Instructions For Form Tc-20s - Utah S Corporation Tax Return - 2012 Page 4
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28Note: See What to Attach and What to Keep later in
The calculation of the required Utah withholding tax is
these General Instructions to identify what federal
done on Schedule N. See the instructions for Schedule
information is required with the Utah return.
N on page 22 for more details.
Franchise Tax
The S corporation must provide a Utah Schedule K-1 to
each shareholder showing the amount of Utah withhold-
Every C corporation incorporated in Utah (domestic),
ing paid on behalf of the shareholder. This withholding
qualifi ed in Utah (foreign), or doing business in Utah,
tax is then claimed as a credit by the shareholder on
whether qualifi ed or not, must fi le a corporate franchise
the shareholder’s personal return.
tax return. C corporation returns are fi led on form TC-
20. There is a minimum tax (privilege tax) of $100 on
If this S corporation has an interest in a partnership (also
every corporation that fi les form TC-20, regardless of
considered a pass-through entity), that partnership is
whether or not the corporation exercises its right to
required to withhold Utah income tax on Utah income
do business.
allocated to this S corporation. The partnership must
provide a Schedule K-1 showing the amount of Utah
S Corporation
withholding tax paid on behalf of this S corporation.
Every S corporation (as defi ned in IRC Section 1361(a))
This withholding tax must be reported on TC-250 and
that has fi led a proper and timely election under IRC
then be allocated to the shareholders of this S corpora-
Section 1362(a) must fi le form TC-20S, so long as the
tion to be claimed on their personal returns. Enter this
federal election remains in effect. The minimum tax
previous pass-through entity withholding tax for each
does not apply to S corporations.
shareholder on Schedules K and K-1.
Income Tax
The S corporation may request a waiver of withhold-
Corporations required to fi le under the income tax provi-
ing tax and any associated penalty and interest for all
sions are those that derive income from Utah sources,
or selected shareholders who fi led and paid tax on
but are not qualifi ed to do business in Utah and have
their personal returns on the Utah income from this S
no regular and established place of business in Utah,
corporation. The tax must be paid on or before the S
either owned or rented, and do not maintain an inventory
corporation’s return due date, including extensions (see
or have employees located at a place of business in
UC §59-10-1403.2(5)). See Schedule N instructions on
Utah. For example, a trucking company operated in or
page 22 for more details.
through Utah, or an institution making loans or issuing
credit cards to Utah customers from outside Utah, that
Qualified Subchapter S Subsidiary
are not qualifi ed to do business in Utah and have no
An S corporation that owns one or more qualifi ed subchap-
place of business in Utah, are subject to the income
ter S subsidiaries, as defi ned in IRC §1361(b)(3)(B), must:
tax rather than franchise tax.
• Include each subsidiary’s assets, liabilities and items
A $100 minimum tax applies to the corporate income
of income, loss and deductions as part of the par-
tax.
ent S corporation’s assets, liabilities and items of
income, loss and deductions for Utah tax purposes.
Pass-through Entity Withholding
The qualifi ed subchapter S subsidiary shall not be
Requirements
treated as a separate corporation.
S corporations and business entities treated as S
• Take into account the activities of the qualifi ed sub-
corporations are considered pass-through entities
chapter S subsidiaries in determining whether the
(see UC §59-10-1402(9)) and, for tax years beginning
S corporation parent is doing business in Utah. For
on or after Jan. 1, 2009, are required to withhold Utah
purpose of this determination, all of the subsidiary’s
income tax on all nonresident individual shareholders
activities will be attributed to the parent.
and on all resident and nonresident trust shareholders.
These shareholders are collectively referred to as pass-
• Attach TC-20S, Schedule M identifying the qualifi ed
through entity taxpayers (see UC §59-10-1402(10)).
subchapter S subsidiaries incorporated, qualifi ed,
An S corporation is not required to withhold on
or doing business in Utah.
a shareholder that is exempt from tax under UC
Taxable Year
§59-7-102(1)(a) or §59-10-104.1, or if the S corpora-
tion is a plan under IRC Sections 401, 408 or 457 and
The taxable year for Utah tax purposes must match the
is not required to fi le a return under UC Chapter 7, or
taxable year used for federal tax purposes. When the
is a publicly traded partnership as defi ned under UC
taxable year changes for federal purposes, the taxable
§59-1403.2(1)(b)(iv).
year must be changed for Utah purposes. Refer to Filing
Return When Period Changed below.
Utah imposes a 5 percent withholding tax on all Utah
business and nonbusiness income derived from or
Filing Return When Period Changed
connected with Utah sources and attributable to pass-
through entity taxpayers. The S corporation may reduce
When changes are made to the taxable year, as indi-
this withholding by any mineral production withholding
cated under Taxable Year above, a short-period return
tax and previous pass-through entity withholding tax
is required. The short-period return must cover the
allocated to the shareholder. This withholding tax must
period of less than 12 months between the prior tax-
be paid to the Tax Commission by the original due date
able year-end and the new taxable year. The tax rates
of the return, without regard to extensions.
as provided in UC §§59-7-104 and 59-7-201 apply to
short period returns.
Page 2
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