040 or Form 1065, are still required for filing federal taxes.
What occurs when a member does not provide the required signature?
A missing signature triggers a nonconsenting member tax calculated through Schedule T on Form 568. The liability may later appear as a credit on the member’s tax return. Preparers must review records carefully to ensure complete filings.
Are entity members subject to the exact signature requirement?
Yes, entity members must sign regardless of their Entity Classification Election. The information reported must match the records of federal departments and agencies. Consistency supports accurate reporting across tax years.
How is the consent processed through e-file?
Electronic filing requires attaching the signed form using Form FTB 8453-LLC. Preparers must retain all confirmations to meet recordkeeping requirements. Accurate records help align state reporting with federal tax law requirements of the United States.
