Key takeaways
- A valid federal S election makes the corporation a PA S corporation automatically, and it files the PA-20S/PA-65 even though it generally owes no entity-level income tax.
- The entity pays 3.07% personal income tax withholding for nonresident individual, estate and trust owners, and the REV-276 extension does not give extra time to pay it.
- Built-in gains tax is the usual entity-level exposure, reported on the RCT-101.
- Missing returns and missing RK-1 or NRK-1 schedules each carry a $250 penalty.
What Pennsylvania taxes and what it does not
The Department of Revenue states that any corporation with a valid federal S corporation election is automatically a PA S corporation. No separate state election is needed to get the treatment. The corporation is subject to the corporate net income tax only on its net recognized built-in gain, and that tax is reported on the RCT-101.
The owners pick up their shares of income, loss and credit on their own personal income tax returns, taxed at 3.07%. Resident owners report their share on the PA-40, and the PA-20S/PA-65 schedules are what support those lines.
The Department's guidance also covers an entity formed as a limited liability company, so do not assume an LLC taxed as an S corporation is outside the filing.
Which form the S corporation files
Every PA S corporation files the PA-20S/PA-65 information return. The form is shared with partnerships, which is why the name looks odd on an S corporation file. The S corporation completes the S corporation side of the form and issues owner schedules.
PA-65 Corp is a different filing. The Department describes it for partnerships with nonfiling corporate partners that are C corporations, including a partnership solely owned by corporate partners. Its page does not mention S corporations, and an S corporation cannot have a corporation as a shareholder, so it never files PA-65 Corp. Do not let a partnership checklist carry over to an S corporation file.
Each owner gets Schedule RK-1 if resident or Schedule NRK-1 if nonresident. The entity must furnish the copies before the return is required to be filed, including extensions. Treat the schedule as a deliverable on the same day as the return, not a follow-up.
Due dates for tax year 2026
The federal Form 1120-S for a calendar-year S corporation is due March 15. For tax year 2026 that is Monday, March 15, 2027. For tax year 2025 it was March 16, 2026, because March 15, 2026 fell on a Sunday.
Pennsylvania runs later than the federal date. The Department's extension guidance puts nonresident withholding payments at the 15th day of the 4th month after year end for calendar and fiscal filers, and it says the final withholding payment is due by the PA-20S/PA-65 filing date. Read together, that puts a calendar-year return on April 15, which is Thursday, April 15, 2027 for tax year 2026. I could not find a Department page that states the return date in one sentence, so confirm it against the current PA-20S/PA-65 instructions before you put it in an engagement letter.
Do not tell a client that the federal and state dates are the same. Prepare the federal return first, because the PA schedules follow its income and shareholder data.
A revocation or termination year is its own case. The short-year return is due 3½ months after the last day of the tax year.
Withholding on nonresident owners
The PA S corporation must withhold and pay Pennsylvania personal income tax on each nonresident owner's expected share of distributable Pennsylvania-source income. This applies to nonresident individual, estate and trust owners. The rate is 3.07%. I found no 1% pass-through withholding rate on the Department's pages, so do not quote one to a client.
The entity makes the payments under its own EIN, name and address, in quarterly installments. The first payment can be made with form PA-40 ESR. The entity may not withhold for another entity or for a Pennsylvania resident individual, and it should not withhold on intangible income such as interest, dividends or gain on the sale of stock.
Worked example. A Maryland resident owns 50% of a calendar-year PA S corporation and is expected to receive $75,000 of Pennsylvania-source income for tax year 2026. Withholding is $75,000 times 3.07%, which is $2,302.50. Spread over four quarters, that is $575.63 a quarter. When the final numbers show a bigger share, the entity pays the deficiency by the return filing date, either with the PA-40 NRC or with an extension request.
The owner's own estimated payments do not reduce what the entity owes, so a nonresident who says they already paid does not clear the entity's withholding. Confirm each owner's state of residence at year end, because an owner who moved changes which schedule applies.
Do not confuse owner withholding with payments to nonresident vendors
A separate Department page covers Pennsylvania-source non-employee compensation, business income and lease payments that any business pays to nonresidents, also at 3.07%. That is the payor's withholding obligation, reported on the Annual Withholding Statement REV-1667 together with the 1099-MISC/NEC forms, filed electronically through myPATH by January 31. The page lists no withholding where the payee is a corporation or a partnership or multi-member LLC, and says withholding is optional for payors paying less than $5,000 annually.
REV-1832 is the Nonresident Withholding Exemption Certificate. An S corporation that pays a nonresident contractor for Pennsylvania work may owe withholding on the contractor, apart from anything owed on its own shareholders.
January 31, 2027 falls on a Sunday. The Department's page does not say how it treats weekends, so file early.
Extending with REV-276
A PA-20S/PA-65 filer may request a five-month extension by filing the REV-276. The Department grants it only if no additional nonresident withholding payments are due by the original due date, and only if the entity has an automatic federal extension on Form 7004 that is attached to the return.
The REV-276 does not grant additional time for remitting nonresident withholding payments. The deposits stay on their schedule, and the extension covers filing only. Nonresident withholding payments of $15,000 or more must be submitted electronically.
File a separate REV-276 for each return if the entity needs extensions for both the PA-20S/PA-65 and a PA-40 NRC. Request it through the myPATH payments panel, on paper, or through an approved Fed/State e-file vendor, and do not also mail the paper form if you used myPATH.
Decision rule: if nonresident quarterly payments fell short, pay the shortfall by the original return date, not the extended one, or the extension is not available.
Penalties and the built-in gains exposure
A partnership or S corporation that does not file a return is penalized $250 for each failure. In addition, $250 applies for each missing RK-1, NRK-1 and Schedule H-Corp, so a five-owner S corporation with no schedules can pick up several penalties on top of the late return.
Built-in gains is the entity-level tax to screen for. A corporation that converted from C status within the recognition period and sold appreciated assets is the usual case, and the tax is reported on the RCT-101, not on the PA-20S/PA-65.
Treat built-in gains as a separate filing question, and do not assume the REV-276 covers it.
What to collect before you open the template
Ask for the federal return and shareholder list first, then a residency record per owner. A request that works: "For each shareholder, send the legal name, tax ID, home address on December 31, 2026, the date any move happened, and whether the person is an individual, estate or trust." That gives you the RK-1 or NRK-1 decision for each owner.
Ask also for any Pennsylvania withholding payments the entity made in 2026, with the date and amount of each, and any REV-1832 certificates received from vendors. A payment history is needed to compute the shortfall for each nonresident owner.
In Usual, a single request can carry this checklist with automatic reminders, so the owner list is chased on a schedule instead of by email.