Fill - Free fillable Form 2016: C PA-20S/PA-65 1606010054 PLEASE PRINT. USE (Pennsylvania) PDF form

Part IV. Total PA S Corporation or Partnership Income (Loss)

10 Total Income (Loss) per Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

11 Total Reportable Income (Loss). Add Lines 1e and 9 or add Lines 2h and 9. . . . . . . . . . . . . . . . 11

12 Total Nontaxable/Nonreportable Income (Loss). Subtract Line 11 from Line 10. . . . . . . . . 12

Part V. Pass Through Credits - See the PA-20S/PA-65 instructions

13a Total Other Credits. Submit PA-20S/PA-65 Schedule OC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13a

13b Resident Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13b

14a PA 2016 Quarterly Tax Withholding Payments/Extension Payment for Nonresident Owners . . . . . . 14a

14b Final Payment of Nonresident Withholding Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14b

14c Total PA Income Tax Withheld. Add Lines 14a and 14b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14c

Part VI. Distributions - See the PA-20S/PA-65 instructions – Partnerships Only

15 Distributions of Cash, Marketable Securities, and Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

16 Guaranteed Payments for Capital or Other Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

17 All Other Guaranteed Payments for Services Rendered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

18 Guaranteed Payments to Retired Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Distributions - See the PA-20S/PA-65 instructions – PA S Corporations Only

19 Distributions from PA Accumulated Adjustments Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

20 Distributions of Cash, Marketable Securities, and Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

LOSS

FEIN

Business Name

Page 2 of 3

Part VII. Other Information – See the PA-20S/PA-65 instructions for each line

01 During the entity’s tax year, did the entity own any interest in another partnership or in any foreign entity that was

disregarded as an entity separate from its owner under federal regulations Sections 301.7701-2 and 301.7701-3?

If yes, submit statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

02 Does the entity have any tax-exempt partners/members/shareholders? If yes, submit statement . . . . . . . . . . . . . . . . . 2

03 Does the entity have any foreign partners/members/shareholders (outside the U.S.)? If yes, submit statement . . . . . 3

04 Was there a distribution of property or a transfer (e.g., by sale or death) of a partner/member interest during the

tax year? (Partnership only) If yes, submit statement

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

05 Has the federal government changed taxable income as originally reported for any prior period? If yes, indicate

period on supplemental statement, and submit final IRS determination paperwork . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

06 Does the entity have any foreign operations or ownership in a foreign bank account? If yes, submit statement . . . . . 6

07 Is this entity involved in a reportable transaction, listed transaction, or registered tax shelter within this return?

If yes, submit statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

08 Does the entity filing as a partnership have other partnerships as partners? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

09 Has the entity sold any tax credits? If yes, submit statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

10 Has the entity changed its method of accounting for federal income tax purposes during this tax year? If yes,

submit federal Form 3115 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

11 Has the entity entered into any like-kind exchanges under IRC Section 1031? If yes, submit federal Form 8824 . . . 11

12 PA Apportionment as reported on PA-20S/PA-65 Schedule H-Corp . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Yes or No

●

PA-20S/PA-65

PAGE 2 of 3

(

09-16) (FI)

2016

1606110052

START

➜

9 DIGIT - NO DASH

If a loss, enter "0"

Reset Entire Form

1 Balance at the beginning of the taxable year . . . . .

If AAA is negative, fill in the oval

2 Total reportable income from Part IV, Line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

3 Other additions. Submit an itemized statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

4 Loss from Part IV, Line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

5 Other reductions. Submit an itemized statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

6 Sum of Lines 1 through 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

7 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

8 Balance at taxable year-end. Subtract Line 7 from Line 6

. . . . . . . . . . . . . . . . . . . . . . . .

Part VIII. PA S Corporations Only - Accumulated Adjustments Account (AAA)

and Accumulated Earnings and Profits (AE&P)

Part IX. Ownership in Pass Through Entities

If the entity received income (loss) from an S corporation, partnership, estate or trust, limited liability company or any other pass through entity

including a qualified subchapter S subsidiary (QSSS), list below the FEIN, name and address for each entity. If additional space is needed,

submit a separate statement. If the income (loss) is from a QSSS, enter “yes” in the QSSS box.

FEIN

Business Name

PA-20S/PA-65

PAGE 3 of 3

(09-16) (FI)

2016

LOSS

OSS

LOSS

OSS

QSSS NAME & ADDRESSFEIN

AAA AE&P

N/A

Part X. Signature and Verification

Under penalties of perjury, I declare I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and

belief, it is true, correct and complete. Declaration of paid preparer is based on all information of which preparer has any knowledge.

Page 3 of 3

Print/Type name of general partner, principal officer or Signature of general partner, principal officer or Date Daytime phone no.

authorized individual authorized individual

Paid Preparer’s Use Only

Print/Type preparer’s name Preparer’s signature Date Check if

self-employed

Firm’s name (or yours if self-employed) Daytime phone no.

Firms’s address

Preparer’s PTIN Firm’s FEIN

E-File Opt Out

1606210050

START

➜

9 DIGIT - NO DASH

If a loss, enter "0"

9 DIGIT - NO DASH

Please Sign Your Return after printing.

MM/DD/YY

Please Sign Your Return after printing.

9 DIGIT - NO DASH

PRINT FORM

RETURN TO FORM

Reset Entire Form

THIS PAGE DOES NOT PRINT

5www.revenue.pa.gov

Pennsylvania Department of Revenue 2016

Instructions for Form PA-20S/PA-65

PA S Corporation/Partnership Information Return

orm PA-20S/PA-65 (09-16)

Tax year changes for the PA-20S/PA-

65 Information Return, schedules and

forms include:

The Capital Stock/Foreign Franchise

Tax has expired for tax years beginning

after December 31, 2015. References

to the capital stock and foreign fran-

chise taxes have been removed from

all tax forms and instructions.

PA-20S/PA-65, Schedule H-Corp

Effective for tax years beginning after

12/31/15, the capital stock/foreign fran-

chise tax has expired. The PA-20S/

PA-65 Schedule H-Corp has been up-

dated to remove the property and pay-

roll factors.

PA-65 Corp, Directory of Corporate

Partners

A “Final Return” oval has been added

in the upper right legend where the de-

mographic fields are located for 100%

corporate owned entities filing a final

PA-65 Corp, Directory of Corporate

Partners return.

Schedule T

With the passing of Act 84, retroactive

to January 1, 2016, the Pennsylvania

personal income tax applies to cash

prizes from the Pennsylvania Lottery.

Previously only gambling and lottery

winnings from sources other than the

Pennsylvania Lottery were taxable.

Schedule OC

Coal Refuse Energy and

Reclamation Tax Credit:

This new tax credit is designed to in-

centivize eligible facilities that generate

electricity in the commonwealth to use

coal refuse for power generation, con-

trol acid gasses for emission control

and use ash produced by the facility to

reclaim mining-affected sites. Credits

may be awarded at a rate of $4 per

2,000 pounds of qualified refuse

capped at 22.2 percent of the available

budget allocation per fiscal year. The

allocation is $7.5 million for the 2016-

17 fiscal year and $10 million each fis-

cal year thereafter.

PA-20S/PA-65, Schedule M and

Schedule D

Effective September 11, 2016, Section

1033 of the Internal Revenue Code

shall be applicable to the personal in-

come tax. This federal provision allows

a taxpayer to acquire replacement

property and make an election to defer

recognition of gain following an invol-

untary conversion, for example when

the original property is destroyed by

fire or natural disaster.

Internet. Visit the department’s web-

site at www.revenue.pa.gov to:

● Download forms, instructions

and publications;

● Research tax questions by us-

ing the Online Customer Service

Center; or

● Search publications online by topic

or keyword.

If you do not have Internet access, visit

your local public library or district office.

Email. Forms for tax year 2011

through the current year can be

found on the department’s website

at www.revenue.pa.gov. Requests

for forms prior to 2011 should be

sent to ra-forms@pa.gov.

Written Requests. Send written re-

quests for forms to:

PA DEPARTMENT OF REVENUE

TAX FORM SERVICE UNIT

1854 BROOKWOOD ST

HARRISBURG PA 17104-2244

By phone and in person. You can

order forms and publications by calling

the department’s automated, 24-hour,

toll-free forms ordering message serv-

ice at 1-800-362-2050.

You can also get most forms and pub-

lications at your nearest district office.

Please call ahead to verify a district of-

fice’s address and services or visit

www.revenue.pa.gov for more informa-

tion. Taxpayer assistance hours are

8:30 a.m. to 5:00 p.m.

Copies of Previously Filed Returns

To receive copies of previously filed tax

returns, complete and sign Form REV-

467, Authorization for Release of Tax

Records, and send it to:

PA DEPARTMENT OF REVENUE

BUREAU OF

ADMINISTRATIVE SERVICES

12TH FLOOR

STRAWBERRY SQUARE

HARRISBURG PA 17128-1200

You may also fax the request to

717-783-4355. If someone other than

the taxpayer is making the request,

Form REV-677, Power of Attorney and

Declaration of Representative, must be

submitted with the request for the

release of the tax records. If a taxpayer

is deceased, sufficient evidence to es-

tablish authority to act for the tax-

payer's estate must be provided to the

department.

Please allow four to six weeks for a

request to be processed.

By law (42 U.S.C. §405(c)(2)(C)(i); 61

Pa. Code §117.16), the department

has the authority to use the Social Se-

curity number (SSN) to administer the

Pennsylvania personal income tax and

other Commonwealth of Pennsylvania

tax laws.

The department uses the SSN to iden-

tify individual taxpayers and verify their

HOW TO GET FORMS

AND PUBLICATIONS

WHAT’S NEW

PRIVACY NOTIFICATION

6 www.revenue.pa.gov

incomes. The department also uses

the SSN to administer a number of tax-

ffset and child-support programs that

ederal and Pennsylvania laws require.

The commonwealth may also use the

SSN in exchange-of-tax information

agreements with governmental author-

ties. Except for official purposes,

Pennsylvania law prohibits the com-

monwealth from disclosing information

that individuals provide on income tax

returns, including the SSN(s).

PURPOSE OF FORM

The PA-20S/PA-65 form is an informa-

tion return and personal income tax fil-

ing requirement used to report the

income (losses), deductions, credits,

etc., from the operation of foreign or

domestic PA S corporations, partner-

ships or limited liability companies

classified as partnerships or S corpo-

rations for federal income tax purposes

(further referred to as “entity” or “enti-

ties”).

These entities do not pay tax on their

income but “pass through” any profits

or losses to their owners (share-

holders, partners or members). When

preparing the PA-20S/PA-65 PA S

Corporation/Partnership Information

Return, it is best to start with the com-

pleted federal Form 1120S or federal

Form 1065 and then proceed to the

Pennsylvania schedules.

The information on the PA-20S/

PA-65 Information Return has no

relevance to C corporations except if a

credit from PA-20S/PA-65 Schedule

OC has been allocated on the PA

Schedule RK-1, Line 9 or NRK-1, Line

7. Otherwise, the only information rel-

evant to a corporate taxpayer is the

PA-20S/PA-65 Schedule H-Corp for

calculating CNI tax.

Act 52 of 2013 authorizes the assess-

ment of partnerships and PA S corpo-

rations at the entity level for

understating income by more than $1

million. While the provision does not

apply to publicly traded partnerships, it

does apply to partnerships with 11 or

more partners; partnerships with at

least one partner that is a corporation,

limited liability company, partnership, S

orporation or trust; PA S corporations

with 11 or more shareholders; or any

partnership or PA S corporation that

elects to be subject to the provision.

IMPORTANT: Pass-through en-

ities that fail to maintain accu-

rate lists of owner/beneficiary names,

addresses, and tax identification num-

bers now subject the general partner,

tax matters partner, corporate officer

and/or trustee of the partnership, S cor-

poration, trust or estate to responsible

party assessments holding them indi-

vidually liable for tax, penalty, and in-

terest owed by the entity.

Every domestic or foreign PA S corpo-

ration (72 P.S. §7330.1), partnership

(72 P.S. §7335(c)) or entity formed as

a limited liability company that is clas-

sified as a partnership or S corporation

for federal income tax purposes must

file the PA-20S/PA-65 Information Re-

turn if any of the following apply:

1. During the taxable year, the part-

nership, PA S corporation or its

qualified subchapter S subsidiary

earned, received or acquired any

gross taxable income (loss) alloca-

ble or apportionable to Pennsylva-

nia, regardless of the amount of its

income (loss) and whether or not

the income was distributed; or

2. During the taxable year, the PA S

corporation had at least one share-

holder that was a Pennsylvania

resident individual or part-year res-

ident estate, trust or disregarded

entity owned by a resident individ-

ual or part-year resident; or

3. The partnership, at year-end, had

at least one partner that was a

Pennsylvania resident individual,

estate, trust or disregarded entity

owned by a resident individual.

A $250 penalty is imposed for failure

to file the PA-20S/PA-65. In addition, a

$250 penalty is imposed for each

missing RK-1, NRK-1 and Schedule

H-Corp.

IMPORTANT: All income for an

S corporation must be propor-

tionally distributed and cannot be

specifically allocated.

Inactive S Corporations and

Partnerships

If the PA S corporation or partnership

was inactive during the entire tax re-

orting period, the entity must still

submit the PA-20S/PA-65 Information

Return and fill in the Inactive oval.

chedules and supporting documenta-

tion do not need to be included with the

PA-20S/PA-65 Information Return.

In many instances, Pennsylvania per-

sonal income tax law and regulations

differ from federal tax laws. This is

especially true with regard to federal

elections concerning the timing of in-

come and expense items.

