​Effective for taxable years beginning on or after January 1, 2019

1. Can the partnership get credit for estimated tax payments made by its partners, or vice versa depending on whether an election is made?


2. Can an electing partnership transfer payments from the entity's pass-through withholding account (Form PW-ES payments) to the entity-level tax account (Form 3-ES payments)?


3. Can an electing partnership transfer payments from the entity-level income tax account (Form 3-ES payments) to the entity's pass-through withholding account (Form PW-ES payments)?


4. Is an electing partnership required to pay the entity-level tax by the unextended due date of its return (Form 3) if the partnership is filing under an extension?


5. Is an electing partnership required to make quarterly estimated tax payments?


6. How does a partnership make a payment?


7. In the first year a partnership makes an election to pay tax at the entity level, is the partnership subject to underpayment interest on late estimated tax payments even if the prior year Wisconsin tax liability for the partnership was zero?


8. If an electing partnership does not pay the full amount of taxes due by the 15th day of the 3rd month following the close of the partnership's taxable year, what interest rate will apply?


9. Is an electing partnership required to make pass-through withholding tax payments for nonresident partners?


10. If an electing partnership made withholding tax payments for a nonresident partner, how does the withholding get refunded?


11. Does the entity-level tax election change how a partnership reports its nonresident entertainer withholding paid by another person on its behalf?

1. Can the partnership get credit for estimated tax payments made by its partners, or vice versa depending on whether an election is made?

   No, payments must be made separately by the partners and their partnership. The department will not transfer payments between an account of a partner and an account of a partnership. Partners and partnerships must file their respective Wisconsin income tax returns to receive a refund of their overpayments.

2. Can an electing partnership transfer payments from the entity's pass-through withholding account (Form PW-ES payments) to the entity-level tax account (Form 3-ES payments)?

   Yes, the partnership may submit a written request to move pass-through withholding payments to the entity-level income tax account if the payments were made by the same entity. Written requests may be submitted to dorincomepte@wisconsin.gov.

3. Can an electing partnership transfer payments from the entity-level income tax account (Form 3-ES payments) to the entity's pass-through withholding account (Form PW-ES payments)?

   Yes, the partnership may submit a written request to move entity-level income tax payments to the entity's pass-through withholding account if the payments were made by the same entity. Written requests may be submitted to dorincomepte@wisconsin.gov.

4. Is an electing partnership required to pay the entity-level tax by the unextended due date of its return (Form 3) if the partnership is filing under an extension?

   Yes, an extension of time to file does not extend a deadline to pay an amount due. A partnership must pay any amount due by the unextended due date to avoid interest charges.

   For information on submitting a payment, visit the department's Make a Payment web page under "Make a Payment - Corporations, Partnerships, & Pass-Through Withholding."

5. Is an electing partnership required to make quarterly estimated tax payments?

   Yes, estimated tax payment requirements and underpayment interest under secs. 71.09 and 71.84, Wis. Stats., apply.

   For information on submitting a payment, visit the department's Make a Payment web page under "Make a Payment - Corporations, Partnerships, & Pass-Through Withholding."

6. How does a partnership make a payment?

   For information on submitting a payment, visit the department's Make a Payment web page under "Make a Payment - Corporations, Partnerships, & Pass-Through Withholding."

7. In the first year a partnership makes an election to pay tax at the entity level, is the partnership subject to underpayment interest on late estimated tax payments even if the prior year Wisconsin tax liability for the partnership was zero?

   If the preceding taxable year was 12 months, the partnership had no Wisconsin tax liability in that year, and the partnership was a resident of Wisconsin for all of that year, then the electing partnership will not owe underpayment interest according to sec. 71.09(11)(b), Wis. Stats.

   According to sec. 71.21(6)(d)5., Wis. Stats., the provisions of secs. 71.09 and 71.84, Wis. Stats., relating to estimated payments and underpayment interest shall apply to an electing partnership.

8. If an electing partnership does not pay the full amount of taxes due by the 15th day of the 3rd month following the close of the partnership's taxable year, what interest rate will apply?

   The interest rate may be 12 percent or 18 percent as provided in secs. 71.82 and 71.84, Wis. Stats.

9. Is an electing partnership required to make pass-through withholding tax payments for nonresident partners?

   No, according to sec. 71.775(3)(a)4., Wis. Stats., an electing partnership is not required to make pass-through withholding tax payments for nonresident partners.

10. If an electing partnership made withholding tax payments for a nonresident partner, how does the withholding get refunded?

    There are two primary methods for claiming a refund of pass-through withholding paid by a partnership:

    1. The electing partnership may file a Form PW-1, Wisconsin Nonresident Income or Franchise Tax Withholding on Pass-Through Entity Income, reflecting $0 withholding tax computed in Part 2 of Form PW-1, OR
    2. The partners may file their respective Wisconsin income tax return and claim the withholding on their return.
    
    
11. Does the entity-level tax election change how a partnership reports its nonresident entertainer withholding paid by another person on its behalf?

    No, the electing partnership may report the nonresident entertainer withholding paid by another person on its behalf using one of the two methods below, regardless of whether the partnership makes an election under sec. 71.21(6)(a), Wis. Stats.

    1. As withholding on Line 5 of Form 3, or
    2. As a Form WT-11 withholding payment made on the entity's behalf on Line 4 of Form PW-1
    
    

Applicable Laws and Rules

This document provides statements or interpretations of the following laws and regulations enacted as of March 27, 2024: secs. 71.03, 71.05, 71.09, 71.20, 71.21, 71.75, 71.775, 71.82, 71.84 and 73.03, Wis. Stats.

Laws enacted and in effect after this date, new administrative rules, and court decisions may change the interpretations in this document. Guidance issued prior to this date, that is contrary to the information in this document is superseded by this document, according to sec. 73.16(2)(a), Wis. Stats.