General Instructions Election Not To Be Taxed As A Pennsylvania S Corporation - Department Of Revenue

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GENERAL INSTRUCTIONS
ELECTION NOT TO BE TAXED AS A PENNSYLVANIA S CORPORATION
Federal subchapter S corporations are no longer required to file the
Pennsylvania S corporation, the parent must file an election not to be
Pennsylvania S Corporation Election and Shareholders’ Consent,
taxed as a Pennsylvania S corporation for itself and all qualified sub-
REV-1640, in order to be granted Pennsylvania S corporation sta-
chapter S subsidiaries. the corporation must include a schedule with
tus. Effective for tax years beginning after dec. 31, 2005, any cor-
the election identifying the name, address, Revenue Id and federal
poration with a valid federal subchapter S corporation election will
employer identification number of each qualified subchapter S sub-
automatically be a Pennsylvania S corporation. Any federal sub-
sidiary owned by the corporation and doing business in Pennsylvania.
chapter S corporation that does not desire to be a Pennsylvania S
corporation must file an Election Not to be taxed as a Pennsylvania
PA Resident Shareholders of Subchapter S
S Corporation, REV-976, on or before the due date or extended due
Corporations in Another State
date of the report for the first tax period in which the election is to
be in effect. this election must be signed by 100 percent of the
Any federal subchapter S corporation that does not make this elec-
shareholders of the S corporation and once made cannot be
tion, and which does not do business nor is registered to do busi-
revoked for five years.
ness in PA but has a PA resident shareholder, will be taxed as a
Pennsylvania S corporation and will be required to file the PA S
In the case of a federal subchapter S corporation not required to
Corporation/Partnership Information Return, PA-20S/PA-65. In
file RCt-101, PA Corporate Net Income tax Report, (does not do
addition, each resident shareholder will be subject to Pennsylvania
business in PA and is not registered to do business in PA), the
personal income tax on each shareholder’s pro rata share of the S
Election Not to be taxed as a Pennsylvania S Corporation, REV-976,
corporation income, whether distributed or not.
must be filed on or before the 15th day of the fourth month follow-
ing the end of the first tax period for which the election is to be in
effect (the due date of RCt-101 if the corporation had been
Filing the Election
required to file this report).
For a federal subchapter S corporation conducting business in
Any federal subchapter S corporation doing business in
Pennsylvania that is required to file RCt-101: the due date for fil-
Pennsylvania or registered to do business in PA that does not make
ing the Election Not to be taxed as a Pennsylvania S Corporation,
this election will be taxed as a Pennsylvania S corporation and will
REV-976, is the due date or the extended due date of RCt-101 for
be required to file the PA S Corporation/Partnership Information
the first year for which the election is to be in effect.
Return, PA-20S/PA-65. In addition, each resident shareholder is
For a federal subchapter S corporation that is not required to file
subject to Pennsylvania personal income tax on each shareholder’s
RCt-101, (does not do business in PA and is not registered to do
pro rata share of the S corporation income, whether distributed or
business in PA): the due date for filing the Election Not to be
not. Each nonresident shareholder is subject to tax on the share-
holder’s personal income from sources within PA. Filing of the PA
taxed as a Pennsylvania S Corporation, REV-976, is 30 days after
Corporate Net Income tax Report is not required unless the corpo-
the due date or the extended due date of the federal return.
ration has federal taxable built-in gains.
these corporations must check the box indicating “Corporation is
not subject to PA Corporate Net Income tax; election is for PA
A Pennsylvania S corporation with taxable income from sources
resident Shareholder purposes only”.
within PA is jointly liable with its nonresident shareholders for
personal income tax on this income. It is authorized and required
the Election Not to be taxed as a Pennsylvania S Corporation, REV-
to collect this tax from its nonresident shareholders and remit the
976, must be signed by all shareholders on the date of the election
tax to the PA department of Revenue. Use PA-40ESR (F/C) to
and sent via certified mail to:
make the first nonresident withholding payment. thereafter, the
PA dEPARtMENt OF REVENUE
department will provide pre-printed PA-40ES (P/S) forms. the
BUREAU OF CORPORAtION tAxES
PA-40ESR (F/C) form can be downloaded from the department’s
PA S UNIt
website at or ordered by telephone at
1-888-PAtAxES (728-2937).
PO BOx 280701
HARRISBURG PA 17128-0701
Qualified Subchapter S Subsidiaries
DO NOT SEND WITH THE PA CORPORATE
If a qualified subchapter S subsidiary and/or parent of a qualified
NET INCOME TAX REPORT
subchapter S subsidiary, does not desire to be taxed as a
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