Pass Through Entity

Legislative Changes

Information About the Pass-Through Entity Tax (SB 151)

Beginning on January 1, 2022, a number of legislative changes to the West Virginia Pass Through Entity Tax became effective.

The apportionment formula for S-corporations/partnerships doing business in more than one state has changed. For tax years beginning on or after January 1, 2022, West Virginia uses a single sales factor formula. Under this formula, the numerator includes sales occurring in West Virginia and the denominator includes sales occurring everywhere. Prior to tax year 2022, West Virginia apportioned the income of multi-state S-corporations/partnerships through use of a four-factor formula consisting of a property factor, a payroll factor, and a double weighted sales factor.

Beginning on January 1, 2022, sales on which a S-corporation/partnership does not pay tax in any state should not be included in the numerator but remain in the denominator of the sales factor. Prior to tax year 2022, sales on which a S-corporation/partnership does not pay tax in any state were not included in either the numerator and denominator of the sales factor.

West Virginia has adopted market-based sourcing for services and certain intangible property starting on January 1, 2022. Under a “market-based sourcing” rule, sales of services go into the numerator of the sales factor based on whether the service was delivered to a customer in this state. Intangible property that is rented or licensed, or a contract right or government license, should also be included in the numerator of the sales factor if they were used in this state.

S Corporations and Partnerships

A Partnership includes syndicates, pools, joint ventures or any other unincorporated organization of two or more persons through which any business, trade, profession, occupation or venture is carried on.

The following partnerships are required to file an Annual return.

Resident Partnerships

A Resident Partnership is any partnership organized under the laws of West Virginia whose principal office, place of business, or other activity is within the borders of West Virginia.

It may also carry on its business or other activities in other states.

Nonresident Partnerships

A Nonresident Partnership is any partnership other than a resident partnership that has:

  • A partner who is a resident of West Virginia, or
  • Any income from or connected with West Virginia sources regardless of the amount of such income.

Limited Liability Companies (LLC)

A limited liability company which is treated like a partnership for federal income tax purposes will also be treated as such for West Virginia income tax purposes.

If it is not treated like a partnership, it will be taxed as a Corporation.

S Corporations

Every corporation electing to be taxed under sub-chapter S of the Internal Revenue Code that engages in business in West Virginia or that derives income from property, activity or other sources in West Virginia.

Extensions of Time to File

Any partnership or S corporation needing an extension of time to file and/or that expects to owe nonresident withholding tax must file Form PTE-100EXT Extension of Time to File Information Returns (formerly SPF-100EXT or SPF-100T), on or before the due date of the return .

Any partnership granted an extension of time to file their federal return is granted the same extension of time to file their West Virginia return.

Be sure to attach a copy of your federal extension (Federal Form 7004) to each tax return to avoid any penalty for late filing.

An extension of time for filing does not extend the time for payment.

A state extension of time to file may be obtained, even if a federal extension has not been requested, provided Form PTE-100EXT (formerly SPF-100EXT or SPF-100T) is filed prior to the due date of the West Virginia return.

Penalty for Late Filing and Failure to Include Correct Information

Any S corporation or partnership that fails to file and/or include all the correct information on their PTE-100 return, and K-1, Form NRW-2, or Form NRW-4 when applicable, by the required filing date, is subject to a penalty of $50.00 for each information return on which they failed to file or include correct information, not to exceed $100,000.00.

Provisions for the reduction of the penalty amount exist if the S corporation or partnership corrects the failure or error within specified time frames.

If the failure is due to intentional disregard for the filing requirements or the correct information reporting requirement, the penalty is $100.00 or ten percent (.10) of the aggregate amount of the items required to be reported correctly, whichever is greater.

Where to File

West Virginia Tax Division
Tax Account Administration Division
PO Box 11751
Charleston, WV 25339-1751

Nonresident Partner / Shareholder Withholding

Partnerships and S corporations are required to withhold West Virginia income tax from each nonresident partner / shareholder that has not provided the partnership or S corporation a West Virginia Nonresident Income Tax Agreement, Form NRW-4

The amount to be withheld is six and one-half percent (.065) of the nonresident partner's/shareholder's share of the federal taxable income or portion thereof that is derived from or attributable to West Virginia sources, whether such amount is distributed or is deemed to have been distributed for federal income tax purposes.

The entire tax withheld is required to be remitted with Form PTE-100 Income Tax Return S Corporation and Partnership (Pass-Through Entity).

The individual nonresident partners/shareholders may claim the amount withheld as a credit against their West Virginia Income Tax liability by attaching a copy of the information statement provided by the partnership/S corporation to the West Virginia Income Tax Return.

Information Statement of Tax Withheld

Every S corporation or partnership required to deduct and withhold tax on nonresident shareholders/partners must provide an information statement to each nonresident shareholder/partner on or before the date it files its West Virginia Income Tax Return.

The information statement shall show the amount of West Virginia income subject to withholding and the amount of West Virginia income tax withheld.

