Pass-Through Entities (PEs) with nonresident members who receive guaranteed payments

FOR TAXABLE YEAR 2018 ONLY

Additional Information and Filing Option

This is an optional step for PEs with a significant number of nonresident members who receive guaranteed payments.

Generally, nonresident members who receive Connecticut source guaranteed payments are required to file Form CT-1040NR/PY to report and pay income tax on their Connecticut source income.

The Department of Revenue Services (DRS) will permit PEs to report and remit tax to DRS on behalf of their nonresident members for the PE’s taxable year 2018. DRS recognizes the administrative burdens that requiring nonresident members to file individually would create for PEs and for DRS.

To utilize this option, your PE will:

  • prior to filing its 2018 Form CT-1065/CT-1120SI, enter into an agreement with DRS to report and remit tax on behalf of each nonresident member;
  • when it prepares its 2018 Form CT-1065/CT-1120SI, calculate the amount it must remit on behalf of each nonresident member (on a schedule similar to page 3 of the agreement); and
  • at the same time as it files its 2018 Form CT-1065/CT-1120SI, file this schedule, along with payment, via mail submission to DRS (if the PE requests an extension of time to file its Form CT-1065/CT-1120SI, a tentative payment is required by the original due date – March 15 for calendar year filers). 

Note

By using this option, your PE will be paying on behalf of its nonresident members. Those members will not need to file an individual Form CT-1040NR/PY - unless they have Connecticut source income from sources other than your PE.  Your PE must notify its nonresident members of the amount paid on their behalf, in case they still need (or choose) to file a return.

AGREEMENT

Directions

  1. Complete pages 1 and 2 of the fillable PDF agreement.
  2. Print, sign, and mail the agreement to DRS (do not e-mail).
  3. DRS will sign the agreement and return a fully executed copy to you.

When you return the agreement, the PE must provide the name of a contact person, along with the contact person’s phone number and email address.  If that person is a practitioner representing a PE, also submit a power of attorney.

If the PE is not registered with DRS or there are any other issues, DRS will call this contact person.

Mail agreement to:

Connecticut Department of Revenue Services
450 Columbus Boulevard – 11th Floor
Hartford, CT 06103
Attn: Legal Division/Guaranteed Payment Agreement

Previous DRS Guidance