Taxpayers should not use federal elec-

tions to determine Pennsylvania per-

sonal income tax income (loss).

PA S corporations, partnerships and

limited liability companies classified as

partnerships or S corporations for

federal income tax purposes report

income (loss) using the Pennsylvania

personal income tax rules. Pennsylva-

nia does not adopt federal rules for

purposes of personal income taxation.

Accordingly, the determination of re-

portable amounts in each personal

income tax classification may vary sig-

nificantly from the classifications and

amounts as determined for federal in-

come tax purposes.

For Pennsylvania personal income tax

purposes, read the rules for classifying

income found in the Pennsylvania Per-

sonal Income Tax Guide. The income

must be reported on the owner’s tax

return in the same classification of in-

come as it is reported to them on their

PA Schedules RK-1 and/or NRK-1

from the entity.

The entity must maintain sufficient

books and records to properly report

income (losses), expenses, credits,

deductions, and other amounts for

Pennsylvania personal income tax

purposes. A PA S corporation or part-

nership that only operates a busi-

ness, profession or farm must include

all activities and transactions to deter-

mine Part I or Part II of the PA-

20S/PA-65 Information Return,

whichever is applicable, regardless of

WHO MUST FILE

GENERAL INFORMATION

CLASSIFYING INCOME

7www.revenue.pa.gov

the name of the transaction and re-

gardless of how it reports for federal

ncome tax purposes. Use PA-

20S/PA-65 Schedule M to classify

federal income (loss) for Pennsylva-

nia personal income tax

purposes. Please review the PA-20S/

PA-65 Schedule M instructions on the

department’s website at

www.revenue.pa.gov.

NOTE: Pennsylvania personal

income tax law taxes resident

partners, shareholders and members

(owners) on income from sources

within and outside Pennsylvania and

taxes nonresident owners on Pennsyl-

vania-source income only.

Starting with tax years beginning on or

after Jan. 1, 2006, all corporations, in-

cluding those incorporated in a state

other than Pennsylvania, with a valid

federal subchapter S election are con-

sidered Pennsylvania S corporations

and are no longer required to file the

Pennsylvania S Corporation Election

and Shareholders’ Consent form (REV-

1640) in order to be a Pennsylvania S

corporation. Under Act 67 of 2006, all

federal subchapter S corporations are

Pennsylvania S corporations. Act 67

also includes a provision for federal

subchapter S corporations to make an

election to not be taxed as a Pennsyl-

vania S corporation. To make this elec-

tion, the taxpayer is required to file a

completed REV-976, Election Not to be

Taxed as a Pennsylvania S Corpora-

tion on or before the due date, or ex-

tended due date, of the report for the

first period in which the election is to be

in effect.

NOTE: 72 P.S.§7301(n.1) stipu-

lates all federal S corporations

filling in Pennsylvania are automati-

cally PA S corporations.

An election to not be taxed as a PA S

corporation may not be revoked for five

years from the date it went into effect.

A revocation received within this five

ear period will be effective for the first

tax period for which the taxpayer is el-

igible to revoke the election.

lections which first went in effect in

2011 may be revoked for 2016. To

revoke the election the corporation must

send a letter signed by shareholders

holding more than one-half of the

shares of stock of the corporation on the

day on which the revocation is made.

This letter must contain the name of the

corporation, the federal employer iden-

tification number (FEIN), the PA S cor-

poration’s 10-digit Revenue ID or

seven-digit PA Account ID and the effec-

tive date of the revocation. If no effective

date is provided the revocation will be

effective for the first tax period for which

the revocation was timely submitted. In

the case of a corporation with qualified

subchapter S subsidiaries, the letter

must include the name and 10-digit

Revenue IDs, if applicable, of all quali-

fied subchapter S subsidiaries doing

business in Pennsylvania.

Mail the letter to:

PA DEPARTMENT OF REVENUE

BUREAU OF

CORPORATION TAXES

PROCESSING DIVISION

PO BOX 280705

HARRISBURG PA 17128-0705

The due date for filing the Election Not

to be Taxed as a Pennsylvania S Cor-

poration, REV-976, is the due date or

the extended due date of the PA corpo-

rate net income tax report for the first

year for which the election is to be in

effect. A revocation submitted after the

due date will be in effect for the next

tax period.

Fed/State Electronic Filing for

S Corporations and Partnerships

The department will accept original and

amended PA S Corporation/Partner-

ship Information Returns (PA-20S/PA-

65) including corresponding forms and

schedules filed through the Modern-

ized e-File (MeF) platform provided by

the IRS (also known as the Fed/State

e-File).

IMPORTANT: An amended PA-

20S/ PA-65 Information Return

iled through Fed/State e-File will only

e accepted for 2014 tax year returns

nd forward. You may not file an

amended PA-20S/PA-65 Information

Return through Fed/State e-File prior

to 2014 tax year return. See How To

Amend a PA-20S/PA-65 Information

Return prior to 2014 tax year return.

Fed/State e-File allows you to file fed-

eral and state returns together or sep-

arately. It is available through tax

preparers or computer software. When

you file using Fed/State e-file, the de-

partment sends an acknowledgement

directly to you, your tax professional or

Electronic Return Originator (ERO).

Whoever submits the tax return will re-

ceive the acknowledgement.

The PA-20S/PA-65 Information Return

can be filed through Fed/State e-File

through an approved vendor that has

tested with and been approved by the

department to offer electronic filing

in Pennsylvania. Even if a vendor is

federally approved they must also

be approved by Pennsylvania. As a

result, every year vendors must go

through a testing process for the

department's approval of their soft-

ware. When the vendors complete the

testing process, they will be listed

on Revenue’s e-Services Center at

www.doreservices.state.pa.us.

NOTE: Mandatory e-filing is re-

quired for third-party preparers

who prepare 11 or more PA-20S/PA-65

returns. The department published a

“Method of Filing” notice [43 Pa.B.

5772] for electronic filing requirements

in a Pennsylvania Bulletin on the PA

Department of Revenue website. Once

subject to this mandate, the preparer

must continue to e-file regardless of

how many returns are prepared during

a calendar year.

Tax filers may direct third party prepar-

ers to file returns in a different method

than mandated.

Electronically Filed Returns

with Attachments

When the PA-20S/PA-65 S Corpora-

tion/ Partnership Information Return is

filed through the Fed/State e-File, all

PENNSYLVANIA S

CORPORATION S STATUS

REVOCATIONS

ELECTRONIC FILING

PENNSYLVANIA S

CORPORATION S STATUS

(S ELECTIONS)

8 www.revenue.pa.gov

attachments other than the PA-

0S/PA-65 schedules must be sent in

PDF format.

Examples of other attachments to an

electronically filed PA-20S/PA-65 Infor-

mation Return may include statements

required with the PA-20S/PA-65 Infor-

mation Return; PA Schedules RK-1

and NRK-1 that a pass through entity

receives from another pass through

entity; federal Form 8824, Like-Kind

Exchanges; federal Form 3115, Appli-

cation for Change in Accounting

Method; and federal Form 7004, Appli-

cation for Automatic Extension of Time

To File.

The department will consider the tax

return incomplete if all required docu-

ments are not submitted with an elec-

tronically filed return.

IMPORTANT: Do not include the

PA-20S/PA-65 Schedules RK-1

and NRK-1 that the entity issues to its

owners as a PDF attachment. These

schedules are part of the e-File pack-

age for the PA-20S/PA-65 Information

Return.

Fed/State Electronic Filing Option

for Estimated Nonresident

Individual Quarterly

Withholding Payments

The department accepts through the

MeF Fed/State program the electronic

payment of the quarterly estimated

withholding tax for nonresident owners

filed with the PA-65ESR. The following

types of payments can be electroni-

cally transferred if filed through

Fed/State e-File program:

● Final nonresident individual tax

withholding tax “catch-up” pay-

ment submitted with the 2016 tax

year PA-20S/PA-65 Information

Return; and

● 2017 (future) estimated payments

for nonresident individual quarterly

withholding tax submitted with the

2016 tax year PA-20S/PA-65 Infor-

mation Return; and

● PA-65ESR Quarterly Estimated

Payments for nonresident individ-

uals.

Future estimated nonresident individ-

ual tax withholding payments for tax

ear 2017 will be stored in the system

as separate electronic transaction pay-

ents until the specified due date.

MPORTANT: The nonresident

ndividual quarterly withholding

payment may not be submitted through

Electronic Funds Transfer (EFT),

credit/debit cards or e-TIDES.

Payment Not Submitted with

Electronic Return

If the PA-20S/PA-65 Information

Return has been electronically submit-

ted and the nonresident withholding

was not sent at the time of electronic

submission of the return, then you

may send a paper check for the non-

resident withholding.

You may send in the PA-40 ESR

(F/C) with a check if the entity

electronically files the PA-20S/PA-65

Information Return. Submit a check or

money order made payable to the PA

Dept. of Revenue along with the PA-40

ESR (F/C). Print the entity's federal

employer identification number (FEIN)

and “2016 Final Nonresident Withhold-

ing” on the check or money order.

CAUTION: Failure to include the

PA-40 ESR (F/C) with your check

will result in a delay of processing.

Mail the payment to:

PA DEPARTMENT OF REVENUE

BUREAU OF INDIVIDUAL TAXES

PO BOX 280502

HARRISBURG PA 17128-0502

For payment by check with paper tax

return, See How To Pay.

Prior to 2014 Tax Year Return

If after filing the PA-20S/PA-65 Infor-

mation Return, the entity discovers that

an incorrect PA-20S/PA-65 tax return

has been submitted to the department

and/or has amended federal Form

1065 or 1120S or if the IRS changed or

corrected any items of income, gain or

loss previously reported, the entity

must submit an amended PA-20S/PA-

65 Information Return to the Pennsyl-

vania Department of Revenue.

Prior to the 2014 tax year return, an

amended PA S Corporation/Partner-

ship Information Return (PA-20S/PA-

65) cannot be filed through Fed/State

e-File Program.

When amending a PA-20S/PA-65

nformation Return that was originally

filed through Fed/State e-File, the

entity must:

● Obtain the paper form PA-20S/PA-

65 Information Return for the year

the entity wants to amend. Do not

submit a photocopy of your

original PA-20S/PA-65 Informa-

tion Return;

● Complete the amended return in-

cluding all schedules by entering

the corrected information and sub-

mit it with the amended PA-

20S/PA-65 Schedules RK-1 and/or

NRK-1;

● Clearly mark the “Amended Infor-

mation Return” oval on PA-20S/

PA-65 Information Return and the

“Amended Schedule” oval on the

Schedules RK-1 and/or NRK-1;

● Enter the amended amounts and

enclose a statement explaining the

reasons an amended return is

being filed. Submit only the forms

or schedules supporting the

amended amounts;

● Provide a copy of the amended

PA-20S/PA-65 Schedules RK-1

and/or NRK-1 to the partners,

shareholders or members; and

● Enclose a copy of the amended

federal Form 1120S or federal

Form 1065.

Tax Year Return 2014 and Forward

For tax years 2014 and forward, the de-

partment will accept amended PA-

20S/PA-65 Information Returns

including corresponding forms and

schedules filed through Fed/State e-File.

To file a 2014 or later amended

return through Fed/State E-File, visit

Revenue’s e-Services Center at

www.doreservices.state.pa.us.

Follow all the steps listed above under

“Prior to 2014 Tax Year Return” with

exception to the first bullet referencing

a paper return.

HOW TO PAY ELECTRONICALLY

HOW TO AMEND THE

PA-20S/PA-65

INFORMATION RETURN

9www.revenue.pa.gov

ver-Reported Income

If the entity over reported income,

failed to claim allowable credits, failed

to report allowable deductions, or

vents transpired that decreased its re-

portable Pennsylvania-taxable income,

including an IRS Report of Change, the

entity must file an amended PA-

20S/PA-65 Information Return.

The amended return must be filed

within three years of the original due

date or extended due date of the PA-

20S/PA-65 Information Return. The

amended PA-20S/PA-65 Schedules

RK-1 and/or NRK-1 must show the cor-

rected Pennsylvania-taxable income,

so the shareholders or partners can re-

quest refunds of Pennsylvania income

tax they overpaid.

In order to obtain any refunds, owners

must also file an amended Pennsylva-

nia tax return within three years of the

original due date of their return. See

How To Amend a PA-20S/PA-65 Infor-

mation Return.

Under-Reported Income

If the entity under reported inc-

ome, erroneously claimed credits or

deductions to which it was not entitled,

or events transpired that increased re-

portable Pennsylvania-taxable income,

including an IRS Report of Change, the

entity must file an amended PA-

20S/PA-65 Information Return within

30 days from the determination of such

increase. The amended PA-20S/PA-65

Schedules RK-1 and/or NRK-1 must

show the corrected Pennsylvania-tax-

able income so the shareholders or

partners can pay the tax due.

The entity and owners must also file an

amended Pennsylvania tax return

within 30 days of the discovery of the

error to report any increase in income

for taxes due. See How To Amend a

PA-20S/PA-65 Information Return.

IMPORTANT: There is no statue

of limitations to file an amended

return when reporting additional in-

come. Amended returns cannot be

filed in response to a Department of

Revenue Assessment. In those cases,

an appeal must be filed with the Board

of Appeals.

PA S Corporations

nd Partnerships

Each entity submits with the PA-20S/

PA-65 Information Return a complete

copy of its federal income tax return

including all schedules, statements,

federal Schedules K-1, and PA-

20S/PA-65 Schedules RK-1 and NRK-

1 received from other pass through

entities.

