S Corp and Partnership Tax

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Subchapter S Corporation

A corporation that elects to be taxed as a subchapter S corporation for federal income tax purposes is taxed in the same manner for North Dakota income tax purposes. A subchapter S corporation that carries on business or derives gross income from sources in North Dakota must file a Form 60 - S Corporation Income Tax Return by April 15.

An S corporation reports income or loss to every nonresident individual, estate, or trust shareholder on a Form 60 – S Corporation Income Tax Return. This form is also used to report income or loss to every qualified subchapter S trust (QSST) and electing small business trust (ESBT) shareholder with a nonresident individual or estate beneficiary.

Apportionment - All income derived from the S corporation’s activity is business income and is subject to apportionment. For the definitions of business and nonbusiness income, see North Dakota Administrative Code § 81-03-09. North Dakota does not allow for separate accounting.


Partnership

A partnership that carries on business or derives gross income from sources in North Dakota must file a Form 58 – Partnership Income Tax Return by April 15 each year.

If a partnership is an investment partnership and elects out of the partnership rules under I.R.C. § 761(a)(1) and does not file a federal partnership return, the partnership must file a Form 58 – Partnership Income Tax Return if it carries on investment activity, or derives any gross income from sources during its tax year. An IRS Form 1065 must be completed on a pro forma basis and attached to Form 58 – Partnership Income Tax Return.

Apportionment - All income derived from the partnership’s activity is business income and is subject to apportionment. For the definitions of business and nonbusiness income, see North Dakota Administrative Code § 81-03-09. North Dakota does not allow for separate accounting.


Limited Liability Company (LLC) 

An LLC that is taxed like a partnership or S corporation for federal income tax purposes is treated in the same manner for North Dakota income tax purposes.

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Changes for E-Filing

For tax years 2022 and after, a partnership, S Corporation, trust, or other passthrough entity with 10 or more owners (or beneficiaries) must file its North Dakota income tax return and pay any tax due on it electronically. This requirement is due to law changes passed by the 2021 North Dakota Legislature.

For more information about electronic filing, see: 

E-Filing for Businesses

Passthrough Withholding Requirement – S Corporation

An S corporation, or a limited liability company filing as an S corporation, is required to withhold North Dakota income tax for every nonresident partner whose distributive share of North Dakota income is greater than $1,000. It must withhold at the highest individual income tax rate from the year-end distributive share.

Since the 2014 tax year, a nonresident partner for passthrough entity withholding return purposes was expanded to include:

  • Nonresident trusts
  • Nonresident grantor trusts
  • Passthrough entities with a commercial domicile outside of North Dakota

An S corporation does not have to withhold North Dakota income tax from a nonresident partner's distributive share of North Dakota income if:

  • The distributive share for the taxable year is less than $1,000; or
  • In lieu of filing the North Dakota income tax return by the nonresident shareholder, the nonresident shareholder elects to be included in a composite filing by the S corporation.
  • The nonresident shareholder is a passthrough entity and elects to exempt its distributive share of North Dakota income from withholding. This election is made on Form PWE – Passthrough Withholding Entity Member Withholding Exemption & Certification and remains in effect until it is revoked by the nonresident passthrough entity.
  • The nonresident shareholder is an individual who meets the qualifying conditions and completes the Form PWA. For the qualifying conditions, see Form PWA – Passthrough Withholding Adjustment – Nonresident Member. 

The applicable rate for each year is set in Form 60 – S Corporation Income Tax Forms and Instructions. The total withholding must be paid in full with the S corporation return when it is filed. An S corporation cannot withhold on behalf of a C corporation or an exempt organization.

Passthrough Withholding Requirement - Partnership

A partnership, or a limited liability company filing as a partnership, is required to withhold North Dakota income tax for every nonresident partner whose distributive share of North Dakota income is greater than $1,000. It must withhold at the highest individual income tax rate from the year-end distributive share.

Since the 2014 tax year, a nonresident partner for passthrough entity withholding return purposes was expanded to include:

  • Nonresident trusts
  • Nonresident grantor trusts
  • Passthrough entities with a commercial domicile outside of North Dakota

The applicable rate for each year is set out in Form 58 – Partnership Income Tax Form and its instructions. The total withholding must be paid in full with the partnership return when it is filed. A partnership cannot withhold on behalf of a C Corporation or an Exempt Organization.

A partnership does not have to withhold North Dakota income tax from a nonresident partner's distributive share of North Dakota income if:

  • The distributive share for the taxable year is less than $1,000; or
  • In lieu of filing the North Dakota income tax return by the nonresident partner, the nonresident partner elects to be included in a composite filing by the passthrough entity.
  • The nonresident partner is a passthrough entity and elects to exempt its distributive share of North Dakota income from withholding. This election is made on Form PWE – Passthrough Withholding Entity Member Withholding Exemption & Certification and remains in effect until it is revoked by the nonresident passthrough entity.
  • The nonresident partner is an individual who meets the qualifying conditions and completes the Form PWA. For the qualifying conditions, see Form PWA – Passthrough Withholding Adjustment – Nonresident Member. 

A publicly traded partnership as defined by section 7704(b) of the Internal Revenue Code that is treated as a partnership for federal income tax purposes is not subject to this withholding requirement if it reports each unitholder with a North Dakota distributive share of income over $500 on Form 58, Schedule KP.

1099-MISC or Schedule K-1

S corporations and partnerships that received a Form 1099-MISC or a North Dakota Schedule K-1, showing North Dakota withholding, must:

  • E-File – Properly enter the withholding source when e-filing.
  • Paper File – Include copies of the forms showing the withholding with your returns.
    • S Corporation – Enter amount on line 5, page 1, Form 60 - S Corporation Income Tax Return.
    • Partnership – Enter amount on line 4, page 1, Form 58 – Partnership Income Tax Return.

Withholding can only be claimed by the entity whose identification number appears on the Form 1099-MISC or North Dakota Schedule K-1. If the withholding was issued to a disregarded entity, see Disregarded Entity with North Dakota Withholding.

E-File

The Office of State Tax Commissioner offers a variety of E-Filing options for corporations. See more information:

E-Filing for Businesses

Estimated Payments

North Dakota has no requirement for S corporations and partnerships to make estimated income tax payments. If the S corporation or partnership expects a tax due on its return, an estimated payment can be made online through ND TAP. 

Make a Payment


S Corporation

If you are paper filing, use Form 60-ES – S Corp Estimated Tax Payment. If an extension is granted and the S corporation expects a tax due, an extension payment may be made using Form 60-EXT – S Corp Extension Payment. If an extension is granted and the S corporation expects a tax due, an extension payment may be made.


Partnership

If you are paper filing, use Form 58-ES – Partnership Estimated Tax Payment. If an extension is granted and the partnership expects a tax due, an extension payment may be made using Form 58-EXT – Partnership Extension Payment. If an extension is granted and the partnership expects a tax due, an extension payment may be made.

NAICS Codes – Business Classification

The North American Industry Classification System (NAICS) provides a way to classify business establishments using a six-digit code. The Office of State Tax Commissioner uses NAICS codes to:

  • Evaluate whether a business needs certain sales tax schedules,
  • Identify who should receive information about important legislative changes that affect specific industries.