Form Sc1065 - Instructions For Partnership Return (Page 3 of 3) in pdf

INFORMATION TO BE FURNISHED TO PARTNERS

Partners who are residents of South Carolina must be provided with the total amount of their proportionate share of

the following items:

(1) South Carolina adjustments from Schedule SC-K Column (B) plus

(2) Schedule SC-K Column (D) amounts that are allocated or apportioned to states other than South Carolina.

This total amount would be the respective partner's "partnership modification" to federal taxable income to arrive at

South Carolina taxable income.

Partners who are nonresidents of South Carolina must be provided with their share of the Schedule SC-K Column (E)

items. These amounts are reportable to the state of South Carolina.

Note: The total of lines 1 through 7 of Schedule SC-K, Column (E) should equal the amount shown on line 10 of page 1,

form SC1085.

Partnerships receiving passive activity income and losses pursuant to Internal Revenue Code Section 469, from

investments located within and without South Carolina, must furnish partners with detail for proper reporting of these

amounts. Similar information must be furnished to partners who did not materially participate in the trade or business of

a partnership with multi-state operations. Such partners may have nondeductible passive losses which cannot offset

interest and other business related portfolio income apportioned to South Carolina.

SCHEDULE W-H" WITHHOLDING ON INCOME OF PARTNERS WHO ARE NONRESIDENTS OF SOUTH CAROLINA

Partnerships are required annually to withhold 5% (percent) of the South Carolina taxable income of partners who are

nonresidents of South Carolina. Complete Schedule W-H to compute the withholding. (Note: Any South Carolina real

estate gain subject to buyer withholding is not subject to this withholding.) The income tax withheld must be paid to the

South Carolina Department of Revenue along with filing form SC1065 by the fifteenth day of the fourth month following

taxable year end of the partnership. By this same date, the partnership must provide nonresident partners a form

1099-MISC with "SC only" written at the top, showing respective amounts of income and tax withheld. Along with filing

form SC1065 and payment of tax, the partnership must attach a schedule disclosing the name, address, tax identification

number, SC taxable income and tax withheld for each nonresident partner. For tiered or layered partnerships income tax

should be withheld only by the partnership with activities in South Carolina. Related partnerships should attach a

statement explaining the pass-through withholding and provide 1099s to their partners. Partnerships requesting an

extension of time to file form SC1065 must estimate SC taxable income of nonresidents and pay 5% withholding tax on

this amount along with filing form SC4868 (Request for Extension) by the 15th day of the fourth month following its

taxable year end. Each nonresident must attach a copy of his form 1099-MISC to his respective income tax return as

verification for claiming credit for this withholding.

A nonresident partner may provide the partnership with an affidavit (form 1-309) agreeing that he is subject to the

jurisdiction of the SC Department of Revenue and the Courts of this State for purposes of determining and collecting SC

tax, interest and penalties which may be due. An affidavit form may be obtained from the SC Department of Revenue.

The partnership should mail the affidavit(s) separately to the SC Department of Revenue, Partnership Section,

Columbia, SC 29214-0008. The partnership is not required to withhold income tax on behalf of such partner. If an

affidavit has previously been filed it should not be resubmitted. Partnerships that report the income of their

nonresident partners on a composite return are not required to withhold tax or file affidavits. See Composite

Filing.

COMPOSITE FILING

A composite return is one individual income tax return (SC1040) filed by a partnership which computes and reports the

income and tax of its nonresident partners. The return is due on or before April 15th following the partners' taxable year

end and any tax due is paid along with filing the return. Each participating nonresident partner's separate income tax is

computed in the same manner as if the partner were separately reporting income on a form SC1040. A schedule should

be attached showing the separate computations. The separate tax amounts are totaled and entered on the "tax" line of

page 1, form SC1040. The tax due in connection with this return is subject to declaration of estimated tax rules. See

form SC1040ES and instructions. The heading of the composite return states the name, address and federal EIN of the

partnership, and must be signed by a general partner of the partnership. Corporate partners and nonresident partners

having SC taxable income from sources other than the partnership may not participate in this filing.

Partnerships requesting an extension for filing a composite return must estimate tax due and pay the tax along with filing

the extension on or before April 15th following the partners' taxable year end.

INTEREST AND PENALTIES

A taxpayer that fails to remit tax when due will be charged interest from the time the tax was due until paid in

its entirety. Penalties may be applied for late payment of tax and for late filing of returns. Penalties may also

be applied for negligence and for disregard of regulations.

Form Sc1065 - Instructions For Partnership Return Page 3

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