With the PA-20S/PA-65 Information

Return, the entity must also submit

copies of the PA-20S/PA-65 Schedules

RK-1 that it provides to resident

partners/shareholders (owners) and

copies of the PA-20S/PA-65 Schedules

NRK-1 that it provides to nonresident

owners.

PA S Corporations and

Partnerships as Owners of Another

Pass Through Entity

If the shareholder, partner, member

(owner) of a PA S corporation, partner-

ship, limited liability company or a ben-

eficiary of a trust or estate is classified

as a pass through entity, the issuing

entity must provide the entity owner

with both PA-20S/PA-65 Schedules

RK-1 and NRK-1 showing the entity

owner’s share of the income (loss)

passed through from the issuing entity

in the same class in which the issuing

entity distributed the income to its en-

tity owner.

When the entity owner receives a PA-

20S/PA-65 Schedule RK-1 and NRK-

1, it has the classified income (loss)

amount to complete the PA-20S/PA-65

Information Return, Parts I, II and III.

The entity owner is required to file both

the PA-20S/PA-65 RK-1 and NRK-1

with their PA-20S/PA-65 Information

Return.

Example. When a PA S corporation re-

ceives income from a partnership, the

PA S corporation must file a copy of the

PA Schedule RK-1 and NRK-1 it re-

ceived from the partnership along with

the PA-20S/PA-65 Information Return.

Partnerships with C Corporation

Partners

artnerships or limited liability compa-

nies classified as partnerships for fed-

ral income tax purposes with

operations within Pennsylvania that

ave corporate partners that have not

filed the RCT-101, PA Corporate Tax

Report for the prior or current tax year

or whose partners are all C corpora-

tions must file the PA-65 Corp, Direc-

tory of Corporate Partners.

If the partners are all C corporations,

the partnership:

● Must include a complete copy of

federal Form 1065 with the PA-65

Corp, Directory of Corporate Part-

ners; and

● Does not file a PA-20S/PA-65 In-

formation Return.

For additional information, please re-

view the instructions for the PA-65

Corp, Directory of Corporate Partners

on the department’s website.

Limited Partnership Filing as

Disregarded Entity for Federal

Income Tax Purposes

If an eligible entity has two members

under local law but one of the

members of the eligible entity is, for

federal income tax purposes, disre-

garded as an entity separate from the

other member of the eligible entity,

then the eligible entity cannot be clas-

sified as a partnership. The eligible en-

tity is either disregarded as an entity

separate from its owner or an associa-

tion taxable as a corporation.

Example. A limited partnership (LP A)

is owned by a single-member limited li-

ability company (SMLLC) and a limited

partnership (LP B). The LP B owns 100

percent of the SMLLC which gives LP

B 100 percent control of LP A. The LP

B is required to file the PA-20S/PA-65

Information Return and report the in-

come of both LP A and the SMLLC.

PA S Corporations and

Partnerships Filing on Behalf

of their Qualified Electing

Nonresident Individual Owners

PA S corporations, partnerships and

limited liability companies classified as

partnerships and S corporations for

federal income tax purposes may file a

WHAT TO FILE

WHEN TO AMEND THE

PA-20S/PA-65

INFORMATION RETURN

10 www.revenue.pa.gov

composite return (PA-40 NRC, Nonres-

ident Consolidated Income Tax Return)

n behalf of their qualified nonresident

individual owners who elect to be in-

cluded in the composite filing.

or additional information, please re-

iew the instructions for the PA-40

NRC, Nonresident Consolidated In-

come Tax Return on the department’s

website.

Individual Owners in a PA S

Corporation, Partnership or

Limited Liability Company

Classified as a Partnership or S

Corporation for Federal Income

Tax Purposes

Individual owners of an entity must re-

port on the PA-40, Individual Income

Tax Return, their share of the income

(loss), passed through from the entity

in the same class in which the partner-

ship or PA S corporation reported the

income to its individual owners, as

shown on their PA Schedules RK-1

and/or NRK-1.

Classified as a C Corporation

A limited liability company that elects to

file as a C corporation for federal in-

come tax purposes files as a C corpo-

ration for Pennsylvania and is subject

to Pennsylvania corporate net income

tax, reported on the RCT-101, PA Cor-

porate Tax Report. A limited liability

company that files as a C corporation

with the IRS does not file the PA-

20S/PA-65 Information Return.

Classified as an S Corporation

A limited liability company that elects to

file as an S corporation for federal in-

come tax purposes and has not

elected out of PA Subchapter S status

for Pennsylvania by filing form REV-

976, Election Not To Be Taxed as A

Pennsylvania S Corporation, must file

as an S corporation for Pennsylvania

using the PA-20S/PA-65 Information

Return. The members are subject to

Pennsylvania personal income tax.

Classified as a Partnership

A limited liability company that elects

to file as a partnership for federal in-

come tax purposes files as a partner-

ship for Pennsylvania using the

PA-20S/PA-65 Information Return. The

members are subject to Pennsylvania

personal income tax.

1. Income Reported on Federal Tax

Return of an Individual

For personal income tax purposes, a

single-member limited liability com-

pany owned by an individual or a lim-

ited liability company jointly owned by

a taxpayer and spouse is a disre-

garded entity. The income of the limited

liability company is reported on PA-40

Schedule C, Profit or Loss from Busi-

ness or Profession, or PA-40 Schedule

E, Rent and Royalty Income (Loss), of

the member’s PA-40, Individual In-

come Tax Return, and the single-mem-

ber limited liability company does not

file a PA-20S/PA-65 Information Re-

turn.

2. Income Reported on Federal Tax

Return of another Business Entity

The income of a single-member limited

liability company owned by another en-

tity is reported on the tax return of the

member as if earned by the member.

Qualified Subchapter S Subsidiary

and its Parent S Corporation

Pennsylvania personal income tax law

does not treat a qualified subchapter S

subsidiary (QSSS) owned by a PA S

corporation (parent) as a separate cor-

poration for personal income tax.

Pennsylvania personal income tax law

treats all assets, liabilities and items of

income, deduction and credit of a

QSSS as assets, liabilities and items of

income, deduction and credit of the

parent PA S corporation for income tax

purposes.

The parent PA S corporation must re-

port the assets, liabilities and items of

income, deduction and credit of the

QSSS on the parent’s PA-20S/PA-65

Information Return.

NOTE: Shareholders receive the

income distribution from the par-

ent corporation, not from each QSSS.

The following provisions apply only to

a qualified subchapter S subsidiary in

Pennsylvania:

● A QSSS cannot elect corporation

treatment independent of its parent

corporation.

If a QSSS and/or parent of a

QSSS does not desire to be taxed

as a PA S corporation, the parent

must file REV-976, Election Not to

be Taxed as a Pennsylvania S

Corporation, for itself and all

QSSS(s). The parent corporation

submits a schedule with the elec-

tion identifying the name, address,

the PA S corporation’s Revenue ID

and federal employer identification

number (FEIN) of each QSSS

owned by the corporation and

doing business in Pennsylvania.

● The parent corporation is not re-

quired to register with the Depart-

ment of State if its only activity in

Pennsylvania is its investment in

the QSSS that is registered in

Pennsylvania.

The parent is required to file a

PA-20S/PA-65 Information Re-

turn and list the QSSS(s) on Part

IX and include all of the QSSS’

items of income, deduction and

credit on the return. There is no

ownership percentage for the

QSSS because it is a division of

the parent company.

Since the QSSS is a division of the

parent company, the QSSS is not

included on the Partner/Member/

Shareholder Directory. Only the

owners of the parent company are

listed on the directory.

The parent PA S corporation

may also file the PA-40 Non-

resident Consolidated Income Tax

Return (NRC) for its nonresident

owners if they meet the parame-

ters. See the PA-40 NRC instruc-

tions on the department's website.

Assemble the PA-20S/PA-65 Informa-

tion Return, forms and schedules in the

following order:

● Signed original PA-20S/PA-65 In-

formation Return (Pages 1 through

3). Do not mail a photocopy;

● PA Schedule P-S KOZ – attach be-

hind the information return;

CLASSIFIED AS A SINGLE-MEMBER

LIMITED LIABILITY COMPANY

ASSEMBLING THE PA-20S

PA-65 S CORPORATION/

PARTNERSHIP

INFORMATION RETURN

11www.revenue.pa.gov

● PA-20S/PA-65 Partner/Member/

hareholder Directory;

● PA-20S/PA-65 Schedule D-I, D-II,

D-III and D-IV;

● PA-20S/PA-65 Schedule E;

● PA-20A/PA-65 Schedules RK-1

that the entity provides to resident

wners;

● PA-20S/PA-65 Schedules NRK-1

that the entity provides to nonresi-

dent owners;

● PA-20S/PA-65 Schedule M;

● PA-20S/PA-65 Schedule OC and

the required supporting documents

for claiming any of the business

credits allowed by Pennsylvania

law;

● PA-20S/PA-65 Schedule A;

● PA-20S/PA-65 Schedule B;

● PA-20S/PA-65 Schedule H;

● PA-20S/PA-65 Schedule H-Corp;

● PA-20S/PA-65 Schedule NW;

● PA-20S/PA-65 Schedule J;

● PA-20S/PA-65 Schedule T;

● PA-20S/PA-65 Schedule I;

● All other required supporting

and supplemental documentation,

including a copy of the federal

extension.

NOTE: A complete copy of the

federal Form 1120S, U.S. In-

come Tax Return for an S Corporation,

or Form 1065, U.S. Return of Partner-

ship Income, including all schedules,

statements and federal Schedules K-1

now must be included with the entity’s

PA-20S/PA-65 PA S Corporation/ Part-

nership Information Return.

Assemble documents in the

order above.

● Do not staple documents.

● On all additional statements in-

cluded with the return, please in-

clude the entity’s name, FEIN, tax

year and brief line reference to PA-

20S/PA-65 Information Return or

PA-20S/PA-65 Schedules.

● Do not include federal returns or

federal Schedules K-1 in CD for-

mat. The PA-20S/PA-65 Informa-

tion Return will be considered

incomplete if the federal informa-

tion is not included with the paper

eturn.

IMPORTANT: Do not create a

substitute PA-20S/PA-65 Infor-

mation Return that has not been

approved by the department. A

preadsheet is an unapproved and un-

acceptable tax form. Unapproved tax

orms filed with the department may be

rejected and returned to the taxpayer

or tax return preparer. This may result

in an assessment of interest and

penalty.

If filing any tax form other than an offi-

cial tax form, please review Miscella-

neous Tax Bulletin 2008-02 on the

department’s website.

Estimated Quarterly Tax Payments

for Resident Owners

Individual resident partners and

shareholders (owners) are subject to

the estimated quarterly tax provisions

under the Pennsylvania Income Tax

Act.

Resident owners must file declarations

and make quarterly estimated Pennsyl-

vania tax payments if they reasonably

expect income, other than compensa-

tion on which Pennsylvania tax is with-

held, to exceed $8,000.

The individual owners use REV-414I,

Individuals Worksheet, and REV-413I,

Instructions for Estimating PA Personal

Income Tax (For Individuals Only), to

determine the proper amount of esti-

mated tax payments.

Estimated Quarterly Withholding

Payments for Nonresident Owners

Under Act 22 of 1991, entities must

withhold and pay quarterly Pennsylva-

nia personal income tax for nonresi-

dent partners and shareholders

(owners) that are individuals, estates

or trusts.

This quarterly withholding tax payment

is based on each nonresident owner’s

expected share of distributable Penn-

sylvania-source taxable income.

When there has been a change in an

accounting period that requires filing of

a short-year return, the tax is calcu-

lated on an annualized basis. See

Short-Year Return.

The entity must indicate the amount of

Pennsylvania personal income tax it

withheld for each nonresident on the

PA-20S/PA-65 Schedule NRK-1 and

provide the PA-20S/PA-65 Schedule

NRK-1 to each nonresident owner.

The entity uses REV-414 P/S, Partner-

ships and PA S Corporations Withholding

Tax Worksheet, and REV-413 P/S,

Instructions for Withholding PA Personal

Income Tax from Nonresident Owners

by Partnerships and PA S Corporations,

to determine the proper amount

of withholding.

Partnerships or PA S corporations filing

a nonresident quarterly withholding tax

return for the first time should use PA-

40ESR (F/C), Declaration of Estimated

Tax or Estimated Withholding Tax for

Fiduciaries and Partnerships. There-

after, the department will provide

preprinted forms PA-40ES (P/S).

The partnership or PA S corporation

makes the initial quarterly tax withhold-

ing payment and all future quarterly tax

withholding payments under the federal

employer identification number, name

and address of the entity.

CAUTION: Do not use the

seven-digit PA Account ID num-

ber or the 10-digit Revenue ID number

for submitting non-resident withholding

payments.

IMPORTANT: An entity cannot

withhold Pennsylvania personal

income tax on another entity or a

Pennsylvania resident individual, and

should not withhold Pennsylvania per-

sonal income tax on income from in-

tangibles such as interest, dividends or

sale of stock.

If the entity did not make any or

sufficient estimated quarterly

withholding tax payments for its non-

resident owners, a final payment or

catch-up payment can be made with

the filing of the PA-20S/PA-65 Informa-

tion Return or PA-40 NRC, Nonresi-

dent Consolidated Income Tax Return.

Failure to remit withholding payments

for all nonresident owners on a quar-

terly basis will result in the imposition

of interest, penalty and underpayment

ESTIMATED QUARTERLY

TAX PAYMENTS

AND WITHHOLDING

12 www.revenue.pa.gov

penalty. See Final Payment of Nonres-

ident Withholding Tax for how and

where to send the final nonresident

withholding tax payment with the PA-

20S/PA-65 Information Return.

