ADMINISTRATIVE NOTICE 91-20 SUBJECT: Personal Income Tax -- Requirement to Withhold Tax from Distributions of West Virginia Source Income by Pass-through Entities to Nonresidents. Administrative Notice 91-08 issued March 20, 1991, delayed implementation of W.Va. Code § 11-21-71a until July 1, 1991. Notice is hereby given that Administrative Notice 91-08 is superseded by this Administrative Notice which further delays implementation of section 11-21-71a until January 1, 1992. Section 11-21-71a requires partnerships, S corporations and trusts to withhold West Virginia income tax from distributions of West Virginia source income to nonresidents. Several problems with the language of section 11-21-71a were identified by staff while drafting administrative regulations for that section. Due to these problems, implementation of section 11-21-71a was delayed until after remedial legislation could be enacted by the Legislature during its 1991 Regular Session. Although remedial legislation (H.B. 2967) passed the House of Delegates, it was on second reading in the Senate when the 60 day Regular Session ended on March 9, 1991, as provided in the West Virginia Constitution. Administrative Notice 91-08 advised taxpayers and tax practitioners that compliance with section 11-21-71a withholding requirements will be required on West Virginia source income earned after June 30, 1991, that is passed through to nonresidents and that administrative regulations will be drafted incorporating, where possible, the policy decisions reflected in H.B. 2967. Upon further review, it is determined that remedial legislation is still needed before section 11-21-71a can be implemented. Accordingly, compliance with section 11-21-71a will not be enforced for income earned prior to January 1, 1992. If a pass-through entity has withheld West Virginia income tax from distributions to nonresident distributees, in compliance with Administrative Notice 91-08, that pass-through entity may either distribute the amount withheld from its nonresident distributees or remit the amount withheld to the Tax Commissioner as provided in section 11-21-71a. Legislation amending section 11-21-71a will be introduced when the Legislature begins its next Regular Session on January 8, 1992. This delay in implementing section 11-21-71a affects only the pass-through entities. It does not affect the duty of nonresident individuals or C corporations receiving West Virginia source taxable income to file timely West Virginia Nonresident Income Tax Returns (IT-140NR) or West Virginia Corporation Net Income Tax Returns (WV-120) and pay timely any income taxes due the State of West Virginia. Additionally, this delay does not affect the duty of partnerships, S corporations or trusts to file timely information returns under the West Virginia Personal Income Tax Act (form IT-165 (partnerships) or IT-141 (fiduciary return) or the West Virginia Corporation Net Income Tax Act (form WV-120S (Scorporations)).
For additional information or tax forms, please contact our Taxpayer Services Division. L. Frederick Williams, Jr. Tax Commissioner/Secretary West Virginia Department of Tax and Revenue By: Alan Mierke, Assistant Tax Commissioner and Assistant Secretary West Virginia Department of Tax and Revenue Issued: November 8, 1991 West Virginia Department of Tax and Revenue Taxpayer Services Division P.O. Box 3784 Charleston, West Virginia 25337-3784 Telephone: (304) 348-3333 or Toll free within West Virginia 1-800-642-9016 To order forms or publications call (304) 348-2068 or Toll free within W.Va. 1-800-422-2075