OUR THOUGHTS ON:

Pennsylvania S Corporation Revocations

State and Local Tax

By Matthew Dodge

For the first time since provisions went into effect in 2006, corporations that are federal S corporations have the opportunity in 2011 to revoke their election to not be taxed as a Pennsylvania S corporation. In order to revoke the election, shareholders holding more than half of the stock in the corporation on the revocation date must submit a signed letter to the Pennsylvania Department of Revenue. The letter must include the revocation date, corporation name, federal EIN and Pennsylvania corporate tax account number. If the corporation has qualified Subchapter S subsidiaries doing business in Pennsylvania, the letter must also include the names and corporate tax account numbers of the subsidiaries.

The deadline to file the revocation is the 15th day of the third month in which the revocation is to be effective. Any revocation that is submitted after the deadline will become effective in the next tax period. Note that a revocation may be submitted in advance. Any revocation submitted within five years of the election will be effective for the first tax period for which the taxpayer is eligible to revoke the election.

For further information, please contact Matt Dodge, State and Local Tax Advisory Services, at (412) 697-5343 or mdodge@schneiderdowns.com.

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Schneider Downs provides accountingtax, wealth management, technology and business advisory services through innovative thought leaders who deliver the expertise to meet the individual needs of each client. Our offices are located in Pittsburgh, PA and Columbus, OH. 

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax-related matter.

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