​ 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?
   
   
8. 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?
   
   
9. 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?
   
   
10. Is an electing tax-option (S) corporation required to make pass-through withholding tax payments for nonresident shareholders?
    
    
11. If an electing tax-option (S) corporation made withholding tax payments for a nonresident shareholder, how does the withholding get refunded?
    
    
12. 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?
    
    

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?

   No, payments must be made separately by the shareholders and their tax-option (S) corporation. The department will not transfer payments between an account of an individual and an account of a corporation. Shareholders and tax-option (S) corporations must file their respective Wisconsin income tax returns to receive a refund of their overpayments.

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)?

   Yes, the tax-option (S) corporation may submit a written request to move pass-through withholding payments to the entity-level income tax account if the payments were made by the same entity. Written requests may be submitted to dorincomepte@wisconsin.gov.

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)?

   Yes, the tax-option (S) corporation may submit a written request to move payments from the entity-level tax income tax account to the entity's pass-through withholding account if the payments were made by the same entity. Written requests may be submitted to dorincomepte@wisconsin.gov.

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?

   Yes, overpayment of estimated taxes for the economic development surcharge or entity-level tax liability may be used to offset tax liability from either tax.

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?

   Yes, an extension of time to file does not extend a deadline to pay an amount due. A tax-option (S) corporation must pay any amount due by the unextended due date to avoid interest charges. For information on submitting a payment, visit the department's Make a Payment web page.

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

   Yes, except for taxable years beginning in 2018, estimated tax payment requirements and underpayment interest under secs. 71.29 and 71.84, Wis. Stats., apply.

   For information on submitting a payment, visit the department's Make a Payment web page.

7. How does a tax-option (S) corporation make a payment?

   For information on submitting a payment, visit the department's Make a Payment web page.

8. 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?
   • For taxable year 2018, underpayment interest does not apply to an electing tax-option (S) corporation. See sec. 71.365(4m)(d)4., Wis. Stats.
   • For taxable year 2019, an electing tax-option (S) corporation is exempt from underpayment interest if all of the following conditions are met:
   • The electing tax-option (S) corporation had zero income or franchise tax liability in the 2018 taxable year,
   • The 2018 taxable year was 12 months, and
   • The electing tax-option (S) corporation's 2019 Wisconsin net income is less than $250,000.
     
     Note: If the tax-option (S) corporation's 2019 Wisconsin net income is $250,000 or greater, the tax-option (S) corporation must make estimated tax payments according to sec. 71.29(10), Wis. Stats.
     
     
   • For taxable years beginning on or after January 1, 2020, an electing tax-option (S) corporation is exempt from underpayment interest if both of the following conditions are met:
     
     
     • The preceding taxable year was 12 months and
     • The tax-option (S) corporation had zero income or franchise tax liability for the preceding taxable year, regardless of the amount of its Wisconsin net income in the current taxable year.
       
       Note: If the tax-option (S) corporation does not meet the two conditions listed above, then the tax-option (S) corporation must make estimated payments according to sec. 71.29(9), Wis. Stats.
       
       
9. 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?

   The interest rate may be 12 percent or 18 percent as provided in secs. 71.82 and 71.84, Wis. Stats. See Part II of Form U for more information.

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

    No, according to sec. 71.775(3)(a)4., Wis. Stats., an electing tax-option (S) corporation is not required to make pass-through withholding tax payments for nonresident shareholders.

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

    There are two primary methods for claiming a refund of pass-through withholding paid by an electing tax-option (S) corporation:

    • The electing tax-option (S) corporation may file a Form PW-1, Wisconsin Nonresident Income or Franchise Tax Withholding on Pass-Through Entity Income, reflecting $0 withholding tax computed in Part 2 of Form PW-1, OR
    • The shareholder(s) may file their respective Wisconsin income tax return and claim the withholding on their return.
    
    
12. 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?

    No. The tax-option (S) corporation may report the nonresident entertainer withholding paid by another person on its behalf using one of the two methods below, regardless of whether the corporation makes an election under sec. 71.365(4m)(a), Wis. Stats.

    • As withholding on Line 13 of Form 5S, or
    • As a Form WT-11 withholding payment made on the entity's behalf on Line 4 of Form PW-1
    
    

Applicable Laws and Rules

This document provides statements or interpretations of the following laws and regulations enacted as of November 10, 2023: secs. 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 this date, new administrative rules, and court decisions may change the interpretations in this document. Guidance issued prior to this date, that is contrary to the information in this document is superseded by this document, according to sec. 73.16(2)(a), Wis. Stats.

The department welcomes your input on our guidance. Submit comments on this guidance document.

Guidance Document Number: 100188

November 10​, 2023