12 CSR 10-2.190 - Partnership and S Corporation Annual Return Filing Requirements, Composite Returns, and Nonresident Partner/Shareholder Income Tax Withholding
(1)
For purposes of this rule-
(A) The term
"partnership" includes a general partnership, a limited partnership, a limited
liability partnership, a limited liability limited partnership, and a limited
liability company treated as a partnership for federal income tax purposes.
However, the term "partnership" does not include a publicly traded partnership
treated as a corporation for federal income tax purposes; and
(B) The term "S corporation" includes an S
corporation and a limited liability company treated as an S corporation for
federal income tax purposes.
(2) Annual partnership and S corporation
returns.
(A) A partnership return shall be
filed using Form MO-1065 by the fifteenth day of the fourth month following the
close of each taxable year and shall be based upon the provisions of the law
and the Form MO-1065 instructions effective for the taxable year. This filing
requirement applies to every partnership having any income derived from sources
in this state in accordance with section
143.581, RSMo.
(B) Consistent with the last sentence of
section 143.471.7, RSMo, an S corporation shall file an annual return for its
taxable year at the time required by section
143.511, RSMo. An S corporation
return shall be filed using Form MO-1120S by the fifteenth day of the fourth
month following the close of each taxable year and shall be based upon the
provisions of law and the Form MO-1120S instructions effective for the taxable
year.
(C) The partnership return or
S corporation return shall reflect, among other things, the partnership or S
corporation's Missouri allocated income and Missouri apportioned income
consistent with 12 CSR 10-2.255. The partnership
or S corporation's Missouri allocated income and Missouri apportioned income
shall be the basis on which a nonresident partner or shareholder, consistent
with 12 CSR
10-2.255, determines the items of partnership or S
corporation income, gain, loss, or deduction entering into nonresident federal
adjusted gross income from sources within this state.
(D) On or before the due date (including
extensions of time) of its Form MO-1065 or Form MO-1120S, the partnership or S
corporation with income from Missouri sources shall furnish to each nonresident
partner or shareholder a completed Form MO-NRP or Form MO-NRS, and shall
furnish to each partner or shareholder an extract of all information from the
Form MO-1065 or Form MO-1120S that is relevant to that partner or shareholder,
or else a copy of the Form MO-1065 or Form MO-1120S, but in either event with
information about other partners or shareholders, such as their social security
numbers or share percentages, removed or redacted.
(3) Composite returns.
(A) In lieu of each nonresident partner or S
corporation shareholder filing a separate individual income tax return
(provided that their filing requirement results solely from one (1) or more
interests in a partnership or S corporation), a partnership or S corporation
may file an individual income tax return under the name of the partnership or S
corporation on or before the fifteenth day of the fourth month following the
close of the partnership or S corporation's taxable year. This shall be the
composite return filed on behalf of such nonresident partners or shareholders.
This return shall show on an appended schedule the name, address, Social
Security number, of each nonresident partner or nonresident S corporation
shareholder, and, for each such partner or shareholder, the amount of federal
distributive share of partnership or S corporation income and the amount of
income from Missouri sources as determined in accordance with subsection
(2)(C).
(B) For a composite payment
of tax, the tax rate to be applied to the income from Missouri sources of each
nonresident partner or S corporation shareholder determined in accordance with
subsection (2)(C), in lieu of demonstrating the exact amount of Missouri income
tax, is the tax rate imposed on the highest tax bracket under section
143.011, RSMo, in effect for the
partnership's or S corporation's tax year with respect to which the composite
return is filed.
(C) The sum of the
amount determined in subsection (3)(B) will be paid by the partnership or S
corporation as a payment against the individual income tax liability of all its
nonresident partners or nonresident S corporation shareholders properly
included on the composite return.
(D) Timely filing of the composite return by
the partnership or S corporation and timely composite payment of the tax will
discharge each nonresident partner's or S corporation shareholder's
responsibility to Missouri for filing a Missouri individual income tax return
for the individual income tax year of a nonresident who is included on the
composite return, if the composite return is for a tax year ending within or
with that individual income tax year of the nonresident.
(E) Only nonresident individual partners or
nonresident individual S corporation shareholders, not otherwise required to
file a Missouri individual income tax return, are eligible to be included on a
partnership's or S corporation's composite return and included in the composite
payment of tax. However, a partnership or S corporation may choose to make a
payment of Missouri income tax on behalf of any partner or shareholder,
including but not limited to resident partners, resident shareholders, or
corporate partners. If a partnership or S corporation attempts to make a
composite payment that includes an amount for a taxpayer other than an eligible
nonresident partner or shareholder, that amount shall be deemed a payment of
Missouri income tax made on behalf of such taxpayer.
(F) To help avoid the imposition of an
addition to tax for failure to pay estimated income tax on the nonresident
partners or shareholders that will be included on a composite return, a
partnership or S corporation that expects to file a composite return and make a
composite tax payment must make estimated income tax payments on behalf of such
nonresident partners or shareholders in four (4) equal installments, if the
Missouri estimated tax of the nonresident(s) to be included on the composite
return is reasonably expected to be at least one hundred dollars ($100). The
first installment is paid when the declaration is filed; the second and third
installments on June 15 and September 15, respectively, of the taxable year;
and the fourth installment on January 15 of the succeeding taxable year. If the
taxable year of the partnership or S corporation begins on any date other than
January 1, there shall be substituted, for the months specified in this
subsection, the months which correspond thereto in a manner consistent with
section 143.541.5, RSMo.