Please review the instructions on the

department’s website for the PA-40

NRC, Nonresident Consolidated In-

come Tax Return, for how and where

to send the final nonresident withhold-

ing tax payment with the PA-40 NRC,

Nonresident Consolidated Income Tax

Return.

Be sure to review the electronic option.

See Fed/State Electronic Filing Option

for Estimated Nonresident Individual

Withholding Payments.

Overpayment/Adjustment of

Withholding Tax for

Nonresident Owners

The PA-20S/PA-65 PA S Corporation/

Partnership Information Return is for

information purposes only.

It is not a return where you can indicate

a refund or carry-forward credit. Pay-

ments submitted to this account are for

nonresident tax withholding only and

are held for transfer to the partner,

member or shareholder (owner) as in-

dicated on their individual tax returns.

The department will not make the as-

sumption that the entity paid more than

was needed.

Under Act 22 of 1991, entities must

withhold quarterly Pennsylvania per-

sonal income tax from nonresident

partners and shareholders (owners)

that are individuals, estates or trusts.

This withholding tax is based on each

nonresident owner's expected share of

distributable Pennsylvania-source tax-

able income. The partnership, PA S

corporation or limited liability company

classified as a partnership or PA S cor-

poration is required to remit the with-

holding tax to the department on a

quarterly basis.

If the entity overpaid the nonresident

withholding tax, the entity should pass

through the total nonresident owners’

withholding tax payment (including the

overpayment) as PA Nonresident Tax

Withheld on Line 6 of their PA Sched-

ule NRK-1. The owners can then in-

clude the Line 6 amount as a tax

payment on their respective PA-40,

Pennsylvania Income Tax Return, on

Page 2, Line 17, Nonresident Tax With-

eld from your PA Schedule(s) NRK-1.

If the entity did not pass through the

overpayment of nonresident tax with-

olding to its nonresident owners on

A Schedule NRK-1, and if the entity

wants a refund or to carry forward to

the next tax year the entire amount of

tax withheld or the excess over the

withholding passed through to the non-

resident owners that are individuals,

estates or trusts (providing the entity

did not file a PA-40 Nonresident Con-

solidated Income Tax Return), the

entity must submit a written request to:

PA DEPARTMENT OF REVENUE

BUREAU OF INDIVIDUAL TAXES

NONRESIDENT WITHHOLDING

TAX REFUND

PO BOX 280600

HARRISBURG PA 17128-0600

The request must be on company let-

terhead and include the entity’s name,

federal employer identification number,

tax year, Social Security number(s) of

the owner(s), amount of nonresident

withholding paid, amount of nonresi-

dent withholding tax liability, the re-

quested refund amount and/or

carry-forward to the next tax year of

nonresident withholding and reason for

the request.

File the PA-20S/PA-65 Information Re-

turn for the current calendar year or the

fiscal year that begins in the current tax

year and ends in the next tax year. Use

the current tax year return for a tax

year of less than 12 months that begins

and ends in the current tax year.

To remain consistent with the federal

tax due date, the due date for filing

2016 Pennsylvania tax returns will be

on or before midnight, April 18, 2017.

The U.S. Postal Service postmark date

on the envelope is proof of timely filing.

If the return cannot be filed by the due

date, request an extension of time to

file.

For a calendar-year filer, file the current

tax year PA-20S/PA-65 Information

Return and PA-20S/PA-65 Schedules

RK-1 and NRK-1 on or before April 18,

2017, including an extension date of

Sept. 15, 2017.

For a fiscal-year filer, file the current tax

year PA-20S/PA-65 Information Return

and PA-20S/PA-65 Schedules RK-1 and

NRK-1 on or before the 15th day of the

fourth month following the close of the

fiscal year including an extension date

of five months after the original due date.

If the due date falls on a Saturday,

Sunday or business holiday, the entity

must file the PA-20S/PA-65 Information

Return no later than midnight on the

first business day following the Satur-

day, Sunday or business holiday. The

U.S. Postal Service postmark date on

the envelope is proof of timely filing.

If the entity cannot file by the original

due date, request an extension of time

to file. See Extension of Time To File.

If the entity does not file its return by

the original due date or extended due

date and does not pay the tax due by

the original due date, the department

imposes late filing and underpayment

penalties.

Tax Years

Pennsylvania follows the same tax

year as federal rules.

Calendar-Year Entity

An entity that files on a calendar year

basis reports all taxable income recog-

nized between Jan. 1 and Dec. 31.

See When To File.

Fiscal-Year Entity

A fiscal year is a period of 12 consecu-

tive months without regard to the

calendar year. The fiscal year is desig-

nated by the calendar year in which it

begins. A fiscal-year entity reports all

taxable income recognized during the

fiscal year. See When To File.

An entity may use a 52/53 week tax-

able year if it keeps its books on that

basis.

Changing From a Fiscal-Year Entity

to a Calendar-Year Entity

To change from a fiscal-year filer to a

calendar-year filer, the entity files a

short-year return. See Short-Year Re-

turn. The entity then files the next cal-

endar year on or before April 18, 2017,

including an extension date of Sept.

15, 2017.

WHEN TO FILE

13www.revenue.pa.gov

The entity is also required to submit a

copy of its federal election Form 1128,

Application to Adopt, Change or Retain

a Tax Year, with both the short-year re-

turn and the calendar-year return.

Short-Year Return

A short year is an accounting period

shorter than one year and not a 52/53

week taxable year.

A short-year return is required for the

following reasons:

● Changes in the annual accounting

period. For example, the entity

changes from a fiscal-year filer to

a calendar-year filer; or

● An entity is in existence during

only part of the tax year. For exam-

ple, if the year is the initial year or

final year for all entities; or, if the

partnership or an entity formed as

a limited liability company classi-

fied as a partnership for federal

income tax purposes sells or

exchanges 50 percent or more

of ownership interest (technical

termination).

NOTE: When there has been a

change in an accounting period

that requires filing of a short-year re-

turn, the nonresident withholding tax is

calculated on an annualized basis.

How To File a Short-Year Return

If the entity is required to file a short-

year return, the entity must use the

most recent PA-20S/PA-65 Information

Return, schedules and forms on the

department’s website.

If the tax year on the forms is not the

current tax year and/or the tax year for

which the entity is filing, then the entity

must cross out and write the correct tax

year for which it is filing a short-year

return.

IMPORTANT: Short-year returns

are due on the 15th day of the

fourth month following the end of the

short period.

If the entity is a calendar-year

filer and files a short-year return,

do not fill in the fiscal-year oval. A

short-year return is not a fiscal-year

return.

Technical Termination

A technical termination occurs when

there is a sale or exchange of 50

percent or more of the total interest in

the partnership capital and profits

within a 12-month period and the tax-

ble year of the partnership closes.

The terminating partnership is required

to file a short-year PA-20S/PA-65 Infor-

mation Return for the taxable year end-

ing with and including the date of its

ermination.

The new partnership is required to file

a PA-20S/PA-65 Information Return for

its taxable year beginning after the

date of termination of the terminated

partnership. The new partnership re-

tains the employer identification num-

ber of the terminated partnership and

its Revenue ID if it is a limited liability

company.

When the new partnership files its PA-

20S/PA-65 Information Return, it is re-

quired to list on the Partner/Member/

Shareholder Directory all partners/

members/shareholders (owners) in-

volved with the entity within the tax

year or in this case, short year.

If the entity cannot file the PA-20S/PA-

65 Information Return on or before the

original return due date, the entity can

use REV-276, Application for Exten-

sion of Time to File, to file for a five-

month extension. The department will

now accept REV-276 Application for

Extension of Time to File the PA20S/

PA65. Information Return through the

MeF Fed/State e-file program. See

How to Obtain an Extension of Time to

File.

The department will not grant an exten-

sion for more than five months, except

for taxpayers outside the U.S.

An extension of time to file does not ex-

tend the payment deadline. Pay in full

the amount reasonably estimated as

the entity’s Pennsylvania tax due on or

before the original return due date.

How To Obtain an Extension of

Time to File

Follow one of these procedures when

applying for an extension of time to file:

1. If the entity owes catch-up nonres-

ident withholding tax with the

PA-20S/PA-65 Information Return,

the entity may either pay by check

with a timely filed REV-276, Appli-

cation for Extension of Time to File

or submit the application and pay-

ment through the MeF Fed/State

e-file program on or before the

original return due date. The return

ue date is usually April 15 for cal-

endar-year filers and the 15th day

of the fourth month following the

close of the fiscal year for fiscal-

year filers. The department will not

send a letter granting the exten-

sion but it will write if there is a

question concerning the request.

2. If the entity has an extension of time

to file federal Form 1065 or federal

Form 1120S and does not owe

Pennsylvania nonresident withhold-

ing tax on the PA-20S/PA-65 Infor-

mation Return, the department will

automatically grant the entity a five-

month extension of time to file the

PA-20S/PA-65 Information Return.

The entity is not required to submit

REV-276 or federal Form 7004 be-

fore the original return due date.

However, federal Form 7004 must

be submitted with the filing of the

PA-20S/PA-65 Information Return.

3. If the entity does not have an ex-

tension to file federal Form 1065 or

federal Form 1120S, request an

extension on REV-276, and file it

in sufficient time for the depart-

ment to consider and act upon it

prior to the original return due date.

The REV-276 can be filed elec-

tronically through the MeF

Fed/State program.

CAUTION: The REV-276 can be

filed in paper form or electroni-

cally. If the entity filed the PA-20S/PA-

65 Information Return and did not file

the REV-276 but requested an exten-

sion for the federal return, federal Form

7004 can be substituted for the REV-

276. In such cases, include a copy of

the federal Form 7004 with the PA-

20S/PA-65 Information Return.

A five-month extension of time to file

requires PA Schedules RK-1 and NRK-

1 to be filed one month earlier and al-

lows owners time to prepare and file

their personal income tax returns within

EXTENSION OF TIME

TO FILE

14 www.revenue.pa.gov

the normal six-month time period for in-

ividuals.

ualifying for the Extension

When an entity requests an extension

of time to file, it does not extend the

iling time for its owners. Each owner

ust individually obtain an extension

f time to file the PA-40, Individual

Income Tax Return, PA-41, Fiduciary

Income Tax Return, or PA-40 NRC,

Nonresident Consolidated Tax Return.

An extension of time to file a PA-20S/

PA-65 Information Return does not ex-

tend the time for full payment of the

catch-up nonresident withholding tax,

nor does it preclude an assessment of

interest and penalty for late payment

and underpayment of tax due.

To get the extra time to file you must:

1. Properly estimate the current year

nonresident withholding tax liability

using the information available

to you.

2. Enter the tax liability on REV-276.

3. File REV-276 by the original due

date of the return along with a

check or money order for the cur-

rent year tax liability, or file elec-

tronically through the MeF

Fed/State program.

Mail REV-276 To:

PA DEPARTMENT OF REVENUE

BUREAU OF INDIVIDUAL TAXES

PO BOX 280504

HARRISBURG PA 17128-0504

How to File the PA-20S/PA-65

Information Return with an

Extension

When filing a PA-20S/PA-65 Informa-

tion Return for which an extension was

requested, the entity must:

● Fill in the “Extension Requested”

oval at the top of the PA-20S/PA-

65 Information Return;

● Submit a copy of federal Form

7004 with the PA-20S/PA-65 Infor-

mation Return if the entity did not

file REV-276, Application for Ex-

tension of Time to File;

● Submit a statement with the fed-

eral confirmation number received

if the entity electronically filed a

federal extension and did not file

REV-276;

● List the extension payment amount

on the statement and be sure to

include the total nonresident with-

holding payments on PA-20S/PA-

65 Schedule NW, Line B.

NOTE: Do not submit REV-276,

Application for Extension of Time

to File, with the PA-20S/PA-65 Informa-

ion Return.

Extension Due Dates

See When To File.

The entity must submit the PA-20S/

PA-65 Information Return, the PA-20S/

PA-65 supporting schedules and the

PA-20S/PA-65 Schedules RK-1 and/or

NRK-1, and if applicable, the final with-

holding payment or “catch-up” payment.

Where the entity should mail the PA-

20S/PA-65 Information Return de-

pends whether there is a final

withholding payment or “catch-up”

payment. Choose the appropriate

mailing address:

Without Payment:

PA DEPARTMENT OF REVENUE

BUREAU OF INDIVIDUAL TAXES

PO BOX 280509

HARRISBURG PA 17128-0509

With Payment:

PA DEPARTMENT OF REVENUE

BUREAU OF INDIVIDUAL TAXES

PO BOX 280502

HARRISBURG PA 17128-0502

See Final Payment of Nonresident

Withholding Tax for how and where to

send the final nonresident withholding

tax payment.

Final Payment of Nonresident

Withholding Tax

Payment by Check

If your tax preparation software prints

a Nonresident Withholding Voucher

facsimile approved by the Department

of Revenue, that voucher may be used

when no preprinted voucher (PA-40ES

(P/S)) is available. Mail the voucher

and check to the department. See

Where to File.

In the event the entity does not have a

preprinted voucher and your software

is unable to produce a department ap-

proved facsimile, make the check or

money order payable to PA Dept. of

evenue. Write the entity’s federal em-

ployer identification (FEIN) and 2016

Final Nonresident Withholding on the

check or money order. The department

ill need the entity’s FEIN to accurately

apply the payment. See Where to File.

Do not staple the check or money

order to the return.

