SC Department of Revenue
 
 
 
 
 
 
 
 
 
 
 
 
Partnership FAQs

 

DISCLAIMER

This information is revised as of September 28, 2011, unless otherwise indicated. Be aware that some laws have been amended in past years that could result in different answers and that new legislation may result in different answers in the future. These questions and answers address general situations and should be used only as a guide. Since your particular facts and circumstances may result in a different answer, you should not rely on this information as a substitute for obtaining professional advice and researching tax law.

FAQ Topics: To view a list of the most frequently asked questions and answers, select a topic below.

 


Filing Requirements

Q. What tax form do partnerships file with South Carolina?

A. Partnerships must file an SC1065 Partnership Return each year and include a complete copy of federal Form 1065.

(Last revised 11/30/09) (Reviewed 9/28/11)


Q. What is the due date of the partnership return?

A. The due date for filing SC1065 is the 15th day of the fourth month following the close of the tax year.  For a calendar year partnership the due date is April 15. 

Code Section 12-6-4970(A).

(Last revised 11/30/09) (Reviewed 9/28/11)


Q. Which tax form does a Limited Liability Company (LLC) taxed as a partnership file?

A. An LLC taxed as a partnership must file SC1065.

Code Section 12-6-600, SC Information Letter #96-25.

(Last revised 11/30/09) (Reviewed 9/28/11)


Q. If a partnership has a loss, is it necessary to file the SC1065, Partnership Report of Income?

A. Yes, any partnership conducting business in South Carolina, having South Carolina gross income, or having an interest in any partnership conducting business in South Carolina must file an SC1065.

Code Sections 12-6-4910(4), 12-6-600.

(Last revised 11/30/09) (Reviewed 9/28/11)


Q. Other than the annual partnership tax return, is there an annual report required by SC Department of Revenue?

A. The Department of Revenue does not require a partnership to file an annual report other than SC1065.

(Last revised 11/30/09) (Reviewed 9/28/11)


Q. Is there a fee for filing a partnership return?

A. No, there is no fee for filing a partnership return.

(Last revised 11/30/09) (Reviewed 9/28/11)


Q. If a single member LLC is disregarded for federal purposes, is it also disregarded for South Carolina purposes?

A. Yes.  Revenue Ruling #98-11.

(Last revised 11/30/09) (Reviewed 9/28/11)


Q.What are the filing requirements of an individual nonresident partner?

A. A nonresident partner must file SC1040 including Schedule NR.  The amount withheld by the partnership, reported on a 1099 "for SC purposes only," is a credit against the partner's tax liability.  Include the 1099 with the partner's individual return.

Code Section 12-8-590(C), (D); Section 12-8-1540(A).

(Last revised 11/30/09) (Reviewed 9/28/11)


Q. Other than the annual partnership tax return, including nonresident withholding, is a partnership liable to South Carolina for any other type taxes?

A. Based on the type of business the partnership is conducting, it may be liable for other taxes such as employer withholding tax or sales tax.  When the nature of the business makes the partnership liable for taxes beyond nonresident withholding, it must complete an SCTC-111 Business Tax Application.

(Last revised 11/30/09) (Reviewed 9/28/11)


Q. In a case where a Partnership or S corporation has a large number of partners or shareholders, will the South Carolina Department of Revenue accept the K-1 information in any format other than by paper K-1?

A. If a Partnership has more than 50 partners, we request that you submit the K-1 information on a CD in any file format that is compatible with Microsoft Word or Excel.  The CD should be labeled with the following information: Name of Partnership, Federal Employer Identification Number, South Carolina Partnership File Number and Tax Year.  Excel spreadsheets are also accepted.  We will continue to accept paper K-1s, but request the CD or spreadsheet method of reporting.  Permission does not need to be obtained from this office to submit K-1s by these methods.

(Last revised 9/28/11) (Reviewed 9/28/11)


 File Number

Q. Does South Carolina issue a state I.D. number to a partnership or LLC taxed as a partnership?

A. A newly formed partnership should register with the SC Department of Revenue by using the Business One Stop On-line Business Registration available through our website at www.sctax.org or by downloading and submitting form SCTC-111 which is also available through our website.  The SC partnership file number will be assigned upon completion of the registration process.  Use this number when filing the SC1065 partnership return, SC8736 partnership extension, or any correspondence pertaining to partnership income tax.  Also include the FEIN on the SC1065 partnership return. 

Note:  Failure to include the FEIN when filing the SC1065 could delay processing of the return.

