West Virginia Senate Bill 151 (SB 151) was approved by Gov. Jim Justice on March 28, 2023. This bill allows for pass-through entities (PTEs) to make an election to be taxed at the entity level.
Key components of this new law include:
- The election is retroactive to tax year 2022 and is effective June 8, 2023.
- The election is to be made annually and is irrevocable once made.
- Qualifying entities include any partnerships or S corporations not disregarded for federal income tax purposes.
- The PTE tax is filed and paid in lieu of nonresident withholding. Form PTE-100 is not required if the election is made.
- For calendar-year taxpayers, the election is due on or before March 15. Retroactive elections for tax year 2022 are required to be made between June 8 and September 15, 2023.
- For tax year 2022, an extension of time will be granted until April 18, 2023 to pay the entity-level tax due as a nonresident withholding payment so long as the entity receives agreement from the owners to later apply the nonresident withholding payment as entity-level tax. If an entity does not make this payment, an extension of time to pay the entity-level tax will be granted only if the owners have paid their West Virginia personal income tax liability by April 18, 2023 without regard to allowable West Virginia PTE credits.
- No estimated payments are required for tax year 2022.
- For tax year 2023, Q1 and Q2 estimated payments are extended until September 15, 2023. At this time, payment must include the estimated liability for the first three quarters of the taxable year. In later years, estimates are due quarterly.
- Election forms and the entity-level return are not yet available but are set to be released as soon as possible following the June 8, 2023 effective date. The West Virginia Department of Revenue anticipates these filings will be available online only through its filing portal.
- The PTE tax rate is the top marginal individual rate for the year: 6.5% for tax year 2022.
- The PTE tax is calculated on a resident’s share of unapportioned income.
- Owners of an electing PTE are allowed to claim a credit against their West Virginia individual income tax equal to their share of PTE tax paid. Excess credits may be carried forward for up to five taxable years.
- Resident owners are allowed a credit for taxes paid to other states.
If you have any questions or need assistance, please reach out to a professional at FORVIS or submit the Contact Us form below.