Electronic Payment

See Fed/State Electronic Filing Option

For Estimated Nonresident Individual

Quarterly Withholding Payments.

IMPORTANT: The nonresident

individual quarterly withholding

tax payment may not be submitted

through Electronic Funds Transfer

(EFT), credit/debit cards or e-TIDES.

Mailing Address for Final

Withholding Payment

See Where To File.

RECORDKEEPING

An entity must retain all books and

records for at least seven years. All

amounts reported on the PA-20S/PA-

65 Information Return, schedules and

forms are subject to verification and

audit by the department.

Information that substantiates the cal-

culation of basis for an entity or individ-

ual, in any investment (partnership, S

corporation, stocks, bonds, real estate,

etc.), must be retained indefinitely or

for at least four years after the invest-

ment is sold.

Information that substantiates the cal-

culation of basis in an investment shall

include but not be limited to broker

statements, Pennsylvania and other

states’ income tax returns, PA-20S/PA-

65 Schedules RK-1, closing state-

ments, etc.

Foreign Address Standards

If the entity is located outside the U.S., it

is important to write the foreign address

WHERE TO FILE

HOW TO PAY

COMPLETING

PA-20S/PA-65

INFORMATION RETURN

15www.revenue.pa.gov

on the PA-20S/PA-65 Information Re-

turn, according to U.S. Postal Service

standards.

Failure to use these standards may

delay processing or correspondence

necessary to complete the processing

of the return.

To comply with foreign address stan-

dards, use the following rules when

completing the address portion of the

PA-20S/PA-65 Information Return.

● Eliminate apostrophes, commas,

periods and hyphens. Write the ad-

dress in all uppercase letters. Ad-

dresses should have no more than

five lines and must be written in ink

or typewritten. Pencil is unaccept-

able.

● Write the name of the entity in the

spaces provided. Mail may not be

addressed to a person in one

country “in care of” a person in an-

other country. The address of

items sent to general delivery must

indicate the addressee’s full legal

name.

● Write the address in the space pro-

vided, including street and building

name and number, apartment or

suite numbers, city name and city

or provincial codes. All lines of the

delivery address should appear in

all capital letters. The house num-

ber and street address or box

number must appear when mail is

addressed to towns or cities.

● Write only the name of the country

in the space provided for the city or

post office.

● Do not include any entries in the

state field other than “OC” for Out-

of-Country. The ZIP Code spaces

should remain blank on the PA-

20S/PA-65 Information Return.

Providing the address in this for-

mat will better ensure that the de-

partment is able to contact the

entity if we need additional infor-

mation.

Below are two examples of properly

completed foreign addresses:

Foreign Address Examples

Name: DIETRICH ENTERPRISES

Address 1: HARTMANNSTRASSE 7

Address 2: 5300 BONN 1

City: GERMANY

State: OC

ZIP Code: Leave Blank

ame: DIETRICH ENTERPRISES

ddress 1: 117 RUSSELL DR

Address 2: LONDON W1PGHQ

City: ENGLAND

State: OC

ZIP Code: Leave Blank

Canada (Only) Address Example

The following address format may be

used when the postal address delivery

zone number is included in the ad-

dress:

Name: NORTH BY NORTHWEST CO

Address 1: 1010 CLEAR ST

Address 2: OTTAWA ONT K1A OB1

City: CANADA

State: OC

ZIP Code: Leave Blank

If the entity’s address does not fit in the

available spaces on the PA-20S/PA-65

Information Return using this format,

please include a separate statement

with the return showing the complete

address.

NOTE: For a Canadian address,

two spaces must exist between

the province abbreviation and the

postal code. Please review the exam-

ple where “ONT” (province abbrevia-

tion) and “K1A OBI (postal code) are

separated by two spaces in the ad-

dress format.

Filing Status

Fill in the oval for a PA S corporation

(PA-20S) or partnership (PA-65).

P-S KOZ

Fill in the oval if approved for the Key-

stone Opportunity Zone and include a

PA Schedule P-S KOZ – Keystone Op-

portunity Zone.

Federal Employer Identification

Number (FEIN)

Enter the entity’s nine-digit federal em-

ployer identification number.

Revenue ID

Enter the Revenue ID, if applicable.

The Revenue ID is a unique, 10-digit

number assigned by the Department of

Revenue to replace the seven-digit Tax

ccount ID number. The seven-digit

Tax Account ID number may be used if

the 10-digit Revenue ID number is not

nown.

North American Industry

Classification System

(NAICS) Code

Provide your six-digit federal NAICS

code identified on Page 1 of your fed-

eral Form 1120S or 1065.

Inactive Oval

Fill in the oval if the entity was inactive

during the 12-month accounting pe-

riod. The entity would still be required

to file the PA-20S/PA-65 Information

Return, but schedules and accompa-

nying documentation do not need to be

submitted.

Business Name

Enter the complete name of the entity

or business.

First Line of Address

Enter the street address. If the address

has an apartment number, suite or RR

number, enter after the street address.

Eliminate all punctuation such as apos-

trophes, commas, periods and hy-

phens.

NOTE: If the street address

along with the apartment num-

ber, suite or RR number does not fit on

the first line of address, then enter the

street address on the second line of

address and the apartment number,

suite or RR number on the first line of

address.

Second Line of Address

Enter the post office box, if applicable.

If there is no post office box, leave the

second line of address blank. Eliminate

all punctuation such as apostrophes,

commas, periods and hyphens.

For a foreign address, enter the city or

municipal designation. See Foreign

Address Examples.

For a Canadian address, enter the city

and postal delivery zone number. See

Canada (Only) Address Example.

PAGE 1

TAX IDENTIFICATION NUMBERS

16 www.revenue.pa.gov

IMPORTANT: If the address has

only a post office box, enter on

the first line of address.

City or Post Office, State and

ZIP Code

Enter the appropriate information in

each box. Eliminate all punctuation

uch as apostrophes, commas, peri-

ods and hyphens.

For Canadian and foreign addresses,

the bottom line of the address should

show only the country name, written in

full (no abbreviations) and in capital let-

ters. See Foreign Address Example

and Canada (Only) Address Example.

Method of Accounting

Indicate whether the entity uses the

accrual, cash or other method of ac-

counting. If other, please identify your

method of accounting on a supplemen-

tal statement.

Income is calculated under the method

of accounting on which the entity reg-

ularly calculates income in keeping its

books. If the department determines

that no method has been regularly

used or the method used does not

clearly reflect income, the calculation

of income shall be made under a

method that clearly reflects income in

the opinion of the department.

IMPORTANT: If the entity

changes its method of account-

ing, it must submit a copy of its federal

Form 3115, Application for Change in

Accounting Method, with its PA-20S/

PA-65 Information Return.

Extension Requested

Fill in the oval if the entity requested an

extension of time to file the PA-20S/

PA-65 Information Return. If the entity

did not file REV-276, Application for Ex-

tension of Time to File, submit a copy

of federal Form 7004, Application for

Automatic Extension of Time to File

Certain Business Income Tax, Informa-

tion, and Other Returns with the PA-

20S/PA-65 Information Return. See

Extension of Time To File.

Initial Year

f the entity is in the first year of opera-

tions, fill in the oval.

Fiscal Year

A fiscal year is a 12-month accounting

eriod, other than a calendar year,

ending on the last day of a particular

month, for example July 1 to June 30

of the following year.

The entity must use its federal taxable

year for Pennsylvania purposes.

If the entity does not file on a calendar-

year basis, fill in the fiscal-year oval.

Enter the month, day and year (MMD-

DYY) when the fiscal year begins and

ends.

NOTE: A fiscal year includes any-

thing other than a calendar year.

Do not fill in the fiscal-year oval

for a calendar-year filer whose

initial year does not begin 01/01/20XX

or for a calendar-year filer whose final

return does not end 12/31/20XX.

If the entity is a calendar-year filer and

files a short-year return, do not fill in

the fiscal-year oval.

Short Year

Fill in the short-year oval if the entity is

filing a short-year return. Enter the

month, day and year (MMDDYY) when

the short year begins and ends.

For more information about short-year

returns, refer to Short-Year Return.

Final Return

Fill in the oval if the PA S corporation

or partnership went out of business

during its taxable year.

FEIN/Name/Address Change

Fill in the oval if the FEIN, name or ad-

dress on the PA-20S/PA-65 Informa-

tion Return differs from the last filed

return.

Amended Information Return

Fill in the oval if amending the PA-20S/

PA-65 Information Return. The entity

must also provide amended PA-20S/

PA-65 Schedules RK-1 and NRK-1 to

its owners.

For more information on amended re-

turns, see How To Amend PA-20S/PA-

65 Information Return.

Date Activity Began

In Pennsylvania

he entity must include the date activ-

ity began in Pennsylvania.

f the entity is only filing the PA-20S/

PA-65 Information Return because it

has a Pennsylvania resident share-

holder or partner and has no Pennsyl-

vania-source income, then the date

activity began in Pennsylvania would

be the date the shareholder or partner

moved to Pennsylvania or the date a

partnership or S corporation had a res-

ident partner or shareholder invest in

the entity.

Total Taxable Business

Income (Loss) from

Operations Everywhere

In Part I, report the entity’s income

(loss) from all business operations

from all sources within and from out-

side Pennsylvania.

Taxable Business Income (Loss)

from Operations Everywhere

Enter the calculation from PA-20S/PA-

65 Schedule M for the total amount of

taxable income (loss) from its own sep-

arate operation of a business, profes-

sion or farm from the books and

records of the entity.

This is the entity’s total business in-

come (loss) from all of its operations

everywhere. Do not include income

(loss) received as an owner from other

entities providing PA-20S/PA-65

Schedules RK-1 or federal Schedules

K-1 on Line 1a. Report only the income

(loss) from an entity’s own operations

from all locations inside Pennsylvania

and outside Pennsylvania. If a negative

amount, fill in the “loss” oval.

Share of Business Income (Loss)

from All Other Entities

Enter the share of net profit (loss) that

the entity receives as a partner or

shareholder (owner). Also complete

the PA-20S/PA-65 Information Return,

FILL IN THE

APPLICABLE OVALS

LINE INSTRUCTIONS

PAGE 1 - PART I

LINE 1a

LINE 1b

17www.revenue.pa.gov

Part IX on Page 3. If a negative

mount, fill in the “loss” oval.

f the entity completing the PA-20S/

A-65 Information Return received a

A-20S/PA-65 Schedule RK-1 from

another entity in which it is a share-

holder or partner (owner), this PA-

20S/PA-65 Schedule RK-1 already has

the classified income (loss) amount for

completing PA-20S/PA-65 Information

Return.

On Line 1b, enter the business income

(loss) received as an owner from all

other entities reported on the PA-20S/

PA-65 Schedules RK-1, Line 1.

Total Income (Loss)

Add Line 1a and Line 1b. Include

losses when determining Line 1c. If

Line 1c is a negative, fill in the “loss”

oval.

Previously Disallowed Corporate

Net Income (CNI) Deductions

PA S Corporations Only

Enter the total amount of previously

disallowed corporate net income de-

ductions on this line.

The department allows any deduction

that it disallowed when the corporation

was subject to Pennsylvania corporate

net income tax as an additional deduc-

tion while the corporation is in a PA S

corporation status, except a net loss

carry forward deduction.

Pennsylvania limits the additional de-

duction to the same extent and in the

same manner that the additional de-

duction would have been allowed had

the corporation remained subject to

Pennsylvania corporate net income

tax.

Any previously disallowed Pennsylva-

nia corporate net income deduction

shall be separately determined and

must be taken against net profits from

a business, profession or farm. Resi-

dent shareholders are allowed the full

amount of any previously disallowed

Pennsylvania corporate net income de-

duction.

Nonresident shareholders are allowed

only a previously disallowed Pennsyl-

vania corporate net income deduction

to the extent that the deduction would

have been considered a deduction

against income from sources within

Pennsylvania in the year disallowed.

Submit a separate statement for each

deduction indicating the basis for each

claimed deduction and the year in

which the deduction was disallowed.

Use the earliest previously disallowed

Pennsylvania corporate net income de-

duction first.

Disallowed Accelerated

Depreciation on

Tax Preference Items

Pennsylvania allows accelerated de-

preciation of tax preference items that

were disallowed when the corporation

was subject to Pennsylvania corporate

net income tax as an additional deduc-

tion, to the extent and amount allowed

had the corporation remained subject

to Pennsylvania corporate net income

tax. For further information, refer to the

department’s regulations in 61 Pa.

Code §153.14.

Total Adjusted Business

Income (Loss)

Subtract Line 1d from Line 1c. Include

losses when determining Line 1e. If a

negative amount, fill in the “loss” oval.

Apportioned/Allocated PA-Taxable

Business Income (Loss)

In Part II, an entity that has business

operations within and outside Pennsyl-

vania must allocate or apportion its in-

come (loss), costs, expenses and

liabilities if it has an owner that is:

● A nonresident individual;

● A resident or nonresident estate or

trust;

● A PA S corporation; or

● A partnership

NOTE: If the entity’s opera-

tions are entirely within

Pennsylvania, the amounts in Part

I will be the same as the amounts

in Part II, PA Source Column. Part

II, Outside PA Column, will have all

zero amounts.

