Pass-Through Entity-Level Tax: Tax-Option (S) Corporation Tax Payments and Transferability Questions

This is a proposed guidance document. The document has been submitted to the Legislative Reference Bureau for publication in the Administrative Register for public comment as provided by sec. 227.112(1), Wis. Stats.

Effective for taxable years beginning on or after January 1, 2018

  1. Can the tax-option (S) corporation get credit for estimated tax payments made by its shareholders, or vice versa depending on whether an election is made?

  2. Can an electing tax-option (S) corporation transfer payments from the entity's pass-through withholding account (Form PW-ES payments) to the entity-level tax account (Form Corp-ES payments)?

  3. Can an electing tax-option (S) corporation transfer payments from the entity-level tax account (Form Corp-ES payments) to the entity's pass-through withholding account (Form PW-ES payments)?

  4. Can overpayment of estimated taxes for the economic development surcharge be applied to the tax-option (S) corporation's tax liability resulting from the entity-level tax election and vice versa?

  5. Is an electing tax-option (S) corporation required to pay the entity-level tax by the unextended due date of its return (Form 5S) if the tax-option (S) corporation is filing under an extension?

  6. Is an electing tax-option (S) corporation required to make quarterly estimated tax payments?

  7. How does a tax-option (S) corporation make a payment if there is an amount due with the return?

  8. How does a tax-option (S) corporation make a payment for an amount due on an amended return?

  9. In the first year a tax-option (S) corporation makes an election to pay tax at the entity level, is the corporation subject to underpayment interest on late estimated tax payments even if the prior year Wisconsin tax liability for the corporation was zero?

  10. If an electing tax-option (S) corporation has a tax liability and does not pay the full amount of taxes due by the original due date of the entity's Wisconsin tax return, what interest rate will apply?

  11. Is an electing tax-option (S) corporation required to make pass-through withholding tax payments for nonresident shareholders?

  12. If an electing tax-option (S) corporation made withholding tax payments for a nonresident shareholder, how does the withholding get refunded?

  13. Does the election to be taxed at the entity level under sec. 71.365(4m)(a), Wis. Stats., change how the tax-option (S) corporation reports its nonresident entertainer withholding paid by another person on its behalf?


Applicable Laws and Rules

This document provides statements or interpretations of the following laws and regulations in effect as of February 10, 2020: Sections 71.20, 71.29, 71.365, 71.775, 71.80, 71.82, 71.84 and 77.96, Wis. Stats., and sec. Tax 1.12, Wis. Adm. Code.

Laws enacted and in effect after February 10, 2020, new administrative rules, and court decisions may change the interpretations in this document. Guidance issued prior to February 10, 2020, that is contrary to the information in this document is superseded by this document, pursuant to sec. 73.16(2)(a), Wis. Stats.

FOR QUESTIONS OR COMMENTS CONTACT:

MS 5-77
WISCONSIN DEPARTMENT OF REVENUE
Customer Service Bureau
PO Box 8949
Madison, WI 53708-8949
Phone: (608) 266-2772
Fax: (608) 267-1030
Email additional questions to DORIncome@wisconsin.gov

Guidance Document Number: 100188

February 10, 2020