Form 512-S And Form 512-Sa - Oklahoma Small Business Corporation Income Tax

General Filing Information

To file and pay the income tax withheld, the S

corporation must complete Form OW-9-C "Nonresi-

Withholding on Nonresident

dent Oklahoma Distributed Income Withholding Tax

Members

Report". The S corporation will file Form OW-9-C

Pass-through entities (partnerships, S corpora-

on or before the due date (including extensions) of

the S corporation’s income tax return.

tions, limited liability companies or trusts) are

required to withhold Oklahoma income tax at a rate

The S corporation must provide nonresident share-

of 5% of the Oklahoma share of taxable income

holders a Form 500-B, by the due date (including

distributed to each nonresident member (partner,

member, shareholder or beneficiary). A pass-

extensions) of its income tax return, showing their

respective amount of income and tax withheld.

through entity is not required to withhold income

tax with regard to any nonresident member who

Each nonresident shareholder must enclose a copy

of the Form 500-B with their Oklahoma income tax

submits a Nonresident Member Withholding Ex-

return as verification for this withholding. Copies of

emption Affidavit (Form OW-15). Title 68 O.S.

Sections 2385.29, 2385.30 and 2385.31

Form 500-B’s, along with the cover Form 501, must

be sent to the Oklahoma Tax Commission by the

Withholding is not required on distributions made

same date.

to persons, other than individuals, who are exempt

For S corporations paying the tax on behalf of non-

from Federal income tax, organizations granted

an exemption under Section 501(c)(3) of the

resident shareholders, the nonresident share-

holder's withholding may be claimed on Form

Internal Revenue Code, insurance companies

subject to the Oklahoma Gross Premium Tax and

512-S, part 1, line 11. A copy of the nonresident

shareholder's Form 500-B must be enclosed

therefore exempt from Oklahoma income tax under

with the Form 512-S.

Title 68 O.S. Section 2359(c), and nonresident

members who have filed the Form OW-15 “Non-

resident Member Withholding Exemption Affidavit”.

Agricultural Commodity

Withholding is not required on any distribution of

Processing Facility Exclusion

royalty income on which the nonresident royalty

interest income tax has already been withheld, on

Owners of agricultural commodity processing

facilities may exclude fifteen percent (15%) of their

any distribution made to another pass-through

entity or on any distribution of income not subject

investment in a new or expanded agricultural

commodity processing facility located within Okla-

to Oklahoma income tax.

homa. “Agricultural commodity processing facility”

The following pass-through entities are not re-

means buildings, structures, fixtures and improve-

ments used or operated primarily for the process-

quired to withhold:

· An entity electing to be treated as a

ing or production of agricultural commodities to

marketable products. The investment is deemed

disregarded entity for Federal income tax

purposes. A disregarded entity is an eligible

made when the property is placed in service.

Under no circumstances shall this exclusion lower

entity that is treated as an entity that is not

the shareholder’s taxable income below zero. In

separate from its single owner.

· An entity that does not have a requirement,

the event the exclusion does exceed income, any

unused portion may be carried over for a period

or properly elects out of the requirement, to

file a Federal income tax return.

not to exceed six (6) years.

· An entity making distributions of income not

Attach a separate schedule showing the type of

subject to Oklahoma income tax.

investment(s), the date placed in service, the cost,

the total exclusion and the exclusion available for

· Distributions made from the S Corporation

each shareholder. Do not include this exclusion in

the Oklahoma net distributable income; each

S corporations, that make distributions subject to

shareholder shall report their allowable share of

Oklahoma withholding, must register with the

Oklahoma Tax Commission. Register by completing

the exclusion on the designated line of their indi-

vidual return. For a nonresident who does not file a

the registration form “Registration for Oklahoma

Withholding for Nonresident Members” (Form OW-

nonresident agreement, include the shareholder’s

allowable share in Part 5, column 8.

11). This form may be obtained by calling our forms

request line at (405) 521-3108 or from our website

at:

Form 512-S And Form 512-Sa - Oklahoma Small Business Corporation Income Tax - 2006 Page 3

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