When an entity operates a busi-

ness that is neither wholly within

nor wholly outside Pennsylvania

and is required to allocate or ap-

portion its income (loss), it allo-

cates by separate accounting if

both of the following conditions are

met:

● The business operations within

Pennsylvania and the business op-

erations outside Pennsylvania

constitute independent profit

centers. This means there are no

transfers of finished or partly fin-

ished goods, raw materials, sup-

plies, services, or operational

assets interspersed; each center is

free to buy outside; and because

of geographical location, no center

is in direct competition with an-

other; and

● The entity retains its books so that

the amounts of revenues, costs,

and expenses attributable to Penn-

sylvania operations can be prop-

erly disclosed.

For more information on the appor-

tionment and allocation of income

from a business carried on partly

within and partly outside Pennsyl-

vania, refer to 61 Pa. Code §109.5.

If the entity must apportion income,

submit a completed PA-20S/PA-65

Schedule H, Apportioning Income

from a Business, Profession or

Farm derived from sources both

within and outside Pennsylvania.

Please review the PA-20S/PA-65

Schedule H instructions on the de-

partment’s website.

NOTE: For reporting income

(loss) from another entity on

Lines 1b, 2b and 2f, the Pennsyl-

vania entity needs both a PA-

20S/PA-65 Schedule RK-1 and

NRK-1 so it can pass through

Pennsylvania-source amounts and

amounts from sources outside

Pennsylvania to its owners.

If the other entity is not a PA S cor-

poration, partnership or entity

formed as a limited liability com-

pany that is classified as a partner-

ship or S corporation for federal

LINE 1e

PAGE 1 - PART II

LINE 1d

LINE 1c

18 www.revenue.pa.gov

income tax purposes, a supplemental

tatement must be provided by the

other entity that shows Pennsylva-

nia-source amounts in the same

class in which the other entity re-

eived the income.

et Business Income (Loss)

Outside PA Column

Subtract Line 2e in Part II from Line 1a

in Part I. Enter the difference. If a neg-

ative amount, fill in the “loss” oval.

Share of Business Income (Loss)

from Other Entities

Outside PA Column

Subtract Line 2f in Part II from Line 1b

in Part I. Enter the difference. If a neg-

ative amount, fill in the “loss” oval.

If the entity completing the PA-20S/

PA-65 Information Return received a

PA-20S/PA-65 Schedule RK-1 and/or

NRK-1 from another entity in which it is

an owner, it already has the classified

income (loss) amount for completing

the PA-20S/PA-65 Information Return.

If the entity completing this PA-20S/

PA-65 Information Return received a

federal Schedule K-1 from another en-

tity, in which it is an owner, it should re-

quest a PA-20S/PA-65 Schedule RK-1

and/or NRK-1 from the entity because

the federal Schedule K-1 does not

classify income for Pennsylvania per-

sonal income tax purposes.

Previously Disallowed PA-Source

Corporate Net Income Deductions

Outside PA Column

PA S Corporations Only

Subtract Line 2g in Part II from Line 1d

in Part I. Enter the difference.

Calculate Adjusted/Apportioned

Net Business Income (Loss)

Outside PA Column

Add Line 2a and Line 2b and then sub-

tract Line 2c. Enter the difference. In-

clude losses when determining Line

2d. If a negative amount, fill in the

“

loss” oval.

Net Business Income (Loss)

A-Source Column

f the entity has operations inside and

outside of Pennsylvania, enter the ap-

portioned income (loss) from PA-20S/

PA-65 Schedule H, Line 7. If the entity

only has operations inside Pennsylva-

nia, enter the allocated income (loss)

from its PA-20S/PA-65 Schedule M,

Part B, Section G, Line 1. If a negative

amount, fill in the “loss” oval.

Share of Business Income (Loss)

from Other Entities

PA-Source Column

Enter the sum of Line 1 of all the PA-

20S/PA-65 Schedules NRK-1 received.

If a negative amount, fill in the “loss”

oval.

If the entity completing the PA-20S/

PA-65 Information Return received a

PA-20S/PA-65 Schedule NRK-1 from

another entity in which it is an owner,

this PA-20S/PA-65 Schedule NRK-1 al-

ready has the classified income (loss)

amount for completing PA-20S/PA-65

Information Return.

If the entity completing the PA-20S/

PA-65 Information Return received a

federal Schedule K-1 from another en-

tity in which it is an owner, it should re-

quest a PA-20S/PA-65 Schedule RK-1

and/or NRK-1 from the entity because

the federal Schedule K-1 does not

classify income for Pennsylvania per-

sonal income tax purposes.

Previously Disallowed PA-Source

Corporate Net Income Deductions

PA-Source Column

PA S Corporations Only

Multiply Line 1d by the applicable ap-

portionment figure(s) from the RCT-

101, PA Corporate Tax Report, for the

year(s) in which the deduction was dis-

allowed.

The corporation’s corporate net in-

come apportionment decimal for the

year in which the deduction was disal-

lowed may be used. Enter the result.

Calculate Adjusted/Apportioned

Net Business Income (Loss)

PA-Source Column

Add Line 2e and Line 2f and then sub-

tract Line 2g. Include losses when de-

termining Line 2h. If a negative

amount, fill in the “loss” oval.

Allocated Other PA PIT Income

(Loss)

In Part III, the entity must allocate all

other income (loss) to Pennsylvania

source and outside Pennsylvania. If all

owners are full-year nonresident indi-

viduals, zero amounts must be shown

in Part III on Lines 3 and 4.

Interest Income from PA Schedule A

PA-Source

Enter the amount from PA-20S/PA-65

Schedule A, Line 8. This is the total

amount of interest income earned by

the entity.

The entity must report on Line 3 any

amount it received for the use of its

money that it does not include in an-

other income class. Do not report on

Line 3 interest from obligations that are

statutorily free from Pennsylvania tax.

Include in Line 1a, not Line 3, in-

terest from assets to generate

working capital and interest used in op-

erating commercial activities (generally

from current assets) when determining

net profit (loss).

Dividend Income from

PA Schedule B

PA-Source

Enter the amount from PA-20S/PA-65

Schedule B, Line 9.

Dividend income is any distribution to

the entity of cash or property from the

LINE 2c

LINE 2d

LINE 2e

LINE 2f

LINE 2g

LINE 2h

LINE 2b

LINE 2a

PAGE 1 - PART III

LINE 3

LINE 4

19www.revenue.pa.gov

accumulated earnings and profits or

current earnings and profits of a corpo-

ration, association, or business trust.

Include in Line 1a, not Line 4,

dividend income from assets to

generate working capital and dividend

income that the entity used in operat-

ing its commercial activities (generally

current assets) when determining its

net profit (loss).

Net Gain (Loss) from

PA Schedule D

PA-Source Column

A PA-20S/PA-65 Schedule D must be

completed for any net gain (loss) in-

come.

These figures represent net gains or

net income, less net losses, derived

from the sale, exchange or disposition

of property including real or personal,

whether tangible or intangible, as

determined in accepted accounting

principles and practices per 72 P.S.

§7303(a)(3).

Net Gain (Loss) from

PA Schedule D

Outside PA Column

If the entity disposed of property lo-

cated outside Pennsylvania, complete

PA-20S/PA-65 Schedule D-III and

Schedule D-IV. Enter the amount from

PA-20S/PA-65 Schedule D-III, Line 16.

If a negative amount, fill in the “loss”

oval.

Net Gain (Loss) from

PA Schedule D

PA-Source Column

If the entity disposed of property lo-

cated inside Pennsylvania from infor-

mation on its books and records

complete PA-20S/PA-65 Schedule D-I

and Schedule D-II. Enter the amount

from PA-20S/PA-65 Schedule D-I, Line

16. If a negative amount, fill in the

“loss” oval.

IMPORTANT: Include the sales,

exchanges or dispositions of in-

ventories and/or stock-in-trade in de-

termining net business income (loss).

Rent/Royalty Net Income (Loss)

from PA Schedule M, Part B

Net Rent

Net rents and royalties from real and tan-

ible personal property located in Penn-

sylvania are allocable to Pennsylvania.

Net Royalties

Patent, copyright and other intangible

royalties are allocable to Pennsylvania

to the extent that the payer of such in-

come uses the patent or copyright in

Pennsylvania.

A business uses a patent in Pennsyl-

vania to the extent that it employs the

patent in the production, fabrication,

manufacturing, or other processing in

Pennsylvania, or to the extent that it

produces a patented product in Penn-

sylvania.

A business uses a copyright in Penn-

sylvania to the extent that it prints or

otherwise publishes in Pennsylvania.

Rent/Royalty Net Income (Loss)

from PA Schedule M, Part B

Outside PA Column

Complete and submit a PA-20S/PA-65

Schedule E. The PA-20S/PA-65

Schedule E should reflect what is re-

ported on federal Form 8825, Rental

Real Estate Income and Expenses of

a Partnership or S Corporation.

Complete PA-20S/PA-65 Schedule M,

Part B to reflect your Pennsylvania ad-

justments. From PA-20S/PA-65 Sched-

ule M, Part B, Section G, enter the

difference of Line 2 minus Line 1. If a

negative amount, fill in the “loss” oval.

Rent/Royalty Net Income (Loss)

from PA Schedule M, Part B

PA-Source Column

Complete and submit a PA-20S/PA-65

Schedule E. PA-20S/PA-65 Schedule

E should reflect what is reported on

federal Form 8825, Rental Real Estate

Income and Expenses of a Partnership

or S Corporation.

Complete PA-20S/PA-65 Schedule M,

art B to reflect your Pennsylvania

adjustments. Enter the amount from

PA-20S/PA-65 Schedule M, Part B,

Section G, Line 1. If a negative

amount, fill in the “loss” oval.

states or Trusts from

PA Schedule J

Outside PA Column

Complete and submit the PA-20S/PA-

65 Schedule J. If the entity is a benefi-

ciary of an estate or trust, enter the

total figure from the PA-20S/PA-65

Schedule J, Column (d) minus the total

figure from PA-20S/PA-65 Schedule J,

Column (c).

Estates or Trusts from

PA-20S/PA-65 Schedule J

PA-Source Column

Complete and submit PA-20S/PA-65

Schedule J. If the entity is a beneficiary

of an estate or trust, enter the total fig-

ure from the PA-20S/PA-65 Schedule

J, Column (c).

Gambling and Lottery Winnings

(Loss) from PA Schedule T

Complete and submit PA-20S/PA-65

Schedule T. The entity must enter any

winnings it realizes from gambling or

lotteries including cash prizes from the

Pennsylvania Lottery. It may not

deduct any expenses related to realiz-

ing such income. However, it can offset

winnings and losses within this income

class. Submit with Schedule T a de-

tailed statement/explanation of any

amount reported, including information

such as the source of winnings, spe-

cific amounts, etc.

Gambling and Lottery Winnings

(Loss) from PA Schedule T Outside

PA Column

Enter the total figure from the PA-20S/

PA-65 Schedule T, Column (b) Line 5

LINE 5b

LINE 6

LINE 6a

LINE 6b

LINE 5a

LINE 5

LINE 7a

LINE 7b

LINE 8

LINE 8a

20 www.revenue.pa.gov

minus the total figure from PA-20S/PA-

65 Schedule T, Column (a) Line 5. If a

negative amount, fill in the “loss” oval.

ambling and Lottery Winnings

(

Loss) from PA-20S/PA-65

Schedule T

PA-Source Column

Enter the total figure from the PA-20S/

PA-65 Schedule T, Column (a) Line 5.

If a negative amount, fill in the “loss”

oval.

Total Other PA PIT Income (Loss)

PA-Source Column

If all owners are full-year residents, a

combination of Pennsylvania resi-

dentsand nonresidents; or a part-year

resident, then Line 9 equals the sum of

Lines 3, 4, 5a, 5b, 6a, 6b, 7a, 7b, 8a

and 8b. Include losses.

If all owners are full-year nonresident

individuals, then Line 9 equals the sum

of Lines 5b, 6b, 7b and 8b. Include

losses. If a negative amount, fill in the

“loss” oval.

When determining income (loss)

distributable to their owners for

each class of income, the entity does

not use Line 9 because the income

(loss) is reflected in Line 9.

The figure on Line 9 is a sum of total

other income used in calculating accu-

mulated adjustments account and the

total in Part IV.

Summary

Below are cross references for resident

and nonresident partners and share-

holders (owners) for Parts I, II, III from

the PA-20S/PA-65 Information Return

and the line entries on the PA-20S/PA-

65 Schedule(s) RK-1 or NRK-1.

Resident Partners and

Shareholders (Owners)

Business Income

PA-20S/PA-65

Schedule RK-1

Part I, Line 1e RK-1, Line 1

Interest Income

PA-20S/PA-65 Schedule RK-1

Part III, Line 3 RK-1, Line 2

Dividend Income

PA-20S/PA-65

Schedule RK-1

Part III, Line 4 RK-1, Line 3

Net Gain (Loss) - Schedule D

PA-20S/PA-65

Schedule RK-1

Part III, Line 5a+5b RK-1, Line 4

ent, Royalty, Net Income

PA-20S/PA-65

Schedule RK-1

Part III, Line 6a+6b RK-1, Line 5

Estates or Trust Income

PA-20S/PA-65

Schedule RK-1

Part III, Line 7a+7b RK-1, Line

6Gambling and Lottery Winnings

PA-20S/PA-65

Schedule RK-1

Part III, Line 8a+8b RK-1, Line 7

Nonresident Partners and

Shareholders (Owners)

Business Income

PA-20S/PA-65

Schedule NRK-1

Part II, Line 2h NRK-1, Line 1

Net Gain (Loss) - Schedule D

PA-20S/PA-65 Schedule NRK-1

Part III, Line 5b NRK-1, Line 2

Rent, Royalty, Net Income (Loss)

PA-20S/PA-65 Schedule NRK-1

Part III, Line 6b NRK-1, Line 3

Estates or Trust Income

PA-20S/PA-65 Schedule NRK-1

Part III, Line 7b NRK-1, Line 4

Gambling and Lottery Winnings

PA-20S/PA-65 Schedule NRK-1

Part III, Line 8b NRK-1, Line 5

Total PA S Corporation or

Partnership Income (Loss)

In Part IV, the entity calculates the dif-

ference between its book income (loss)

and the income (loss) it reports on the

PA-20S/PA-65 Information Return. The

amounts reported to Pennsylvania dif-

fer from the federal reportable income

(loss).

