Form 355s - Massachusetts S Corporation Excise Return

General Information

◗ 1.83% on net income subject to tax if total re-

Major 2012

the excise and each of the C corporations is not

ceipts are $6 million or more, but less than $9 mil-

taxable in Massachusetts, the S corporations are

lion; or

not required to file Form 355U. (Note that in the

Tax Law Changes

latter cases, Form 355U would be required irre-

◗ 2.75% on net income subject to tax if total re-

spective as to whether the S corporations were li-

ceipts are $9 million or more.

There are several changes that apply to corporate

able for the income measure of the excise if one or

taxpayers for tax year 2012.

To determine if an S corporation is liable for the

more of the C corporations were subject to Mass-

income measure of the corporate excise, complete

The tax rate for S corporation qualified taxable in-

achusetts tax). In any case where one or more S

Massachusetts Schedule S, lines 1 through 17. If

come and passive income has been reduced from

corporations that are members of a combined

line 17 of Schedule S is at least $6 million, an in-

8.25% to 8.00%.

group are not required to file Form 355U, such

come measure of corporation excise will be due.

members are also not required to complete Form

If the S corporation has income taxable in Mass-

If line 17 of Schedule S is less than $6 million,

355S, Schedule E.

achusetts of $6 million or more but less than $9

Schedule E is not required. If an S corporation and

million, the income measure rate has been reduced

The non-income measure of excise for S corpora-

any other entity share common ownership and are

from 1.97% to 1.83%.

tions that are members of a combined group is still

engaged in a unitary business, then the total re-

determined on a separate company basis but for

If the S corporation has income taxable in Mass-

ceipts less inter-company transactions of all such

tax years beginning on or after January 1, 2011

achusetts of $9 million or more, the income mea-

entities must be combined according to the rules

this is calculated on schedules attached to the

sure rate has been reduced from 2.95% to 2.75%.

of Regulation 830 CMR 62.17A.1(11)(e) and (f),

Form 355U unless the S corporation’s separate

to determine the dollar amount of such S corpora-

(U.S.) taxable year ends at a different time than the

Which S

tion’s total receipts. “Total receipts” means gross

taxable year of the combined report. An S corpo-

receipts or sales, less returns and allowances, and

ration that pays both the income and non-income

includes dividends, interest, royalties, capital gain

Corporations Must

measure of excise with Form 355U submits Form

net income, rental income and all other income.

355S as an informational return, attaching Sched-

File Electronically?

If an S corporation that is liable for the income

ules S and SK-1, although no additional tax is due

measure is not part of a combined group (see be-

with that filing. See the instructions for Registra-

low), it must complete Massachusetts Schedule E

tion Information, line 4, for additional information.

S corporations that have total revenues of $100,000

with Form 355S and must complete a pro-forma

or more must file electronically. In addition, an S

U.S. 1120 which must be available upon request.

Who Must File

corporation must file electronically unless all of its

shareholders are resident individuals. An S corpo-

Requirement to File

and Pay Corporate

ration must also file electronically if it is withhold-

ing on a shareholder’s distributive share or if it

a Combined Report

received distributive share upon which a lower-tier

Excise?

entity has paid withholding or estimated taxes. For

An S corporation that is doing business in the state

more information about the E-File mandates, see

The purpose of the corporate excise is to require

is subject to combined reporting within the mean-

TIRs 04-30, 05-22 and 09-18.

payment for the right granted by the laws of the

ing of Ch. 63, sec.32B, when it is engaged in a uni-

Commonwealth to exist as a corporation and for

tary business with one or more other corporations,

How Is

the enjoyment under the protection of the Com-

including one or more S corporations. In such

monwealth’s laws of the powers, rights, privileges

cases, if the S corporation is liable for an income

S Corporation

and immunities derived by reason of the corporate

measure of excise, it is required to be included in a

form of existence and operation. The corporate ex-

combined report, and is to compute its net income

Income Taxed?

cise is due and payable when any of the following

subject to tax and its income measure along with

conditions are met:

the other members of the group on Form 355U.

◗ the corporation actually does business within

Entities that are S corporations for federal purposes

Further, even where an S corporation is not itself li-

are S corporations for Massachusetts purposes,

the Commonwealth;

able for an income measure of excise, it is required

except that Massachusetts security corporations

to include its income in a combined report if any

◗ the corporation exercises its charter within the

and public utility corporations cannot be S corpo-

member of the combined group is a C corporation

Commonwealth;

rations. Items of S corporation income, loss, and

that is subject to Massachusetts tax.

◗ the corporation owns or uses any part of its

deduction are passed through the S corporation

Where one or more S corporations that are taxable

capital, plant or other property in the Common-

to the shareholders, and reported and taxed on

in Massachusetts are members of a combined

wealth; or

their return. S corporations are liable for the non-

group that is composed entirely of S corporations

income measure of the corporate excise, and for

◗ the corporation owns and/or rents real or tangi-

and the S corporations are not liable for the income

the income measure of the corporate excise on any

ble personal property as a lessor in Massachusetts

measure of excise, the S corporations are not re-

income that is taxable to the S corporation feder-

even without having a usual place of business here.

quired to file Form 355U. Further, where one or

ally. S corporations owe at least the minimum tax.

Massachusetts S corporations other than Financial

more S corporations that are taxable in Massachu-

S corporations with total receipts of $6 million or

Institution S corporations must file Form 355S

setts are members of a combined group that is

more are liable for the income measure of the cor-

with Schedule S and one Schedule SK-1 for each

composed entirely of one or more S corporations

porate excise at the following rates:

resident and nonresident shareholder. Schedule S

and one or more C corporations and the S corpo-

must be completed to report the S corporation’s

rations are not liable for the income measure of

Form 355s - Massachusetts S Corporation Excise Return - 2012 Page 3

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