Q&A with the Pennsylvania Department of Revenue

Scenario: withholding CNIT

Jun 23, 2010
Q:

ABC Corp. Owns 100% of DEF LLC, a single member limited liability company classified as a disregarded entity for federal income tax purposes. DEF LLC owns an interest in a GHI LP, a partnership that does business in PA. DEP Corp. have never filed CNI Tax reports. Is GHI LP required to withhold CNI Tax in this instance? If GHI LP is required to withhold CNI Tax, should the partnership withhold and remit CNI Tax, as the LLC is the actual partner in the partnership, and not the corporate member? The partnership would not necessarily have the FEIN and/or PA box number of the corporation.

A:

If ABC Corporation files a Corporate Tax Report with Pennsylvania, GHI will not be required to withhold CNI for DEF LLC. If ABC Corporation does not file a return with Pennsylvania, the partnership should report the withholding under ABC Corporation’s EIN.


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These documents provide a summary of the answers provided by the Department of Revenue to the PICPA Committee on State Taxation at its annual question and answer session. These documents are classified as revenue information issued for informational purposes only for the convenience of PICPA members. Pursuant to 61 Pa. Code Section 3.4, these documents should not be relied upon for any purpose or used in tax appeals. Taxpayers requiring a binding opinion on their specific fact situation may request a written letter ruling under 61 Pa. Code Section 3.3.