(4) Withholding Requirements for a
Partnership or S Corporation.
(A) Partnerships
and S corporations are required to withhold Missouri income tax from any
nonresident individual partner(s) or nonresident S corporation shareholder(s)
to which the partnership or S corporation pays or credits amounts on account of
their distributive share of the partnership income for the taxable year, or as
dividends or as their share of the S corporation's undistributed taxable income
for the taxable year.
(B) The
partnership or S corporation is not required to withhold if-
1. The nonresident partner or S corporation
shareholder not otherwise required to file a return agrees to have the Missouri
income tax due paid as part of a composite return;
2. The nonresident partner or S corporation
shareholder, not otherwise required to file a return has Missouri assignable
federal adjusted gross income from the partnership or S corporation of less
than twelve hundred dollars ($1,200);
3. The partnership or S corporation is
liquidated or terminated;
4. The
income from which the nonresident partner's distributive share of partnership
income, or the nonresident shareholder's dividend and share of undistributed
taxable income, was derived was generated by a transaction related to the
partnership's or S corporation's termination or liquidation;
5. No cash or other property was distributed
in both the current and prior taxable year; or
6. The partnership or S corporation files a
Form MO-3NR Partnership or S Corporation Withholding Exemption or Revocation
Agreement, that was signed by the nonresident partner or S corporation
shareholder who has agreed to-
A. File a
return in accordance with the provisions of section
143.481, RSMo, and to make
timely payment of all taxes imposed on the partner or S corporation shareholder
by this state with respect to income of the partnership or S
corporation;
B. Be subject to
personal jurisdiction in this state for purposes of the collection of income
taxes, together with related interest and penalties, imposed on the partner or
S corporation shareholder by this state with respect to the income of the
partnership or S corporation;
C.
Form MO-3NR will be considered timely filed for a taxable year, and for all
subsequent taxable years, if it is filed at or before the time the annual
return of the partnership or S corporation for such taxable year is required to
be filed pursuant to section
143.511, RSMo. A partnership or
S corporation that does not timely file such an agreement for a taxable year
shall not be precluded from timely filing such an agreement for subsequent
taxable years;
D. Note: Exceptions
to this withholding requirement are not exceptions from Missouri income tax or
the Missouri employer withholding tax requirement. For example, income
generated by termination or liquidation, although not subject to this
withholding requirement, may still be subject to Missouri income tax;
E. The partnership or S corporation may
determine the tax to be withheld in one (1) of two (2) ways-
(I) If the partner or shareholder submits a
Form MO W-4, Missouri Withholding Allowance Certificate, the tax to be withheld
on behalf of that partner or shareholder shall be determined based on the
employer withholding tables published by the Department of Revenue for the year
for which the withholding is to be performed. The S corporation or partnership
shall use the employer withholding tables as though the dividends and
undistributed income allocable to Missouri that is paid or credited to the
nonresident S corporation shareholder, or the distributive share of partnership
income allocable to Missouri that is paid or credited to the nonresident
partner, were wages paid to the shareholder or partner; or
(II) If no Form MO W-4 is submitted, the
highest rate used to determine a Missouri income tax liability for an
individual under section
143.011, RSMo, for the year for
which the withholding is to be performed, will be applied to the dividends and
undistributed income allocable to Missouri that is paid or credited to the
nonresident S corporation shareholder, or the distributive share of partnership
income allocable to Missouri that is paid or credited to the nonresident
partner;
F. If
withholding is remitted to the Department of Revenue on behalf of a nonresident
partner or S corporation shareholder who has no tax liability, the partnership
or S corporation may file a claim for refund on behalf of such partner or
shareholder with the Department of Revenue to recover the amount
remitted;
G. Withholding should be
remitted on Form MO-1NR, Income Tax Withheld for Nonresident Individual
Partners or S Corporation Shareholders. The Form MO-1NR, all applicable Forms
MO-2NR, and payment must be filed and paid by the due date or extended due date
for filing the partnership or S corporation income tax return. The Form MO-1NR
and the Form MO-2NR filings shall be considered a part of the annual S
corporation or partnership Missouri income tax return. An extension of time for
filing the partnership or S corporation return automatically extends the time
for filing the Form MO-1NR and all applicable Forms MO-2NR and the time for
making the withholding payment. Form MO-1NR and a copy of the Form MO-2NR must
be filed with the Department of Revenue either before or at the same time the
partnership or S corporation provides a copy of the Form MO-2NR to the
nonresident partner or S corporation shareholder. Failure to do so may result
in the department disallowing the withholding claimed by the nonresident
partner of S corporation shareholder; and
H. A Form MO-2NR, Statement of Income Tax
Payments for Nonresident Individual Partners or S Corporation Shareholders,
must be completed and filed by the partnership or S corporation for each
nonresident partner or shareholder for whom withholding was performed. A copy
of the Form MO-2NR must be furnished by the partnership or S corporation to
each nonresident partner or shareholder for whom withholding was
performed.
(5) Notwithstanding any provision of this
rule to the contrary, nothing in this rule shall be interpreted or construed as
incorporating by reference any rule, regulation, standard, or guideline of a
federal agency.
Notes
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