Elective Pass Through Entity Tax

Legislative Changes

• Information About the Pass Through Entity Tax (SB 151)

SB 151 (2023 Regular Legislative Session) created an Elective Pass Through Entity Tax retroactive to Tax Year 2022. This new Pass Through Entity Tax is meant to comply with the provisions of IRS Notice 2020-75.

The Elective Pass Through Entity Tax is a tax imposed directly upon the income of the entity, defined as the resident pass through entity owners’ income plus the apportioned nonresident pass through entity owners’ income. The Pass Through Entity Tax is filed and paid instead of the nonresident withholding due with PTE-100.

Any entity that elects to pay the Pass Through Entity Tax will no longer be obligated to file the PTE-100.

For calendar year taxpayers, the election is due on or before March 15th.

Forms and Filing

To request an Elective Pass Through Entity Account, taxpayers should:

1. Log on to their MyTaxes account and,
2. Under their Pass Through Entity account, select the option that says "Request Elective Pass Through".

After answering the appropriate questions, the EPT account will be created instantly. You will then be able to file, pay, and ask EPT questions through MyTaxes. Following this change, the filing of an Elective Pass Through Entity Return will be treated as the taxpayer election for the tax year.

Reminder: For tax year 2023 and forward you will not need to make an election prior to filing a tax return. The filing of a PTE return or an EPT return will signify your election.

EPT-100 Elective Pass Through Entity Return

For calendar year taxpayers, the EPT-100 return is due on or before March 15th or any allowable extension is through September 15th. The EPT-100 can only be filed online via MyTaxes.

• EPT-100 Instructions
• EPT-100 Import Spreadsheet

EK-1 Schedule of WV Partner/Shareholder/Member/Beneficiary Elective Pass Through Entity Income Credit

Every S Corporation or Partnership required to pay tax on Non-Resident shareholders/partners must provide the EK-1 to each shareholder/partner on or before the date it files its EPT-100 West Virginia Elective Pass Through Entity Tax Return.

The S Corporation or Partnership is required to submit all income information as it relates to the individual shareholders/partners of the S Corporation or Partnership on the Partner Reports when filing their annual Elective Pass Through Entity Tax return.

It is important to note that the amount reported on the EK-1 should not be reported as withholding for the partner/shareholder. This is a credit and should be reported as such. Reporting it as withholding will delay processing of the returns.

Individual taxpayers must enclose the EK-1 supplied by the S Corporation or Partnership when filing their IT-140 West Virginia Personal Income Tax Return.

Schedule ITP Elective Pass Through Entity Credit for Income Tax Paid to Another State

In addition to the tax credits listed on the EPT-100 Tax Credits Tab, the Elective Pass Through Entity may also claim income taxes paid to another state. This only applies to taxes paid by the electing entity, not their partners.

For each state to which tax is paid, the electing entity should complete a Schedule ITP. The Schedule ITP should be filed with the EPT-100 as an attachment. The total amount of all ITP credit should be listed on the EPT-100 Tax Credit page.

Partners receiving a portion of this credit will need a Schedule ITP showing the amount of credit distributed to them as supporting documentation for their EK-1. For Tax Year 2023, they will need to submit this Schedule and an EK-1 with their individual income tax return for Tax. Income tax paid to another state can only be claimed by an elective pass through entity on the EPT-100 or an individual filing the IT-140.

Payments

Payments should be made to the account associated with the return you intend to file. Taxpayers who haven’t decided which return they will be filing should make estimated payments to their PTE account.

For calendar year taxpayers, estimated payments are due under the following schedule:

• For Tax Year 2024 and beyond:
• First Quarter: April 15th
• Second Quarter: June 15th
• Third Quarter: September 15th
• Fourth Quarter: December 15th

Frequently Asked Questions

How can I create an Elective Pass Through Entity Tax Account?

You must first have a regular Pass Through Entity Account. Then if you wish to make the election, use the “Request Elective Pass Through” link on your Pass Through Entity Account on MyTaxes. After you complete the request, the new account should appear in a few minutes.