The S corporation or partnership may satisfy this requirement by indicating this information on one of the following forms with the “From SP” box checked:

  • NRW-2 Statement of West Virginia Income Tax Withheld for Nonresident Individual or Organization
  • K-1 Schedule of WV Partner / Shareholder / Member / Beneficiary Income, Loss, Modification, Credits, and Withholding
  • K-1C Schedule of WV Partner / Shareholder / Member / Beneficiary Information for Corporations Subject to Corporate Income Tax

The nonresident shareholder/partner must attach their copy of Form NRW-2, Form K-1, and Form K-1C, including the information statement of West Virginia Income Tax Withheld to their West Virginia Income Tax Return to claim credit for tax withheld.

For the nonresident claiming the credit, the “From SP” box should not be checked on their copy of the form.

Nonresident Composite Return

An S corporation or partnership may opt to satisfy the nonresident withholding requirements by filing Form IT-140NRC West Virginia Nonresident Composite Income Tax Return for one or more of its nonresident shareholders.

A nonresident composite return is a return filed on a group basis as though there was only one taxpayer. A list setting forth the name, address, taxpayer identification number, and percent of ownership of each nonresident shareholder/partner included in the return must be maintained. The return does not have to be signed by each nonresident shareholder/partner provided it is signed by a corporate officer.

When filing a nonresident composite return, no personal exemptions may be utilized and the rate of tax is six and one-half percent (.065) of the taxable income.

The S corporation or partnership is responsible for collecting and remitting all income tax due at the time the return is filed.

The due-date for a nonresident composite return is the 15th day of the 4th month following the close of the taxable year. A $50.00 processing fee must also accompany the composite return.

Any nonresident shareholder/partner included in a composite return that has income from any other West Virginia source, must file a separate IT-140 West Virginia Personal Income Tax Return for the taxable year to report and pay personal income tax on all of their West Virginia source income.

The nonresident shareholder/partner may claim credit for their share of West Virginia income tax remitted with the nonresident composite return.

Schedule SP – Summary of K-1 Shareholders/Partners Ownership and Computation of Withholding Tax

Every S corporation or partnership is required to complete a Schedule SP. This schedule must be completed in order to provide information required by the West Virginia Tax Division on each shareholder/partner.

The Schedule SP must include the amount of withholdings required to be remitted by the S corporation/partnership on behalf of their nonresident shareholders/partners.

Taxpayers with more than twelve (12) shareholders/partners must file electronically.

Shareholder Information

The PTE-100 return as well as the Schedule SP is used to identify all shareholders and to account for each shareholder's portion of the S corporation's income.

The Schedule SP is also used to calculate the amount of withholding that is required on each nonresident shareholder's portion of the S corporation's income.

All shareholders are subject to West Virginia Personal Income Tax under the provisions of West Virginia Code Chapter 11, Article 21.

Also, the nonresident shareholder's share of the S corporation's West Virginia source income under the provisions of Chapter 11, Article 21, Section 71a.

Partner Information

The PTE-100 return as well as the Schedule SP is used to identify all shareholders and to account for each shareholder's portion of the S corporation's income.

The Schedule SP is also used to calculate the amount of withholding that is required on each nonresident shareholder's portion of the S corporation's income.

West Virginia Income Tax Withheld on behalf of the S Corporation or Partnership

Electronic Filing or Paper Filed Returns: If an entity withheld tax on behalf of the S corporation or partnership filing a PTE-100, and that withholding is reported on a Form NRW-2 or Form K-1C, failure to submit these documents with your PTE-100 return will result in the disallowance of the credit claimed.

Taxable Year/Method of Accounting

You must use the same taxable year and method of accounting as you use for federal tax purposed.

Federal Return Information

A signed, true copy of the first five pages of Federal Form 1120S or 1065 plus Federal K-1 and any supporting documents must be attached to the return when filed.

Federal Form M-3 must also be attached if required.

If a Federal copy of the return is not included, then the return is not complete and is not valid.

Additions to Tax

Late Filing

Additions to tax are imposed for failure to file a return on or before the due date (determined with regard to an extension of time to file).

On any amount of tax shown to be due on the return, the additions to tax for late filing is five percent (.05) per month or any part of a month not to exceed twenty-five percent (.25).

Late Payment

Additions to tax are imposed for failure to pay all tax shown to be due on a return on or before the due date (determined without regard to an extension of time to file).

The additions to tax for late payment is imposed at the rate of one half of one percent (.005) per month or part of a month not to exceed twenty-five percent (.25).

When both the five percent (.05) additions to tax for late filing and the one half of one percent (.005) additions to tax for late payment are imposed, the maximum monthly percent is five percent (.05) not to exceed forty-seven and one-half of one percent (.475) of tax due.

Completion and Signature

All appropriate sections of the return must be completed. All required supporting documents must be attached. An incomplete return will not be accepted as timely filed. The returns must be signed by an authorized officer, partner, or member.

If the return is prepared by someone other than the taxpayer, the preparer must also sign the return and enter his or her complete address.

