PWE: Form PWE - Nonresident Passthrough Entity Member Withholding Exemption & Certification (2024)
North Dakota · ND Tax Commissioner · Used for tax years 2024
North Dakota Form PWE lets a nonresident passthrough entity member elect or revoke an exemption from income tax withholding on its North Dakota distributive share of income from another passthrough entity. It identifies both entities, records the effective tax year, and certifies
Who files this form
Form PWE is for a nonresident member that is itself a passthrough entity and wants to elect exemption from North Dakota income tax withholding on its North Dakota distributive share of income. It also lets the member revoke an earlier election.
A qualifying member has its commercial domicile outside North Dakota and owns an interest in, or is a beneficiary of, a passthrough entity subject to North Dakota’s withholding requirement. Commercial domicile means the principal office from which the entity’s activities are normally managed or directed.
The exemption does not remove any requirement to file a North Dakota income tax return or pay tax due.
What you'll need
Have the following information ready to complete Form PWE:
- Names, federal employer identification numbers, mailing addresses, and contact information for the nonresident PTE member and the passthrough entity.
- Each entity’s type for federal income tax purposes.
- For a grantor trust or disregarded entity, the settlor’s or owner’s name and Social Security number or FEIN.
- The tax year when the election or revocation will begin, including beginning and ending dates for a fiscal year.
- The authorized representative’s printed name, title, signature, and date signed.
How to file
Submit the completed Form PWE to the passthrough entity identified in Part 2.
- To elect exemption: Complete Parts 1, 2, 3, and 5. Do not complete Part 4. In Part 3, enter the tax year when the election will take effect. If your tax year differs from the passthrough entity’s, use the passthrough entity’s tax year.
- To revoke an exemption: Complete Parts 1, 2, 4, and 5. Do not complete Part 3. Enter the effective tax year in Part 4.
- Use a separate Form PWE for each passthrough entity and keep a copy for your records.
The receiving passthrough entity must check that all applicable items are completed and that Part 2 is correct. For each tax year the election is in effect, it must mark the “Form PWA or Form PWE” circle on the applicable return schedule and attach a copy of Form PWE to its North Dakota income tax return. It must keep the original signed form.
Common mistakes
- Completing both election and revocation parts: Use Part 3 for an election or Part 4 for a revocation, not both.
- Using the wrong tax year: If the member and passthrough entity have different tax years, use the passthrough entity’s tax year for the election.
- Using one form for multiple entities: Complete and give a separate Form PWE to each passthrough entity.
- Choosing an LLC’s entity type incorrectly: Check the box that matches how the LLC files for federal income tax purposes.
- Leaving out required identification numbers: Disclosure of the Social Security number or FEIN is mandatory. Missing numbers may delay or prevent processing.
- Treating the exemption as an exemption from tax: The election does not remove the member’s obligation to file a required North Dakota return and pay tax due.
Questions people ask
Does the election need to be renewed every year?
No. It remains in effect for subsequent tax years until the nonresident PTE member revokes it.
Does this form eliminate my North Dakota income tax?
No. It exempts the covered income from withholding. The member must still file any required North Dakota income tax return and pay any tax due.
What happens after an election is revoked?
The passthrough entity must begin withholding North Dakota income tax from the member’s North Dakota distributive share of income starting with the tax year entered in Part 4.
Which return schedule does the receiving passthrough entity mark?
It fills in the “Form PWA or Form PWE” circle on Schedule BI, Column 6, for Form 38; Schedule KP, Column 7, for Form 58; or Schedule KS, Column 7, for Form 60. It also attaches a copy of Form PWE each year the election is in effect.
Where can I get help?
Call 701-328-1247, email individualtax@nd.gov, or visit www.tax.nd.gov. For speech or hearing assistance, call Relay ND at 800-366-6888.