190 Partnership and S Corporation Annual

Return Filing Requirements, Composite Returns, and Nonresident Partner/Shareholder Income Tax Withholding PURPOSE: This rule clarifies the circumstances under which a composite individual income tax return for nonresident partners or nonresident S corporation shareholders may be filed and the general contents of the return as well as the withholding requirements for nonresident partners and shareholders and the related withholding exemption. This rule also clarifies the annual partnership and S corporation return filing requirement. Limited liability companies which are treated as partnerships for income tax purposes, and limited liability partnerships, will be considered partnerships. (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 12 CSR 10-2—DEPARTMENT OF REVENUE DIVISION 10—DIRECTOR OF REVENUE 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 Share- holders, 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 withhold- ing 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. (1/29/26) Denny Hoskins DIVISION 10—DIRECTOR OF REVENUE 12 CSR 10-2—DEPARTMENT OF REVENUE AUTHORITY: sections 143.411 and 143.961, RSMo 2016, and section 143.471, RSMo Supp. 2023.* Original rule filed March 15, 1989, effective Sept. 11, 1989. Emergency amendment filed Sept. 14, 1994, effective Sept. 24, 1994, expired Jan. 21, 1995. Emergency amendment filed Dec. 20, 1994, effective Jan. 22, 1995, expired May 21, 1995. Amended: Filed Sept. 14, 1994, effective April 30, 1995. Amended: Filed March 1, 1996, effective Aug. 30, 1996. Amended: Filed Dec. 31, 1997, effective June 30, 1998. Amended: Filed Jan. 24, 2024, effective Sept. 30, 2024. *Original authority: 143.411, RSMo 1972, amended 1993, 1997; 143.471, RSMo 1972, amended 1983, 1989, 1993, 1997, 1999, 2006, 2018; and 143.961, RSMo 1972.