Total Income (Loss) per Books

and Records

The entity uses book income to arrive

at this figure. This figure (book income)

would not take into account any federal

or Pennsylvania tax adjustments. This

figure is not Pennsylvania income after

adjustments.

Enter the total entity income (loss) from

its underlying Pennsylvania books and

records for the taxable year. If a nega-

ive amount, fill in the “loss” oval.

Interest and gains that the entity de-

rives from government obligations, ex-

empt from Pennsylvania personal

income tax, do not pass through to its

owners as taxable.

Conversely, the entity cannot use

losses on Pennsylvania personal in-

come tax-exempt obligations to offset

taxable income.

In addition, the entity must include

such income (loss) on Line 10 as the

Pennsylvania-exempt income (loss) af-

fects each owner’s basis. Accordingly,

the entity passes through to each

owner its pro rata share of the Penn-

sylvania-exempt income (loss).

Total Reportable Income (Loss)

If the entity has only full-year resident

individual owners or both full-year res-

ident and nonresident individual own-

ers, add Line 1e and Line 9. If a

negative amount, fill in the “loss” oval.

If entity has only full-year nonresident

individual owners, add Line 2h and

Line 9. If a negative amount, fill in the

“loss” oval.

Total Nontaxable/Non Reportable

Income (Loss)

This amount represents the difference

between book income and Pennsylva-

nia-reportable income (loss). Subtract

Line 11 from Line 10 (include losses).

If a negative amount, fill in the “loss”

oval.

Pass Through Credits

In Part V, the entity is required to

identify pass through credits that it re-

ports on the PA-20S/PA-65 Informa-

tion Return.

PAGE 2 - PART IV

LINE 10

LINE 9

LINE 8b

LINE 11

LINE 12

PAGE 2 - PART V

21www.revenue.pa.gov

otal Other Credits. Submit

A 20S/PA-65 Schedule OC

nter amount from Schedule OC, Line

7. The entity is required to submit the

PA-20S/PA-65 Schedule OC detailing

all credits.

Resident Credit

This figure is based on composite re-

turns filed in other states on behalf of

the individual owners. It is an individual

tax credit that is passed through to

owners. Submit a copy of the out-of-

state returns for all resident credits

claimed.

Certain PA S corporations are not

taxed as S corporations in other states.

Report taxes paid in those other

states on PA-20S/PA-65 Schedule OC,

Line 5.

The resident credit for taxes paid to

other states or countries is now only

available as a credit for taxes paid to a

state of the U.S., the District of Colum-

bia, the Commonwealth of Puerto Rico

or any territory or possession of the

U.S. The credit for taxes paid to foreign

countries is no longer permitted as a

credit against a Pennsylvania Personal

Income Tax liability.

Pennsylvania 2016 Quarterly Tax

Withholding Payments/Extension

Payment for Nonresident Owners

Enter the amount from PA-20S/PA-65

Schedule NW, Line B. The amount on

Line 14a will include an extension pay-

ment (if one was made) as listed and

reported on PA-20S/PA-65 Schedule

NW, Line B.

Final Payment of Nonresident

Withholding Tax

Enter the amount from PA-20S/PA-65

Schedule NW, Line D. See How To

Pay.

Total Pennsylvania Income Tax

Withheld

dd Line 14a and Line 14b. Enter the

total here.

International ACH Transactions

The Federal Office of Foreign Assets

Control has imposed additional reporting

requirements on all electronic banking

transactions that directly involve a finan-

cial institution outside of the territorial ju-

risdiction of the U.S. These transactions

are called international ACH transac-

tions (IAT). Presently, the Pennsylvania

Department of Revenue does not sup-

port IAT debit transactions. Taxpayers

who instruct the department to process

electronic banking transactions on their

behalf are certifying that the transactions

do not directly involve a financial institu-

tion outside of the territorial jurisdiction

of the U.S. at any point in the process.

Distributions for Partnerships

On Lines 15 through 18, list all distri-

butions and guaranteed payments

made to partners during the taxable

year.

Distributions of Cash, Marketable

Securities, and Property (Do not

include guaranteed payments.)

Distributions that the partnership

makes that represent cash, marketable

securities, and other property that are

not guaranteed payments may repre-

sent Pennsylvania-taxable income to

the extent the distributions exceed the

resident partner’s outside basis.

Non-liquidating Distributions from

Partnership to Partner

With respect to non-liquidating distribu-

tions from a partnership to a resident

partner, the partner’s adjusted basis in

its partnership interest is decreased to

the extent of the partnership’s Pennsyl-

vania personal income tax adjusted

basis in the property distributed to the

partner.

In non-liquidating distributions, a resi-

dent partner will recognize taxable in-

come to the extent that the partnership’s

adjusted basis in the property distrib-

uted exceeds the resident partner’s ad-

justed basis in its partnership interest.

Although not taxable to a nonresident

partner, the nonresident partner re-

duces his or her economic investment

by the partnership’s adjusted basis in

the property distributed.

Liquidating Distributions from

Partnership to Partner

With respect to liquidating distributions

from a partnership to a resident part-

ner, the partner’s adjusted basis in its

partnership interest is decreased to the

extent of the fair market value of the

property distributed to the partner.

In liquidating distributions, a resident

partner will recognize taxable gain on

PA-40 Schedule D to the extent that

the fair market value of the property

distributed exceeds the resident part-

ner’s adjusted basis in its partnership

interest.

Guaranteed Payments for Capital

or Other Services

Enter the total guaranteed payments

for capital or other services made to

the partners.

Pennsylvania personal income tax law

characterizes such distributions as:

● A withdrawal proportionately from

the capital of all partners;

● A gain from the disposition of the

recipient’s partnership interest and

a loss from the disposition of the

other partners’ partnership inter-

ests, to the extent derived from the

capital of the other partners; and

● A return of capital by the resident

recipients to the extent derived

from their own capital. The distri-

butions that the partnership makes

that represent repayments of the

partner’s own capital are not in-

come for Pennsylvania personal

income tax purposes.

IMPORTANT: Pennsylvania

personal income tax law does

not allow a deduction for guaran-

teed payments for capital or if serv-

ices have not been rendered.

LINE 14a

LINE 14b

LINE 14c

PAGE 2 - PART VI

LINE 15

LINE 13b

LINE 13a

LINE 16

22 www.revenue.pa.gov

All Other Guaranteed Payments for

ervices Rendered

Enter the total guaranteed payments to

partners to the extent that the partner-

ship makes guaranteed payments for

ervices rendered directly in the pro-

uction of income for a Pennsylvania

income class.

The partnership characterizes guaran-

teed payments to partners in the fol-

lowing manner:

● To the extent paid for services ren-

dered directly in the production of in-

come from a business, profession,

or farm, the guaranteed payments

are gross income from that income

class; and

● To the extent paid for services ren-

dered directly in the production of

rental or royalty income, the guar-

anteed payments are gross in-

come from that income class.

If guaranteed payments

have been deducted in cal-

culating business income, include

these payments on Line 17.

Guaranteed Payments to

Retired Partners

Guaranteed payments to retired part-

ners are not taxable if the exception as

stated in IRC §1402(a) (10) is met.

Only nontaxable amounts should be

reported on Line 18. For further detail,

refer to the Pennsylvania Personal In-

come Tax Guide, Chapter 16.

IMPORTANT: Pennsylvania

does not allow a deduction for

guaranteed payments for the use of

capital, or if services have not been

rendered. Each recipient partner re-

ports its classified income (loss) in

each class by adding its guaranteed

payments to the amounts in their PA-

20S/PA-65 Schedule(s) RK-1 and/or

NRK-1, Part IV.

Distributions from PA Accumulated

Adjustments Account

Generally, distributions from the Penn-

sylvania accumulated adjustments

account (AAA) are not taxable to the

extent of the resident shareholder’s

basis. The resident shareholder will

recognize taxable income to the extent

that the Pennsylvania AAA distribution

exceeds the shareholder’s basis in its

stock.

Distributions for PA S Corporations

n Lines 19 and 20, list all distributions

made to shareholders during the tax-

able year.

A distribution that a PA S corporation

makes from its Pennsylvania accumu-

lated earnings and profits before be-

coming a PA S corporation is dividend

income to its resident shareholders.

Other distributions can represent a

non-taxable return of the resident

shareholders’ stock basis.

Nontaxable return of basis distribution

will reduce each resident shareholder’s

basis in the stock first. If the non-tax-

able return of distribution exceeds the

shareholder’s basis in its stock hold-

ings, the shareholder can apply the ex-

cess against the basis of any

indebtedness of the PA S corporation

to that shareholder. If the distribution

exceeds the shareholder’s basis in the

stock and the PA S corporation’s in-

debtedness, the resident shareholder

must report a gain from the disposition

of property.

If the PA S corporation distributes ap-

preciated property, it must treat the dis-

tribution as if it sold the property to the

shareholders at fair market value. Such

a distribution will produce a gain from

the sale of property that the PA S cor-

poration will have to report as net gain

(loss) from the sale, exchange or dis-

position of property.

Although not taxable to a nonresident

shareholder, the nonresident share-

holder reduces its economic invest-

ment by the fair market value of the

property distributed.

A nonresident cannot deduct losses in

excess of its economic investment in

the PA S corporation.

IMPORTANT: When distribu-

tions are determined from all in-

come sources and the shareholders

are only full-year nonresident individual

owners, the Pennsylvania AAA distri-

bution should be factored by the PA-

20S/PA-65 Schedule H percentage to

revent premature depletion of the

ennsylvania AAA balance, which may

trigger a possible tax event.

Distributions of Cash, Marketable

Securities, and Property

Distributions by the PA S corporation

from its C corporation earnings and

profits are Pennsylvania-taxable divi-

dends. Include such Pennsylvania-tax-

able dividends on each shareholder’s

PA-20S/PA-65 Schedule RK-1, Line 3.

Distributions of cash, marketable secu-

rities and property (other than divi-

dends) in excess of the shareholder’s

Pennsylvania AAA are considered a

tax-free return of investment to the ex-

tent of the resident shareholder’s basis

in its stock. The resident shareholder

will recognize taxable income to the

extent that the fair market value of

such distribution exceeds the resident

shareholder’s basis in its stock.

Although not taxable to a nonresident

shareholder, the nonresident share-

holder reduces its economic invest-

ment by the fair market value of the

property distributed.

Other Information

This section asks a series of questions

similar to federal Schedule B. The

questions should be answered with a

“Yes” or “No.” If the entity answered

“Yes”, supplemental statements must

be submitted.

The entity must answer “Yes” to Ques-

tion 1 if during the tax year:

● It owned an interest in another

partnership, foreign (located out-

side the U.S.) or domestic; or

● It was the tax owner of a foreign

entity, located outside the U.S. that

was disregarded as an entity sep-

arate from its owner under federal

Treasury Regulations §301.7701-

2 and 301.7701-3. The tax owner

of a foreign entity located outside

LINE 18

LINE 19

LINE 17

PAGE 2 - PART VII

LINE 1

LINE 20

23www.revenue.pa.gov

the U.S. that was disregarded as an

ntity is treated as owning the as-

ets and liabilities of the foreign

disregarded entity located outside

the U.S. for purposes of U.S. in-

come tax law.

The statement must show each

ntity’s name, federal employer

identification number (if any), and

the country under whose laws the

entity was organized if the entity di-

rectly or indirectly owned at least a

10 percent interest in any other for-

eign (located outside the U.S.) or

domestic partnership.

The entity must answer “Yes” if there

are any tax-exempt partners/members/

shareholders and select tax-exempt as

the owner type on the PA-20S/PA-65

Schedule RK-1 and/or NRK-1.

The entity must answer “Yes” and sub-

mit a statement indicating entity and

foreign location if the partnership, S

corporation or limited liability company

classified as a partnership or PA S cor-

poration had any owners located out-

side the U.S. at any time during the tax

year.

The entity must answer “Yes” if there

was a distribution of property or a

transfer (e.g., by sale or death) of a

partner/member interest during the tax

year (partnership only). If the entity an-

swered yes, submit a statement indi-

cating the disposing partner, the

acquiring partner and the amount paid

for the interest.

The entity must answer “Yes” if the fed-

eral government changed taxable in-

come as originally reported for any

prior tax year for which amended re-

turns have not been filed in Pennsylva-

nia. If the entity answered “Yes”,

submit a statement indicating tax year

and include a copy of the Revenue

Agent’s Report.

If required, the entity must file an

amended return within 30 days of the

adjustment.

The entity must answer “Yes” if either

1 or 2 of the following apply to the part-

nership:

1. At any time during the tax year, the

entity had signature or other au-

thority over a bank account, secu-

rities account, or other financial

account in a foreign country (out-

side the U.S.); and

● The combined value of the ac-

counts was more than $10,000

at any time during the calendar

year; and

● The accounts were not with a

U.S. financial institution.

2. The entity owns more than 50

percent of any partnership or 50

percent of the stock in any corpo-

ration that would answer the ques-

tion “Yes” based on item 1 above.

