Virginia Pass-Through Entity Withholding Tax Payment Voucher and Instructions

Pass-Through Entity Withholding Tax Payment Voucher and Instructions
2023 Form 502W - Pass-Through Entity Withholding Tax Payment
Pass-Through Entity Withholding Tax Payment

Pass-through entities are required to submit returns and payments electronically. Use this voucher only if you have been granted a waiver.
For details, visit the Department’s website at www.tax.virginia.gov.
General Information
Every pass-through entity (PTE) doing business in the Commonwealth
that has taxable income derived from Virginia sources and must allocate
any portion of that income to a nonresident owner is required to pay
the withholding tax. The PTE is required to withhold 5% of the share of
taxable income from Virginia sources that is allocable to each nonresident
owner. The amount of withholding tax may be reduced by any tax credits
that were earned by the PTE and allowable by the Code of Virginia that
pass through to nonresident owners.
How to Make Withholding Tax Payments Electronically
To make payments electronically, use the eForms application on the
Department’s website at www.tax.virginia.gov. Select the 502W from
the eForms list and complete the form and payment information online.
You can schedule your payment for a future date.
A PTE may also make its tax payments using an ACH credit transaction
through its bank. Some banks may charge a fee for this service. For
information on how to submit ACH credit payments to the Department,
see the Electronic Payment Guide at www.tax.virginia.gov.
When to File and Pay
The withholding tax payment is due on the due date of the PTE’s return
regardless of whether the extension to file Form 502 is used. For calendar
year filers, the withholding tax payment is due on April 15, 2024. When
the last day on which a tax return may be filed or a tax may be paid falls
on a Saturday, Sunday, or legal holiday, you may file and make payment
without penalty or interest on the next succeeding business day.
Purpose of Form
Use Form 502W:
•	 To make a withholding payment when a PTE has an approved
waiver to file on paper rather than electronically
•	 To make a withholding payment prior to filing Form 502, usually
when the PTE is filing during the automatic 6-month extension
•	 To make a withholding payment prior to the due date
Do not use Pass-Through Entity Payment Vouchers (Form 502W and
Form 502V) to make payments with the Unified Nonresident Individual
Income Tax Return, Form 765.
NOTE: Form 502V must be used when a PTE makes a payment with
the Form 502.
Exempt Entities
The PTE will not be required to pay the withholding tax if it:

•	 Is a Publicly Traded Partnership
•	 Is a Disregarded Entity
•	 Files a Unified Return on Behalf of All Nonresident Owners
Undue Hardship
If a PTE believes that the withholding requirement causes an undue
hardship, the PTE may apply to the Tax Commissioner requesting an
exemption. In addition to any other information that is pertinent to the
PTE’s petition for relief, the letter must provide information that will enable
the Tax Commissioner to compare and evaluate the cost to the PTE of
complying with the withholding tax requirements, and the cost to the
Commonwealth of collecting income tax from any nonresident owners
that do not voluntarily file Virginia income tax returns and pay the tax.
Exempt Owners
The PTE must pay the withholding tax for all nonresident owners, with
the following exceptions:
•	 Individuals who are exempt from paying federal income taxes based
on their status or who are exempt from Virginia income taxes. The
exemption must apply to the individual’s share of the PTE’s income.
Examples are diplomatic immunity and individuals who did not have
any liability for Virginia income tax in the previous year and who do
not expect to have any liability in the current year.
•	 Entities other than individuals and corporations that are exempt
from paying federal income taxes by reason of their purpose or
activities. The exemption from federal income tax must apply to the
entity’s share of the PTE’s income. Examples of exempt entities are:
•	 Other PTEs. Generally, a PTE does not need to withhold for
a nonresident owner that is also a PTE. These nonresident
owner PTEs are responsible for filing their own Forms 502
and must pay the withholding tax for their nonresident owners’
shares of income from Virginia sources. If a PTE is notified
by a nonresident owner PTE that the nonresident owner PTE
is not going to file a Form 502, then the PTE is required to
withhold on the nonresident owner PTE.
Caution: If a PTE withholds on a nonresident owner PTE, the
nonresident owner PTE cannot claim credit for the withholding
on its Form 502. PTE withholding is not “generation skipping”
and does not pass through an intermediate PTE to owners
that are more than one level of ownership away. If a PTE
erroneously withholds for a nonresident owner PTE, the PTE

Detach at dotted line below. DO NOT SEND ENTIRE PAGE.

Form 502W

Pass-Through Entity Withholding Tax Payment
Virginia Department Of Taxation
P.O. Box 1500, Richmond, VA 23218-1500

(Doc ID 522)
For assistance, call (804) 367-8037.

Check if initial filer
(This is the first year filing a PTE return.)

Payment must be made electronically. Use this
voucher only if you have an approved waiver.

