There are four types of tax payments an S corporation can make — extension, estimated tax, tax return and amended return payments. You can pay electronically, by credit or debit card or by check. (See Payment Options above.)
Note: If you’re currently paying electronically using the ACH credit method, continue to call your bank as usual. If you wish to make payments using the ACH credit method, instructions are available on our website at www.revenue.state.mn.us.
Your tax is due by the regular due date, even if you are filing under an extension. Any tax not paid by the regular due date is subject to penalties and interest (see lines 16 and 17 on page 5).
If you’re filing after the regular due date, you can avoid penalties and interest by making an extension payment by the regular due date. See Payment Options above. If you’re paying by check, send a completed Form PV81 along with your payment.
Estimated Tax Payments
An S corporation must make quarterly estimated tax payments if the sum of its estimated S corporation taxes, minimum fee, nonresident withholding and composite income tax for all nonresident shareholders electing to participate in composite income tax, less any credits, is $500 or more.
Payments are due by the 15th day of the fourth, sixth and ninth months of the tax year and the first month following the
end of the tax year. If the due date lands
on a weekend or legal holiday, payments electronically made or postmarked the next business day are considered timely.
If estimated tax is required for the S corporation taxes/minimum fee, composite income tax, and/or nonresident withholding, include all in the same quarterly payments.
To make an estimated payment, see Payment Options above. If you’re paying by check, send a completed Form M72 with your payment.
For additional information, see the S Corporation Estimated Tax instructions.
Tax Return Payment
If line 19 of Form M8 shows an amount due, you must make a tax return payment (see Payment Options above). If you’re not required to pay electronically, you may pay by check and send a completed Form PV40 along with your payment.
Penalties and Interest
A late payment penalty is assessed on any tax not paid by the regular due date. The penalty is 6 percent of the unpaid tax.
If you file your return after the regular due date with a balance due, an additional 5 percent penalty will be assessed on the unpaid tax.
There is also a penalty if you file after the extended due date and owe tax. The late filing penalty is 5 percent of any tax not paid by the regular due date.
You must also pay interest on the penalty and tax you are sending in late. The interest rate for 2012 is 3 percent.
There are also civil and criminal penalties for intentionally failing to file a Minnesota return, evading tax and for filing a frivolous, false or fraudulent return.
You must use the same accounting period for Minnesota as you use for your federal return. If you change your federal accounting period, attach a copy of federal Form 1128, Application to Adopt, Change or Retain a Tax Year, to your shortperiod Minnesota return.
Composite Income Tax
An S corporation may pay composite Minnesota income tax on behalf of its nonresident shareholders who elect to be included in lieu of each shareholder filing his or her own Minnesota return. The electing individuals must not have any Minnesota source income other than the income from this S corporation and other entities electing composite filing.
If you are paying composite income tax for your electing shareholders, check the box for composite income tax on the front of Form M8 and see the line 3 instructions on page 4.
Nonresidents included in the composite income tax are not subject to the nonresident withholding requirements (see the next section).
S corporations are required to withhold Minnesota income tax for a nonresident shareholder if the shareholder:
- has a legal residence that is not Minnesota;
- is not included in composite income tax;
- has Minnesota distributive income of $1,000 or more from this S corporation; and
- has income that was not generated by a transaction related to the termination or liquidation of the S corporation in which no cash or property was distributed in the current or prior taxable year.
If you are required to pay nonresident with holding, see the line 4 instructions on page 4.
Compensation paid to a nonresident entertainment entity for performances in Minnesota is not n Specialist subject to Minnesota income tax.
Instead, the compensation is subject to a 2 percent withholding tax on the gross compensation the entertainment entity receives for performances in Minnesota.
An S corporation is an entertainment entity if it is paid compensation for entertainment provided by entertainers who are shareholders. An entertainer includes, for example, a musician, singer, dancer, comedian, thespian, athlete or public speaker. If you are defined by law as an entertainment entity, file Form ETR, Nonresident Entertainer Tax Return, by April 15 of the following year the income was reported. For additional information, see Withholding Fact Sheet 11, Nonresident Entertainer Tax.
If you are an entertainment entity that received compensation for performances in Minnesota and have no other type of Minnesota income, you are not required to file Form M8.
Use of Information
All information on this form is private, except for your Minnesota tax ID number, which is public. Private information cannot be given to others except as provided by state law.
The identity and income information of the shareholders are required under state law so the department can determine the shareholder’s correct Minnesota taxable income and verify if the shareholder has filed a return and paid the tax. The Social Security numbers of the shareholders are required under M.S. 289A.12, subd. 13.
Assembling Paper Returns
Arrange your Minnesota schedules in the order they were completed and place them behind behind your Form M8. Then place your federal return and its schedules behind the Minnesota material. Do not staple or tape any enclosures to your return.
Reporting Federal Changes
If the Internal Revenue Service (IRS) changes or audits your federal return or you amend your federal return and it affects your Minnesota return or the federal Schedules K-1, you must amend your Minnesota return. File your Form M8X within 180 daysafteryouwerenotifiedbytheIRSor after you filed your federal amended return. Enclose a copy of the IRS report or your amended federal return with your amended Minnesota return.
If the changes do not affect your Minnesota return or Schedule K-1, you have 180 days to send a letter of explanation to the department. Send your letter and a complete copy of your amended federal return or the correction notice to: Minnesota S Corporation Tax, Mail Station 5170, St. Paul, MN 55146-5170.
If you fail to report as required, a 10 percent penalty will be assessed on any additional tax.
Annual Reporting of All JOBZ Tax Benefits
Each qualified business participating in a JOBZ zone is required to annually file two forms with the Department of Rev- enue that are in addition to and separate from the qualified business’s tax return.
- By Oct. 15, 2012, each qualified business must file Form M500, JOBZ Tax Benefit Report, to report the amount of taxes the business would have paid in 2011 had it not been in a JOBZ zone.
- By Oct. 15, 2012, each qualified business must file Form JOBZ1, Certification of JOBZ Compliance with Business Subsidy Agreement, to certify to the department that it is in compliance with the terms of its business subsidy agreement.
Failure to submit either of these reports will result in the business being removed from the JOBZ program.
This is part of a series of posts on S corporation M8 instructions.