If the entity answered yes:

● Submit a statement with the

name of the foreign country/

countries; and

● Submit a copy of federal Fin-

CEN Form 114 that was filed

with the Department of the

Treasury.

The entity must answer “Yes” if it is in-

volved in a reportable transaction,

listed transaction, or registered tax

shelter within this return.

Federal Form 8886, Reportable Trans-

action Disclosure Statement, must be

submitted with any return on which a

deduction, loss, credit or any other tax

benefit is claimed or is reported; or any

income the partnership reported from

an interest in a registration-required tax

shelter. If the partnership is required to

file this form with the federal return,

submit a copy with the partnership’s

PA-20S/PA-65 Information Return.

A reportable transaction is any trans-

action as defined in Treasury Regula-

tion 1.6011-4 and includes, but is not

limited to:

● A confidential transaction, which is

offered to an entity under condi-

tions of confidentiality and for

which the entity has paid a mini-

mum fee;

● A transaction with contractual pro-

tections, which provides the entity

with the right to a full or partial re-

fund of fees if all or part of the in-

tended tax consequences from the

transaction are not sustained;

● A loss transaction under IRC §165,

which is at least $10 million in any

one year or $20 million in any com-

bination of tax years;

● A transaction with a significant

book-tax difference; and

● A transaction where the entity is

claiming a tax credit of greater than

$250,000 and held the asset for

less than 45 days.

A listed transaction is a specific re-

portable transaction, or one that is

substantially similar, which has

been identified by the IRS to be a

tax avoidance transaction.

A registered tax shelter is any in-

vestment that must be registered

with the Internal Revenue Service

under IRC §6111.

The entity must answer “Yes” if the en-

tity filing as a partnership has other

partnerships as partners.

The entity must answer “Yes” if tax

credits were sold.

If the entity answered “Yes”, submit a

statement identifying the buyer, the So-

cial Security number or federal em-

ployer identification number, the type

and amount of credit sold and the sales

price.

The entity must answer “Yes” if it

changed its method of accounting for

federal income tax purposes during

this tax year.

Pennsylvania does not allow the four-

year spread of the effect in accounting

LINE 4

LINE 5

LINE 6

LINE 7

LINE 3

LINE 2

LINE 8

LINE 9

LINE 10

24 www.revenue.pa.gov

method change under IRC §481. The

effect of the change must be recog-

nized entirely in the year of the change.

The entity must answer “Yes” if it en-

tered into any like-kind exchanges

under IRC §1031 for the current tax

year.

If the entity answered “Yes”, submit

federal Form 8824.

If Section 179 properties are involved

submit the information provided to the

owners on their federal Schedules K-1.

Enter the Pennsylvania-apportionment

decimal from PA-20S/PA-65 Schedule

H-Corp used for calculating CNI tax. If

using special apportionment, enter that

decimal here.

Accumulated Adjustments

Account and Accumulated

Earnings and Profits

PA S Corporations Only

The Pennsylvania accumulated adjust-

ments account (AAA) should not equal

the federal AAA, because Pennsylva-

nia AAA is based on Pennsylvania tax

principles; however, Pennsylvania par-

allels certain federal calculation rules

in arriving at Pennsylvania AAA, such

as the following:

● The Pennsylvania AAA is based

upon the Pennsylvania personal

income tax income (loss) and dis-

tributions.

● The PA S corporation’s AAA re-

flects only the income (loss) and

distribution from the inception of

the election of PA S corporation

status.

● The PA S corporation does not

make an adjustment for any in-

come (loss) that is not enumerated

in Pennsylvania personal income

tax law or any non-deductible

Pennsylvania personal income tax

expense.

Examp le. For Pennsylvania personal

income tax purposes, tax-exempt in-

come is not added to income subject to

Pennsylvania personal income tax.

IMPORTANT: The AE&P column

is for former C corporations only.

If an entity has been an S corporation

from inception, this column will always

be zero.

Balance at the Beginning of the

Taxable Year

For the corporation’s first tax year as a

PA S corporation, enter zero. In subse-

quent years, enter the ending balance

from the prior year’s account. If a neg-

ative amount, fill in the “loss” oval.

NOTE: If an S corporation had

no prior earnings in Pennsylva-

nia, the beginning AAA would be zero.

Total Reportable Income from

Part IV, Line 11

Enter the total Pennsylvania-reportable

income from the PA-20S/PA-65 Infor-

mation Return, Part IV, Line 11.

Do not enter a loss from Part IV, Line

11 on this line.

Other Additions - Submit an

Itemized Statement

Enter other additions to the Pennsylva-

nia AAA. Do not enter non-taxable in-

come. Submit an itemized statement of

the additions reported on this line.

Example. If an S corporation acquired

another S corporation, the AAA in the

acquired S corporation would be in-

cluded in this line. The itemized state-

ment must include the name(s) of the

S corporation purchased and federal

employer identification number(s).

Loss from Part IV, Line 11

Enter the loss from Part IV, Line 11 of

the PA-20S/PA-65 Information Return.

ther Reductions - Submit an

Itemized Statement

Enter other reductions to the Pennsyl-

vania AAA. Do not enter Pennsylvania

non-deductible expenses associated

with non-taxable income. Submit an

itemized statement of the reductions

reported on this line.

Example. If an S corporation acquired

another S corporation, the negative

AAA in the acquired S corporation

would be included in this line. The

itemized statement must include the

name(s) of the S corporation pur-

chased and federal employer identifi-

cation number(s).

Sum of Lines 1 through 5

Enter the sum of Line 1 through Line 5.

If a negative amount, fill in the “loss”

oval.

Distributions

Enter all distributions other than divi-

dend distributions. Dividend distribu-

tions are not part of the Pennsylvania

AAA.

IMPORTANT: When distribu-

tions are determined from all in-

come sources and the shareholders

are only full-year nonresident individual

owners, the Pennsylvania AAA distri-

bution should be factored by the PA-

20S/PA-65 Schedule H percentage to

prevent premature depletion of the

Pennsylvania AAA balance, which may

trigger a possible tax event.

Balance at Taxable Year-End

Subtract Line 7 from Line 6. Enter the

total. If a negative amount, fill in the

“loss” oval.

If a PA S corporation reverts to being a

corporation subject to corporate net in-

come tax, it may distribute the balance

of its Pennsylvania AAA to sharehold-

ers as a non-taxable return of capital to

the extent of basis. Such distributions,

LINE 1

LINE 2

LINE 3

LINE 4

LINE 5

PAGE 3 - PART VIII

LINE 12

LINE 11

LINE 6

LINE 7

LINE 8

however, will reduce the shareholder’s

asis in the C corporation.

If the distributions exceed the resident

shareholder’s basis in the stock of the

former PA S corporation, the share-

olders must report the distributions as

axable gains on the sale, exchange or

isposition of property to the extent of

ennsylvania AAA.

Ownership in Pass Through Entities

If the entity received income (loss)

from an S corporation, partnership, es-

tate or trust, limited liability company

or any other pass through entity includ-

ing a qualified subchapter S subsidiary

(QSSS), list the federal employer iden-

tification number and name and

address of each entity.

If the income (loss) is from a qualified

subchapter S subsidiary, enter “yes” in

the qualified subchapter S subsidiary

box.

The entity filing the PA-20S/PA-65 In-

formation Return would list in Part IX

all entities in which it is a shareholder,

member, partner or beneficiary.

An S corporation can be a member,

partner or beneficiary in a limited liabil-

ity company, partnership, estate or

trust, respectively. An S corporation

cannot own another S corporation un-

less the other corporation is a qualified

subchapter S subsidiary.

A partnership can be a member, part-

ner or beneficiary in a limited liability

company, partnership, estate or trust,

respectively. A partnership cannot be a

shareholder in an S corporation.

The entities listed in Part IX provide a

Schedule RK-1 and NRK-1 to the entity

filing the PA-20S/PA-65 Information

Return. However, a qualified subchap-

ter S subsidiary does not issue a PA

Schedule K-1.

The entity must report the income from

PA Schedules RK-1 and NRK-1 in the

same class of income on the PA-20S/

PA-65 Information Return.

The entity reports pass through busi-

ness income from PA Schedules RK-1

and NRK-1 on the PA-20S/PA-65 Infor-

mation Return, Parts I and II.

ncome from PA-20S/PA-65 Schedule

K-1 less the amount reported on PA-

0S/PA-65 Schedule NRK-1 is re-

ported in the Outside PA column and

income from PA-20S/PA-65 Schedule

NRK-1 is reported in the PA Source

column on the PA-20S/PA-65 Informa-

tion Return.

NOTE: If additional space is

needed, submit on a separate

statement. Do not submit additional

copies of Page 3 from the PA-20S/PA-

65 Information Return.

Paper-Filed Returns

General Partner, Principal Officer

or Authorized Individual Signature

and Name

The PA-20S/PA-65 Information Return

must be signed and dated.

The entity has not filed a valid PA-20S/

PA-65 Information Return unless it is

properly signed. The individual signing

the return must be a general partner,

principal officer or individual expressly

authorized to sign.

The PA S corporation or partnership of-

ficial signing the return verifies by writ-

ten declaration, under penalties of

perjury, that he or she personally has

examined the PA-20S/PA-65 Informa-

tion Return and its accompanying

schedules and to the best of his or her

knowledge, PA-20S/PA-65 Information

Return is true, correct and complete.

The PA S corporation or partnership of-

ficial that is responsible for signing the

PA-20S/PA-65 Information Return

must sign it by hand; signature stamps

or labels are not acceptable, and in-

clude his or her title, date and daytime

phone number.

The responsible official must submit all

required schedules with the PA-20S/

PA-65 Information Return, including

the PA-20S/PA-65 Schedules RK-1

and NRK-1 for each owner, and

Schedule H-Corp for each corporate

owner.

Preparer’s Signature and Name

A paid preparer may sign original or

amended returns by rubber stamp, me-

hanical device, or computer software

program. Pennsylvania follows federal

guidelines for signature requirements

for the preparer.

If a partner, shareholder or employee

of the entity completes the PA-20S/PA-

65 Information Return, the paid pre-

parer’s space should remain blank. In

addition anyone who prepares the PA-

20S/PA-65 Information Return but

does not charge the entity should not

complete the paid preparer section.

Anyone who prepares a PA-20S/PA-65

Information Return for a fee or incident

to the performance of services for

which the preparer charges a fee, e.g.,

an attorney provides legal services for

a fee and includes for free, the prepa-

ration of the PA-20S/PA-65 Information

Return, must complete the required

paid preparer information listed below:

● Print or type the paid preparer’s

name in the space provided.

● Sign the return in the space pro-

vided for the paid preparer’s signa-

ture.

● Fill in the other areas in the “Paid

Preparer Use Only” section.

● Print or type the paid preparer’s

company or corporation name and

federal employer identification

number, if applicable.

● Print or type the paid preparer’s

Preparer Tax Identification Number

(PTIN). If you are a paid preparer,

you must use a PTIN issued by the

Internal Revenue Service (IRS) to

identify yourself in the paid pre-

parer section of the tax return.

● Give a copy of the return to the tax-

payer.

If someone prepares the return at

no charge, the paid preparer’s

area need not be completed.

Electronically Filed Returns

An electronic return must be signed by

a general partner, principal officer or

authorized individual.

An electronic return must also be signed

by the paid preparer, if applicable.

PAGE 3 - PART X

WHO MUST SIGN

PAGE 3 - PART IX

25www.revenue.pa.gov

Two signature options are available:

1. PA-8879-P, Pennsylvania e-File

Signature Authorization for PA S

Corporation/Partnership Informa-

tion Return (PA-20S/PA-65) – Di-

rectory of Corporate Partners (PA-

65 Corp); or

2. PA-8453-P, PA S Corporation/

Partnership Information Return

(PA-20S/ PA-65) – Directory of

Corporate Partners (PA-65 Corp)

Tax Declaration for a State e-File

Return.

PA-8879-P Form

The federal self-select PIN option con-

sists of two PINs, one for the taxpayer

and one for the practitioner.

In order for the department to accept

the federal self-select PIN as a signa-

ture, software developers must display

a jurat/disclosure statement (similar to

the language on the PA-8453-P and

meeting the requirements of 72 P.S.

§7333 and 61 Pa. Code §121.23) at-

tached as Page 3 to PA-8879-P.

Taxpayers and Electronic Return Orig-

inators (ERO) must complete PA-8879-

P when using this method and con-

senting to electronic funds with-

drawals.

he department requires the ERO to

retain completed PA-8879-P forms for

three years after the due dates of the

returns or the dates the returns were

iled electronically, whichever is later.

Do not mail these forms to the depart-

ment.

PA-8453-P Form

If a taxpayer elects not to use the fed-

eral self-select PIN option or if the state

submission is filed as a state stand-

alone (no link to an original federal

submission), the department requires

the ERO to retain completed PA-8453-

P forms for three years after date the

returns were filed electronically:

Do not mail these forms to the depart-

ment. PA-8453-P must be completed

and signed by all appropriate parties

before the return is transmitted elec-

tronically.

In the event the department selects an

electronic return for examination, the

ERO may be required to provide the

PA-8879-P form and, if appropriate, the

PA-8453-P form within five business

days of the request. A percentage of

these forms will be randomly re-

quested yearly for monitoring compli-

ance.

E-File Opt-Out Oval

Mandatory e-filing is now required for

third party practitioners who prepare 11

or more PA-20S/PA-65 returns. Entities

that prefer their preparers to complete

a paper return should fill in the opt-out

e-filing oval.

26 www.revenue.pa.gov

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