Kentucky Department of Revenue Kentucky Department of Revenue Kentucky Department of Revenue Kentucky Department of Revenue

Pass-Through Entities Tax

UK Tax School Update

In recent conversations with tax software vendors, the Department of Revenue has learned that Kentucky’s Form 725 for a single member LLC entity will NOT be ready for e-filing for the 2015 tax year (2016 processing year).  This is contrary to what DOR presented at UK Tax Seminars in 2015.  Please make note of this as you prepare for the upcoming filing season. 

We will continue to work with vendors to enhance Kentucky’s e-file options and apologize for any inconvenience this may cause. If the Department of Revenue Office of Income Taxation Communications and Training Branch can be of any assistance to you during the upcoming year, please do not hesitate to contact us at 502-564-0929.

Non-Resident Withholding Filing Requirement

• Per KRS 141.206(5),  every pass through entity doing business in Kentucky (except publicly traded partnerships) is required to withhold income tax on the distributive share income whether distributed or undistributed, of each:

a) Nonresident individual partner/member/shareholder (including trusts and estates per KRS 141.030(1); and

b) Corporate partner/member that is doing business in Kentucky ONLY through its ownership interest in a pass through entity. That means if the corporate partner/ member is doing business in Kentucky pursuant to KRS 141.010(25) for reason other than its ownership interest in a PTE, withholding is not required.  Withholding is not required if net distributive share income is not subject to Kentucky income tax (such as PL 86.272 and KRS 141.040).

• A Nonresident withholding and Composite Income Tax Return should be submitted on form 740NP-WH (with copy A of PTE-WH completed for each partner/member/shareholder) by the 15th day of the fourth month following the close of the tax year, at the maximum rate provided in KRS 141.020 or KRS 141.040 (6%).

• A partner/member/shareholder may be exempt from withholding if appropriate tax return (KY 720, KY 740-NP, KY 741 etc.) for prior year was filed. A 740NP-WH form needs to be filed to demonstrate the exemption. In the case of exemption, the partner/member/shareholder is reporting pass through income on a current year tax return (KY720, KY 740-NP, or KY 741).

• Effective for taxable years beginning after December 31, 2011, every pass-through entity required to withhold Kentucky income tax shall make a declaration and payment of estimated tax.   Instructions to determine if you are required to make estimated payments and vouchers are available here: 740 NP-WH-ES

• A partner/member/shareholder may claim nonresident withholding paid (as shown on bottom line on PTE-WH form) on the LLET and/or income tax return.

If you need assistance with nonresident withholding, please call 502-564-8139 or email DORWEBRESPONSEPASSTHROUGHENTITY@ky.gov

Extension of Time

An extension of time to file Form 740NP-WH Kentucky Nonresident Income Tax Withholding on Distributive Share Income Report and Composite Income Tax Return shall be obtained by filing Form 40A201NP-WH-SL, Extension of time to file Kentucky Form 740NP-WH, with the Department of Revenue on or before the due date of the return.  The balance of tax due shall accompany the extension; an extension of time to file the return does not extend the date for the payment of tax.  If no tax is due, a copy of the federal Form 7004 or Kentucky Form 41A720SL or 40A102 must be attached to Form 740 NP-WH when filed.  Complete instructions and the applicable extension form are available here:   Form 40A201 NP-WH-SL

Locate Forms to Download

Current Year - Corporation and Pass-Through Entity Tax Forms

Prior Year - Corporation and Pass-Through Entity Tax Forms

Software Vendors-Supported Forms & Schedules

Tax Year 2015 Business Income Tax Software Approval List

Contact DOR Staff

E-Mail DOR Taxing Areas.

 

E-Filing and Payment Options

E-Tax - Electronic Filing and Payment Options


 

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Last Updated 2/24/2016