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Is there a new tax on pass-through entities for Tax Year 2022 and thereafter?
SB 151 (2023 Regular Legislative Session) creates 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.
What is the difference between this elective pass-through entity tax and the tax I already pay on my PTE-100?
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.
Do I need to make an election prior to filing the Entity Pass through return?
No. Effective September 1, 2023 and forward, the filing of the tax return will indicate the election. Once your election has been indicated by your filing, it is irrevocable for that tax year.
What is the due date for the election?
For calendar year taxpayers, the election is due on or before March 15th. Under Administrative Notice 2023-01, a special rule applies to Tax Year 2022 that requires the election be made between June 8 and September 15, 2023.
What is the due date for the return?
For calendar year taxpayers, the return is due on or before March 15th and any allowable extension is through September 15th. Under Administrative Notice 2023-01, a special rule applies to Tax Year 2022 that requires the return be filed between June 8 and September 15, 2023.
When is payment due for Tax Year 2022?
An extension of time has been granted until April 18, 2023 to pay the entity level tax due as a nonresident withholding payment. However, this extension requires that the pass-through entity receives agreement from the partners to later apply the nonresident withholding tax payments as entity level tax payments and certifies the same upon the filing of the entity level tax return. Payment can be made on our web portal at MyTaxes.WVTax.Gov.
If a nonresident withholding payment is not made by April 18, 2023 by agreement of all partners, a conditional extension of time has been granted until September 15, 2023. This conditional extension of time requires that all pass-through entity owners have paid their income tax due by April 18, 2023 without regard to the expected tax credit for the entity level tax.
When are estimated payments due?
For calendar year taxpayers, estimated payments are due under the following schedule: