41-175: Nonresident Member Composite Agreement 41-175 (2024)
Iowa · Iowa DOR · Used for tax years 2024
The 2024 Iowa Nonresident Member Composite Agreement records an agreement between a pass-through entity and a nonresident member to exclude that member from the entity’s IA PTE-C Composite Return tax payment. It documents the member’s tax commitments and the entity’s approval for
Who files this form
A pass-through entity and its nonresident member use this agreement to exclude the member from the entity’s IA PTE-C Composite Return tax payment for tax year 2024.
The form lists S corporations, partnerships, estates, and trusts as pass-through entities. Nonresident members may be partners, members, shareholders, or beneficiaries.
The nonresident member must complete and sign the agreement, and an authorized representative of the pass-through entity must approve and sign it. The entity keeps the agreement rather than routinely submitting it to the Department.
What you'll need
Have the following information ready to complete the agreement:
- Pass-through entity’s type, name, FEIN, address, and phone number.
- Nonresident member’s name, FEIN or Social Security number, address, and phone number.
- Member’s classification for the Part III certification: individual, C corporation, financial institution, S corporation or partnership, or estate or trust.
- Signatures, printed names, titles, and dates for the nonresident member or authorized representative and the pass-through entity’s representative.
How to file
- Complete Part I with the pass-through entity’s information and Part II with the nonresident member’s information.
- In Part III, check the appropriate certification box. Financial institutions organized as pass-through entities must check both boxes 3 and 4.
- Have the nonresident member or authorized representative sign and date Part III, then provide the form to the pass-through entity.
- Have an authorized representative of the pass-through entity complete and sign Part IV.
For the agreement to be effective, these steps must be completed before the pass-through entity’s income tax return deadline.
The pass-through entity must keep the agreement in its records and submit it to the Department only upon request. It must also report the member’s exclusion on its IA PTE-C Composite Return unless otherwise exempt from filing.
Common mistakes
- Missing the entity’s approval. The agreement is not valid without the pass-through entity’s acknowledgment and approval.
- Completing the agreement too late. The member and entity must complete the required signing process before the entity’s income tax return deadline.
- Checking only one box for a pass-through financial institution. These institutions must check both boxes 3 and 4.
- Submitting the agreement without a request. Keep it in the entity’s records and submit it to the Department only upon request.
- Using the agreement for another tax year. It is valid only for the pass-through entity’s tax year that begins in 2024.
Questions people ask
Does this agreement remove the member’s Iowa tax obligations?
No. The member agrees to file the applicable Iowa return and timely pay the applicable taxes, including estimated taxes, on its share of the entity’s income. The certifications for individuals and estates or trusts include exceptions when income is below the applicable filing threshold and no return is required under the cited Iowa law.
Can the pass-through entity still be responsible for unpaid tax?
Yes. The entity agrees to remain jointly and severally liable for unpaid tax, penalties, and interest on the member’s share of pass-through income. These amounts may be collected from the entity if the member does not follow the agreement.
What does the member agree to about Iowa tax collection?
The member agrees to personal jurisdiction in Iowa for collection of Iowa income and franchise taxes, plus related interest and penalties, on its share of income from the pass-through entity.
How long is this agreement valid?
It is valid only for the pass-through entity’s tax year that begins in 2024.