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

S subsidiaries. The corporation must attach a schedule to

the election identifying the name, address, Revenue ID and

to file the Pennsylvania S Corporation Election and

Shareholders’ Consent, REV-1640, in order to be granted

federal employer identification number of each qualified

Pennsylvania S corporation status. Effective for tax years

subchapter S subsidiary owned by the corporation and

doing business in Pennsylvania.

beginning after Dec. 31, 2005, any corporation with a

valid federal subchapter S corporation election will auto-

matically be a Pennsylvania S corporation. Any federal

PA Resident Shareholders of Subchapter

subchapter S corporation that does not desire to be a

S Corporations in Another State

Pennsylvania S corporation must file an Election Not to be

Any federal subchapter S corporation that does not make

Taxed as a Pennsylvania S Corporation, REV-976, on or

this election, and which does not do business nor is reg-

before the due date or extended due date of the report

istered to do business in PA but has a PA resident share-

for the first tax period in which the election is to be in

holder, will be taxed as a Pennsylvania S corporation and

effect. This election must be signed by 100 percent of the

will be required to file PA S Corporation/Partnership

shareholders of the S corporation and once made cannot

Information Return, PA-20S/PA-65. In addition, each res-

be revoked for five years.

ident shareholder will be subject to Pennsylvania person-

al income tax on each shareholder’s pro rata share of the

In the case of a federal subchapter S corporation not

S corporation income, whether distributed or not.

required to file PA Corporate Tax Report, RCT-101, (does

not do business in PA and is not registered to do business

Filing the Election

in PA), the Election Not to be Taxed as a Pennsylvania

S Corporation, REV-976, must be filed on or before the

For a federal subchapter S corporation conducting busi-

15th day of the fourth month following the end of the first

ness in Pennsylvania that is required to file PA Corporate

tax period for which the election is to be in effect (the due

Tax Report, RCT-101: The due date for filing the Election

date of PA Corporate Tax Report, RCT-101, if the corpora-

Not to be Taxed as a Pennsylvania S Corporation,

tion had been required to file this report).

REV-976, is the due date or the extended due date of the

PA corporate tax report for the first year for which the

Any federal subchapter S corporation doing business in

election is to be in effect.

Pennsylvania or registered to do business in PA that does

not make this election will be taxed as a Pennsylvania

For a federal subchapter S corporation that is not

S corporation and will be required to file both PA

required to file PA Corporate Tax Report, RCT-101, (does

Corporate

Tax

Report,

RCT-101,

and

not do business in PA and is not registered to do busi-

Corporation/Partnership Information Return, PA-20S/PA-

ness in PA): The due date for filing the Election Not to

65. In addition, each resident shareholder is subject to

be Taxed as a Pennsylvania S Corporation, REV-976, is

Pennsylvania personal income tax on each shareholder’s

30 days after the due date or the extended due date of

pro rata share of the S corporation income, whether dis-

the federal return. These corporations must check the

tributed or not. Each nonresident shareholder is subject

box indicating “Corporation is not subject to PA

Corporate Taxes; election is for PA resident Shareholder

to tax on the shareholder’s personal income from sources

within PA.

purposes only”.

A Pennsylvania S corporation with taxable income from

The Election Not to be Taxed as a Pennsylvania

S Corporation, REV-976, must be signed by all sharehold-

sources within PA is jointly liable with its nonresident

ers on the date of the election and sent via certified

shareholders for personal income tax on this income. It

mail to:

is authorized and required to collect this tax from its

nonresident shareholders and remit the tax to the

PA DEPARTMENT OF REVENUE

PA Department of Revenue. Use PA-40ESR (F/C) to

BUREAU OF CORPORATION TAXES

make the first nonresident withholding payment.

PA S UNIT

Thereafter, the department will provide pre-printed

PO BOX 280705

PA-40ES (P/S) forms. The PA-40ESR (F/C) form can be

HARRISBURG PA 17128-0705

downloaded

from

the

department’s

website

DO NOT SEND AS AN ATTACHMENT TO

or ordered by telephone at

1-888-PATAXES (728-2937).

THE PA CORPORATE TAX REPORT

Qualified Subchapter S Subsidiaries

Acknowledgment of Receipt of Election

A qualified subchapter S subsidiary may not be a

Approximately 90 days from the receipt of this election,

Pennsylvania S corporation, or it may elect not to be a

the Department of Revenue will send a confirmation of

Pennsylvania S corporation separate from the parent cor-

approval of the election to the taxpayer at the address

poration. If a qualified subchapter S subsidiary and/or par-

shown on the election. If the confirmation is not received

ent of a qualified subchapter S subsidiary, does not desire

within 90 days, the taxpayer should call the Bureau of

to be taxed as a Pennsylvania S corporation, the parent

Corporation Taxes at 717-705-6110 to verify. It is the sole

must file an election not to be taxed as a Pennsylvania

responsibility of the taxpayer to provide timely proof of

S corporation for itself and all qualified subchapter

mailing (i.e., a certified mail receipt).

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