(Last revised 9/10/10) (Reviewed 9/28/11)


 Tax Forms

Q. How do I request a copy of a partnership return already filed with the S. C. Department of Revenue?

A.  Complete an SC4506 Request for Copy of Tax Form.  The Department charges a fee, plus sales tax, for this information.

(Last revised 11/30/09) (Reviewed 9/28/11)


Q. What form is used to file an amended partnership return?

A.  File a corrected SC1065 and write "AMENDED" at the top.

(Last revised 11/30/09) (Reviewed 9/28/11)


Extension To File

Q. How do I extend the due date for filing a partnership return?

A. The due date can be extended by filing an SC8736 Request for Extension of Time to File South Carolina Return for Fiduciary and Partnership.  The Department will also accept a federal Form 7004 marked for South Carolina purposes.  The request for extension automatically extends the filing due date of the return for five months.

SC Code Section 12-6-4980.

(Last revised 11/30/09) (Reviewed 9/28/11)


Q. How do I extend the time to file a composite return?

A.  See below for a discussion of composite returns.

For an extension of a composite return, you must file SC4868, indicating that the  extension is for a composite return and entering the name, address and Federal  Employer Identification Number (FEIN) of the S-corporation, partnership or LLC.  Filing SC1120T or Federal Form 7004 will not result in an extension of the composite return.

(Last revised 11/30/09) (Reviewed 9/28/11)


Refunds

Q. May a partnership or LLC use SC1065 to request a refund?

A. No, form SC1065 is an information return and may not be used to request a refund.  Refunds are issued only at the partner or LLC member level.

(Last revised 11/30/09) (Reviewed 9/28/11)


Composite Filing

Q. What is a composite return?

A. A composite return is a single return filed by a partnership, S-corporation, or Limited Liability Company (LLC) taxed as a partnership or S-corporation on behalf of two or more nonresident individuals, trusts or estates who are partners, shareholders of the S-corporation or members of the LLC.  A composite return allows S-corporations or partnerships to compute and report the SC income and tax attributable to electing nonresident shareholders or partners on a single tax return.   A composite return is filed using an SC1040 SC Individual Income Tax Return.  The heading states the name, address, and FEIN of the partnership, S-corporation or LLC.  There is no need to use "Composite Return for" or "Shareholders/Partners of" in the name.  Mark the box for filing a composite return.  Mark "Single" filing status.

NOTE: Corporate partners and members may not participate in composite returns.

(Last revised 11/30/09) (Reviewed 9/28/11)


Q. How do I complete a composite return?

A. A partnership, S-corporation, or LLC taxed as a partnership or S-corporation must compute the tax separately on each participant's share of income and add the tax together to arrive at the total tax due.

  • The methods available depend on whether the partner, shareholder or member has filed an I-338 Composite Return Affidavit with the department through the partnership, S-Corporation or LLC.  An I-338 affidavit states that the partner, shareholder or member has no other income taxable to South Carolina.
  • If a partner, shareholder or member completes an I-338 affidavit, the composite return can either prorate the standard deduction or itemized deductions and personal exemptions for each participant or not include them.
  • If a partner, shareholder or member does not provide an I-338 affidavit, the composite return must not include any personal deductions or exemptions, and must tax active trade or business income at the active trade or business income rate (5% for tax years after 2008) and all other income at 7%.
  • The composite return must be signed by an authorized partner, an authorized officer of the S-corporation, or an authorized member of the LLC.  Attach a schedule showing the separate computations.  Total the separate tax amounts and enter on Line 6, the "tax" line, of SC1040 page 2.
  • Nonresident fiduciaries and individuals who are shareholders or partners may participate in the filing.  All participating must have the same tax year.

Also refer to form I-348, Composite Filing Instructions. 

S.C. Code Section 12-6-5030, SC Revenue Procedure #92-5.

(Last revised 5/25/11) (Reviewed 9/28/11)


Withholding Requirements for Nonresident Partners, S-Corporation Shareholders and LLC Members

Q. What are the withholding requirements on nonresident partners, S-corporation shareholders, and LLC members?

A.  In general, partnerships, S-corporations, and LLCs taxed as partnerships or S-corporations must withhold 5% on the share of South Carolina taxable income of all nonresident partners, shareholders or members.  Corporate partners and members are not exempt from these withholding requirements.

(Last revised 11/30/09) (Reviewed 9/28/11)


Q. How does a partnership compute and remit withholding for nonresident partners?

A. Use Schedule W-H Withholding on Income of Nonresident Partners, located in the SC1065 partnership return, and remit the amount withheld with the return when due.  List the partners; their Social Security Numbers or FEINs, whichever is applicable; and the amount withheld on behalf of each. 