To receive credit for your payment in the correct
taxable year, enter the ending month (numerical)
and year.

Va. Dept. of Taxation  2601021-W  Rev. 08/23

0000000000000000 5228888 000000
FEIN

Entity Type

Month Ending

NAICS Code
Calendar year:

Name of Pass-Through Entity

Fiscal year

Address (Number and Street)

12

Year Ending

OR;
OR;

Short taxable year

Address Continued
City, State, and ZIP Code
I declare that this return (including accompanying schedules and statements) has been examined
by me and to the best of my knowledge and belief is true, correct, and complete.
Signature	

Date	

Phone Number

$

Amount of Payment

.00

should file an amended Form 502. See the Amended Returns
section of the Form 502 instructions for additional information.
•	 Entities exempt by reason of diplomatic immunity or pursuant
to treaties between the United States and other countries. An
entity claiming this exemption must provide a statement to
the PTE stating that it has diplomatic immunity from federal
income tax.
•	 Real estate investment trusts (REITs) except Captive REITs.
•	 Corporations that are exempt from Virginia income tax include:
•	 Certain banks, insurance companies, and public utilities
that are subject to other taxes in lieu of Virginia income tax.
•	 Corporations that are exempt from federal income tax
under IRC § 501.
If a nonresident owner claims to be exempt from the withholding tax, the
PTE is required to obtain documentation from the nonresident owner
setting forth the basis for the exemption. This documentation must be
retained by the PTE with its records.
The determination of nonresident status will be based on the owner’s
address of record for the PTE unless the PTE has other information
relating to the owner’s residence or commercial domicile by reason of
the owner’s participation in management of the PTE. If an owner is also
employed by the PTE, the information relating to withholding on wages
will also be considered.
The PTE must provide with its return of withholding tax a list of every
individual, corporation, and other entity claiming exemption from
the withholding tax. The list must contain the name, Social Security
number, federal employer identification number (FEIN), or other
taxpayer identification number and the address of each nonresident
owner claiming exemption, as well as a description of the basis for the
claimed exemption.
Penalties
Extension Penalty – The PTE must pay at least 90% of the withholding
tax due by the return due date to avoid a penalty. If the return is filed
within the 6-month extension and less than 90% of the tax was paid by
the original return due date, then the PTE owes an extension penalty.
The penalty is 2% per month of the tax due with the return from the due
date through the date that the return is filed, up to a maximum of 12%.
Late Filing Penalty – If the return is filed after the extended due date,
the extension is not valid, and the entity is subject to the late filing penalty
of 30% or $1,200, whichever is greater.
Late Payment Penalty – If the return is filed within the extended period
and full payment is not included with the return, the entity is subject to
the late payment penalty of 6% per month from the date the return is
filed through the date of payment, up to a maximum of 30%.

Interest – Interest is due on any unpaid tax at the underpayment rate
under IRC § 6621, plus 2%, from the due date until paid.
Change of Address/Out-of-Business
If the PTE changes its business mailing address or discontinues
the business, either send a completed Form R-3, Registration
Change Request or a letter to the Virginia Department of Taxation,
P.O. Box 1114, Richmond, Virginia 23218-1114. A Form R-3 can be
obtained from the Department’s website, www.tax.virginia.gov, or by
calling the Department at (804) 367-8037.
Questions
If you have any questions about this return, call (804) 367-8037 or write
to the Virginia Department of Taxation, P.O. Box 1115, Richmond,
Virginia 23218-1115.
Preparation of Payment Voucher
Complete the PTE’s FEIN, entity type, North American Industry
Classification System (NAICS) code, ending month and year, and name
and address information.
Entity type: A proper entry in this field is required. Enter the code that
corresponds to the type of entity that is filing this return.
Type	
Code
•	 	S Corporation............................SC
•	 	General Partnership..................PG
•	 	Limited Partnership................... PL
•	 	Limited Liability Company......... LL
•	 	Limited Liability Partnership...... LP
•	 	Nonprofit Organization..............NZ
•	 	Other.........................................OB
NAICS code: Enter the 6-digit NAICS code. You can access a list of
these codes by visiting the Businesses section on the Department’s
website, www.tax.virginia.gov.
Determine the amount of withholding due by either:
(1)	Computing the taxable income of the PTE and applying the pro rata
share of the nonresident owners. Multiply the nonresident income
by 5% to calculate the tax liability. Then reduce the tax liability by
the owner’s share of any tax credits.
(2)	Computing the taxable income of the individual nonresident owners.
Calculate the tax liability of each owner by multiplying taxable
income by 5%. Reduce the tax liability by the owner’s share of tax
credits.
Enter the total amount withheld for all nonresident owners in the block
indicating the amount of payment.
Declaration and Signature
Be sure to sign, date, and enter your phone number in the space
indicated.