If you are a new business, a Pass Through Entity account will be set for you based on your Business Registration application. Once the account has been added to MyTaxes, you will be able use the Request Elective Pass Through link on MyTaxes.

How do I file an extension for Tax Year 2023?

Any partnership or S corporation needing an extension of time to file for the EPT-100 must file Form PTE-100EXT Extension of Time to File Information Returns, on or before the due date of the return .

Any partnership granted an extension of time to file their federal return is granted the same extension of time to file their West Virginia return.

Be sure to attach a copy of your federal extension (Federal Form 7004) to each tax return to avoid any penalty for late filing.

An extension of time for filing does not extend the time for payment.

A state extension of time to file may be obtained, even if a federal extension has not been requested, provided Form PTE-100EXT is filed prior to the due date of the West Virginia return.

You may also log into your MyTaxes EPT account to make an estimated payment and request an extension.

Can I revoke my election to file the EPT-100?

The filing of a return indicates a taxpayer’s election for the tax year. Once a PTE-100 or EPT-100 has been filed, the election cannot be revoked for that tax year.

What third-party vendors can I use to file my EPT-100?

Currently, the EPT-100 is available for filing only on MyTaxes. Please log in to your MyTaxes EPT account in order to file. It is anticipated that tax year 2024 returns will be available through software vendors.

How can I have my CPA file for me? (Third-Party Account Access)

MyTaxes offers and encourages a feature that allows a taxpayer to grant a third party (tax preparer, accountant, etc.) access to one or more of their accounts. The taxpayer will also determine the type of access a third party is granted (File and Pay, File only, Pay only or View only).

A third party, that has been granted access by multiple taxpayers, will only require one single logon to access the various accounts for their multiple clients.

Submitting a request for third party access will send your username and email information to the first party, so access may be granted to your logon.

The following provides instructions for a third party to request access to a client's accounts:

1. Select Manage My Profile
2. Select the More tab
3. Select the Request Third Party Access link, in the Third Party Access section
4. Select Id Type and enter Taxpayer Id
5. Submit

Note: If the customer indicated on our request is found, they will be sent a notice in MyTaxes asking them to grant your logon third party access. Once third party access is granted, you will receive a notice indicating the accounts to which your third party has been granted access, including the access type.

How will the credit flow through to individuals in a tiered partnership?

Tiered partnerships are eligible to file the EPT election. After an EPT Return has been filed and any amounts due paid, the electing entity should issue an EK-1 to their partners. EK-1 should not report withholding of the partner. EK-1 is to report the credit available to the partner/shareholder which was created because of the withholding. Individual partners will need to include the EK-1 with their IT-140 when they file to claim the income credit. The income credit is claimed on the Recap Schedule.

Taxpayers should remember that only individuals are eligible to take an EPT credit.

How should the EK-1 be issued when there are trust beneficiaries eligible to take the credit but their trust is not required to file a return?

The EPT entity will issue the EK-1 to the trust who would be listed on the EK-1 already. The trust would then provide EK-1's to the beneficiaries who would receive their percentage of the credit.

When the entity listed in “Organization Name” submits the EK-1 for information purposes, the entity must check the “From Partner Report” box and include the “PARTNER/SHAREHOLDER/MEMBER/BENEFICIARY” on either the Resident partner Report or Nonresident Partner Report.

Do nonresident shareholders need to file individual WV returns? Is the Nonresident Composite (IT-140NRC) still needed?

An electing PTE may not file a composite return on behalf of its nonresident owners. If a nonresident owner’s only West Virginia source income is through an electing PTE that fully pays the tax, that nonresident owner is not required to file a West Virginia nonresident return, but may do so at the election of the nonresident owner.

What if my question is not answered here?

If your question is not answered here, please log in to MyTaxes and ask the question via your EPT account, or contact Taxpayer Services toll-free at 1 (800) 982-8297 or (304) 558-3333 or via email at TaxHelp@WV.Gov.