See Code Section 12-8-590, SC Revenue Procedure #92-5.

(Last revised 11/30/09) (Reviewed 9/28/11)


Q. When are the partners, shareholders or members responsible for paying their own tax instead of being subject to withholding?

A. A partner, shareholder or member who completes the I-309 Nonresident Shareholder or Partner Affidavit and Agreement, Income Tax Withholding directs the partnership, S-corporation or LLC not to withhold and places all of the compliance requirements on the partner, shareholder or member.

See Code Section 12-8-590; SC Revenue Procedure #92-5.

(Last revised 11/30/09) (Reviewed 9/28/11)


Q. What is a partner, shareholder or member who files an I-309 required to do?

A.  In order to be effective, an I-309 affidavit must be fully completed by the partner, shareholder or member and delivered directly to the partnership, S-corporation or LLC.  If a partner or member of an LLC taxed as a partnership is a corporation, the I-309 must be signed by an officer of the corporate partner or member.  (Note:  A corporate partner or member may not participate in a composite return.)  Joint owners of a partnership interest or stock in an S-corporation must file separate I-309s.

  • An I-309 should only be filed once.  The I-309 is valid for subsequent years and should not be filed again as long as
    1. the nonresident status of the partner, shareholder or member remains unchanged or
    2. the withholding exemption has not been revoked by the Department.
  • An S-corporation, or LLC taxed as a corporation, should attach the I-309 to the SC1120S-WH Withholding Tax on Income of Nonresident Shareholders and file them with the Department on or before the 15th day of the third month after the close of the S-corporation's tax year.
  • A partnership, or LLC taxed as a partnership should attach the I-309s to the SC1065 partnership return or SC8736 extension, and file with the Department on or before the 15th day of the fourth month following the close of the partnership's tax year.

(Last revised 11/30/09) (Reviewed 9/28/11)


Q. How does the SC1065 partnership return avoid withholding on exempt income?

A.  Line 3 of SC1065 deducts any amount of income from line 2 that is exempt from withholding because of I-309 affidavits and composite filing. The partnership or LLC taxed as a partnership should include a statement explaining the adjustment.

(Last revised 11/30/09) (Reviewed 9/28/11)


Deductions

Q. Does South Carolina allow loss carrybacks or loss carryforwards on partnership income?

A. No, there are no provisions for a loss carryback or a loss carryforward on a partnership return.  All activity for the current year flows through to the partner's individual returns for that year.

(Last revised 11/30/09) (Reviewed 9/28/11)


 Administrative Questions

Q. What is the address to which partnership returns should be mailed?
    
A. 
Mail SC1065 to: 
      SC Department of Revenue
      Partnership Return
      Columbia, SC 29214-0008.

The address is on the front of SC1065.

(Last revised 11/30/09) (Reviewed 9/28/11)


Q. How do I report a change of address on a partnership?

A.  A partnership can notify the Department of a change of address by including the new address on the return when it is filed.  A partnership can also notify the Department by filing an SC8822 Change of Address/Business Location form.  A third way to notify the Department is mail a letter to:

SC Department of Revenue
Registration/ Database Maintenance
PO Box 125
Columbia, SC 29214

(Last revised 11/30/09) (Reviewed 9/28/11)


Q. Should we notify the S. C. Department of Revenue of changes in partners?

A.  Yes, notify the Department of any changes in partners by sending a letter to:

SC Department of Revenue
Registration/ Database Maintenance
PO Box 125
Columbia, SC 29214

NOTE: A change in ownership of greater than 50% requires all new registrations with the Department. A change of 25% or more requires a new ABL (Alcoholic Beverage Licensing) account.

(Last revised 11/30/09) (Reviewed 9/28/11)


Q. How can I obtain a Certificate of Compliance for a partnership?

A.  Complete a C-268 Certificate of Tax Compliance Request Form signed by one of the partners.

(Last revised 11/30/09) (Reviewed 9/28/11)


Q. Can you file a partnership return electronically?

A.  At this time partnership returns cannot be filed electronically.  A partnership return can be filed with 2D Barcode.

(Last revised 11/30/09) (Reviewed 9/28/11)




 
The S.C. Department of Revenue strives to make our website broadly accessible and is continuously working on improvements.
If you have problems accessing this website or suggestions on how to improve the accessibility of this site, please contact webmaster@sctax.org.

Disclaimer and Copyright Information
Privacy Statement

Home / Contact DOR