Changes on Federal Return

Any S corporation or partnership whose reported income or deductions are changed or corrected by the Internal Revenue Service or through renegotiation of a contract with the United States is required to report the change or correction to the West Virginia Tax Division.

This report must be made within 90-days of the final determination by filing an amended return and attaching a copy of the revenue agent's report detailing such adjustments.

An S corporation or partnership that filed an amended return with the Internal Revenue Service must file an amended return with the West Virginia Tax Division within 90-days of filing the amended federal return.

On the amended West Virginia return, attach all schedules that have amended amounts in order to verify the changes made to the return.

Amended West Virginia returns filed for the purpose of obtaining a refund of an overpayment must be filed within three years of the due date of the original return (with regard to an extension of time to file), or two years from the date the tax was paid, whichever expires later.

If your Amended Return has a balance due, send the payment along with the tax return.

Consistency in Reporting

In completing your West Virginia S Corporation and Partnership return, if you depart from or modify past procedures for classifying business income and nonbusiness income, for valuing property or including or excluding property in the property factor, for treating compensation paid in the payroll factor, for including or excluding gross receipts in the sales factor, you must disclose by separate attached schedule the nature and extent of the variance or modification.

If you make sales of tangible personal property which are shipped into a state in which you are not taxable, you must identify the state to which the property is shipped and report the total amount of sales assigned to such state.

Confidential Information

Tax information, which is disclosed to the West Virginia Tax Division, whether through returns or through department investigations, is held in strict confidence by law.

The Tax Division, the United States Internal Revenue Service, and other states have agreements under which tax information is exchanged. This is to verify the accuracy and consistency of information reported on federal, other state, and West Virginia returns.

Tax Forms, Schedules and Instructions

  • PTE-100 West Virginia Income Tax Return S Corporation and Partnership (Pass-Through Entity) Instructions
  • Schedule A Income/Loss Modifications to Federal Pass-Through Income
  • Schedule B Modifications to Federal S Corporation and Partnership Income

Credit Forms and Schedules

  • ATTC-1 Apprenticeship Training Tax Credits (For Periods After January 1, 2015)
  • CIP West Virginia Credit for Capital Investment in Child-Care Property
  • DNG-1 Downstream Natural Gas Manufacturing Investment Tax Credit
  • DNG-A Application for Downstream Natural Gas Manufacturing Investment Tax Credit
  • DSV-1 Tax Credit for Donation or Sale of Vehicle Through a Qualified Charitable Organization That Provides Affordable Transportation to Low-Income Workers. The definition of what constitutes a "Qualified Charitable Organization" and other credit information can be found in the rule 110-13FF.
  • EOTC-A Application for West Virginia Economic Opportunity Tax Credit. For Investments Placed Into Service On or After January 1, 2003.
  • FIIA_TCS West Virginia Film Industry Investment Tax Credit (For periods after January 1, 2020)
  • Schedule JSP-1 West Virginia Jumpstart Savings Program Credit for Employer Contribution
  • NGL-1 Natural Gas Liquids Property Tax Adjustment Credit for Eligible Businesses Engaged in the Storage or Transportation of Natural Gas Liquids
  • NIPA-2 Neighborhood Investment Program Credit Schedule (For periods after January 1, 2015) Instructions
  • PCM-1 Post-Coal Mine Site Business Credit for Corporate and Pass Through Entities
  • PCM-A Application for Post-Coal Mine Site Business Credit
  • RBIC Historic Rehabilitated Buildings Investment Credit (For Investments Made After June 6, 1990)
  • RBIC-A Residential Historic Rehabilitated Buildings Investment Credit, For Investments Made After December 31, 1999.
  • SAAM-1 West Virginia Tax Credit for Federal Excise Tax Imposed Upon Small Arms and Ammunition Manufacturers (For Periods On or After July 1, 2021)
  • SAAM-A Application for West Virginia Tax Credit for Federal Excise Tax Imposed Upon Small Arms and Ammunition Manufacturers (For Periods On or After July 1, 2021) Instructions

Other Schedules

  • BAR-0 Business Activity Report
  • NRW-4 Nonresident Income Tax Agreement
  • APT Allocation and Apportionment for Multistate Businesses
  • Schedule SP Summary of K-1 Shareholders/Partners Ownership and Computation of Withholding Tax
  • NRW-2 Statement of West Virginia Income Tax Withheld for Nonresident Individual or Organization
  • K-1 Schedule of WV Partner / Shareholder / Member / Beneficiary Income, Loss, Modification, Credits, and Withholding
  • K-1C Schedule of WV Partner / Shareholder / Member / Beneficiary Information for Corporations Subject to Corporate Income Tax

Payments

  • PTE-100ES West Virginia Estimated Income Tax Payment For S Corporations And Partnerships
  • PTE-100EXT Extension of Time to File Information Returns
  • WV-PTEV West Virginia Income Tax for S Corporations and Partnerships Electronic Payment Voucher and Instructions

Mailing Address:

West Virginia Tax Division
Tax Account Administration Division
PO Box 11751
Charleston, WV 25339-1751

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