Form Tc-65 Form Tc-65 Tax Return & Instructions Page 3
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27General Instructions and Information
WhatÊs New
• it maintains records that show each partner’s or
member’s share of income, losses, credits, and
• Apportionment Fraction for “Sales Factor
other distributive items, and those records are made
Weighted Taxpayers.” For tax years beginning in
available to the Tax Commission upon request.
2013, the calculation of the apportionment fraction
A partnership or other entity treated as a partnership
on TC-20, Schedule J has changed to consider
for federal tax purposes with any partners or members
only the sales factor that is for a business that is a
who are not Utah resident individuals or that is itself a
sales factor weighted taxpayer. See Sales Factor
pass-through entity taxpayer is required to fi le a TC-65.
Weighted Taxpayers on page 12.
Pass-through Entity
Reminder
Withholding Requirements
TC-250: List all nonrefundable and refundable credits
received from an upper-tier pass-through entity on a
Partnerships and business entities treated as partner-
Utah Schedule K-1, as well as any mineral production
ships are considered pass-through entities (see UC
withholding tax credit received on a form TC-675R.
§59-10-1402(10)) and, for tax years beginning on or after
Jan. 1, 2009, are required to withhold Utah income tax
Partnership Defined
on all nonresident individual partners, and on all resident
business and nonresident business partners. These part-
A “partnership” is any unincorporated entity that is
ners are collectively referred to as pass-through entity
treated as a partnership under federal income tax
taxpayers (see UC §59-10-1402(11)). A partnership is
law, including general partnerships, limited partner-
not required to withhold on a partner that is exempt from
ships, limited liability partnerships, and limited liability
tax under UC §59-7-102(1)(a) or §59-10-104.1, or if the
companies. A “partner” includes a partner or member
pass-through entity is a plan under IRC Sections 401,
of one of these entities.
408 or 457 and is not required to fi le a return under UC
Chapter 7, or is a publicly traded partnership as defi ned
under UC §59-1403.2(1)(b)(iii).
Partnerships Not
Subject to Tax
Utah imposes a 5 percent withholding tax on all Utah busi-
ness and nonbusiness income derived from or connected
A partnership is not subject to Utah income tax. How-
with Utah sources and attributable to pass-through entity
ever, partners conducting business are liable for Utah
taxpayers. The partnership may reduce this withholding by
income tax in their separate or individual capacities.
any mineral production withholding tax and previous pass-
A partnership must withhold Utah tax on all nonresi-
through entity withholding tax allocated to the partner. This
dent individual pass-through entity taxpayers and all
withholding tax must be paid to the Tax Commission by the
resident or nonresident business pass-through entity
original due date of the return, without regard to extensions.
taxpayers. See Pass-through Entity Withholding Re-
The calculation of the required Utah withholding tax is
quirements below.
done on Schedule N. See the instructions for Schedule
N on page 22 for more details.
Pass-through Entity
The partnership must provide a Utah Schedule K-1 to
A pass-through entity is an entity whose income, gains,
each partner showing the amount of Utah withholding
losses, deductions and/or credits fl ow through to its
paid on behalf of the partner. This withholding tax is
partners (partnerships), members (limited liability com-
then claimed as a credit by the partner on the partner’s
panies), shareholders (S corporations) or benefi ciaries
personal return.
(estates and trusts) for federal tax purposes.
If this partnership has an interest in another partnership,
that other partnership is required to withhold Utah income
Pass-through Entity Taxpayer
tax on Utah income allocated to this partnership. The
other partnership must provide a Utah Schedule K-1
A pass-through entity taxpayer is any entity which has
showing the amount of Utah withholding tax paid on
income, gains, losses, deductions and/or credits passed
behalf of this partnership. This withholding tax must be
to it from a pass-through entity (e.g., an individual who
reported on TC-250 and then allocated to the partners of
is a partner in a partnership, or a partnership which is
this partnership to be claimed on their personal returns.
a partner in another partnership).
Enter this previous pass-through entity withholding tax
for each partner on Schedules K and K-1.
Filing Requirements
The partnership may request a waiver of withholding
A partnership or other entity treated as a partnership for
tax and any associated penalty and interest for all or
federal tax purposes, all of whose partners or members
selected partners who fi led and paid tax on the Utah
are Utah resident individuals, is not required to fi le a
income from this partnership. The tax must be paid on
Utah return, TC-65, if:
or before the partnership’s return due date, including
extensions (see UC §59-10-1403.2(5)).
• it is not a pass-through entity taxpayer, and
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