Form Rev-976 - Election Not To Be Taxed As A Pennsylvania S Corporation (Page 2 of 2) in pdf

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 Election and

Shareholders’ Consent (REV-1640) in order to be granted Pennsylvania S corporation status. Effective for tax years

beginning after Dec. 31, 2005, any corporation with a valid federal subchapter S corporation election will automatically

be a Pennsylvania S corporation. Any federal subchapter S corporation that does not desire to be a Pennsylvania S cor-

poration must file an Election Not to be Taxed as a Pennsylvania S Corporation (REV-976) on or before the due date or

extended due 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 shareholders of the S corporation and once made cannot be revoked for five years.

In the case of a federal subchapter S corporation not required to file PA Corporate Tax Report, RCT-101, (does not do

business in PA and is not registered to do business in PA), the Election Not to be Taxed as a Pennsylvania S Corporation

(REV-976) must be filed on or before the 15th day of the fourth month following the end of the first tax period for which

the election is to be in effect (the due date of PA Corporate Tax Report, RCT-101, if the corporation had been required

to file this report).

Any federal subchapter S corporation doing business in Pennsylvania or registered to do business in PA that does not

make this election will be taxed as a Pennsylvania S corporation and will be required to file both PA Corporate Tax Report,

RCT-101, and PA S Corporation/Partnership Information Return, PA-20S/PA-65. In addition, each resident shareholder is

subject to Pennsylvania personal income tax on each shareholder’s pro rata share of the S corporation income, whether

distributed or not. Each nonresident shareholder is subject to tax on the shareholder’s personal income from sources

within PA.

A Pennsylvania S corporation with taxable income from sources within PA is jointly liable with its nonresident share-

holders for personal income tax on this income. It is authorized and required to collect this tax from its nonresident

shareholders and remit the tax to the PA Department of Revenue. Use PA-40ESR (F/C) to make the first nonresident

withholding payment. Thereafter, the department will provide pre-printed PA-40ES (P/S) forms. The PA-40ESR (F/C)

form can be downloaded from the department’s website at or ordered by telephone at

1-888-PATAXES (728-2937).

Qualified Subchapter S Subsidiaries

A qualified subchapter S subsidiary may not be a Pennsylvania S corporation, or it may elect not to be a Pennsylvania S

corporation separate from the parent corporation. If a qualified subchapter S subsidiary and/or parent of a qualified sub-

chapter S subsidiary, does not desire to be taxed as a Pennsylvania S corporation, the parent must file an election not to

be taxed as a Pennsylvania S corporation for itself and all qualified subchapter S subsidiaries. The corporation must attach

a schedule to the election identifying the name, address, Tax Account ID and federal employer identification number of each

qualified subchapter S subsidiary owned by the corporation and doing business in Pennsylvania.

PA Resident Shareholders of Subchapter S Corporations in Another State

Any federal subchapter S corporation that does not make this election, and which does not do business nor is registered

to do business in PA but has a PA resident shareholder, will be taxed as a Pennsylvania S corporation and will be required

to file PA S Corporation/Partnership Information Return, PA-20S/PA-65. In addition, each resident shareholder will be

subject to Pennsylvania personal income tax on each shareholder’s pro rata share of the S corporation income, whether

distributed or not.

Filing the Election

For a federal subchapter S corporation conducting business in Pennsylvania that is required to file PA Corporate Tax Report,

RCT-101: The due date for filing the Election Not to be Taxed as a Pennsylvania S Corporation (REV-976) is the due date

or the extended due date of the PA corporate tax report for the first year for which the election is to be in effect.

For a federal subchapter S corporation that is not required to file PA Corporate Tax Report, RCT-101, (does not do

business in PA and is not registered to do business in PA): The due date for filing the Election Not to be Taxed as a

Pennsylvania S Corporation (REV-976) is 30 days after the due date or the extended due date of the federal return.

These corporations must check the box indicating “Corporation is not subject to PA Corporate Taxes; election is for PA

resident Shareholder purposes only”.

The Election Not to be Taxed as a Pennsylvania S Corporation (REV-976) must be signed by all shareholders on the date

of the election and sent via certified mail to:

PA DEPARTMENT OF REVENUE

BUREAU OF CORPORATION TAXES

PA S UNIT

PO BOX 280705

HARRISBURG PA 17128-0705

DO NOT SEND AS AN ATTACHMENT TO THE PA CORPORATE TAX REPORT

Acknowledgment of Receipt of Election

Approximately 90 days from the receipt of this election, the Department of Revenue will send a confirmation of approval

of the election to the taxpayer at the address shown on the election. If the confirmation is not received within 90 days,

the taxpayer should call the Bureau of Corporation Taxes at 717-787-8353 to verify. It is the sole responsibility of the

taxpayer to provide timely proof of mailing (i.e., a certified mail receipt).

Form Rev-976 - Election Not To Be Taxed As A Pennsylvania S Corporation Page 2

Related Articles

Related forms

Related Categories