1. (a) An S corporation which engages in activities in this State which would subject a C corporation to the requirement to file a return under section 235-92 shall file with the department an annual return, in the form prescribed by the department, on or before the due date prescribed for the filing of C corporation returns by section 235-97.

   Every S corporation shall make a return for each taxable year, stating specifically the items of its gross income and the deductions allowable by this chapter, the name, address, and social security or federal identification number of each person owning stock in the corporation at any time during the taxable year, the number of shares of stock owned by each shareholder at all times during the taxable year, the income attributable to the State and income not attributable to the State with respect to each shareholder as determined under this part, the modifications required by section 235-123, the amount of money and other property distributed by the corporation during the taxable year to each shareholder, the date of each such distribution, and such other information as the department may by form or rule prescribe.

   The S corporation, on or before the day on which such return is filed, shall furnish to each person who was a shareholder during the year a copy of the information shown on the return as the department may by form or rule prescribe. Any return filed pursuant to this section, for purposes of sections 235-111 and 235-112, shall be treated as a return filed by the corporation under section 235-92. The S corporation shall also maintain the accumulated adjustments account described in section 235-127(c)(2).

2. (b) The department shall permit S corporations to file composite returns and to make composite payments of tax on behalf of some or all of its nonresident shareholders. The department may permit composite returns and payments to be made on behalf of resident shareholders.

3. (c) An S corporation shall file with the department, in the form prescribed by the department, the agreement of each nonresident shareholder of the corporation:

   1. (1) To file a return and make timely payment of all taxes imposed by this State on the shareholder with respect to the income of the S corporation; and

   2. (2) To be subject to personal jurisdiction in this State for purposes of the collection of unpaid income tax, together with related interest and penalties.

      If the corporation fails to timely file the agreements required by paragraphs (1) and (2) on behalf of each of its nonresident shareholders, then the corporation, at the times set forth in subsection (d), shall pay to this State on behalf of each nonresident shareholder in respect of whom an agreement has not been timely filed an amount equal to the highest marginal tax rate in effect under section 235-51 multiplied by the amount of the shareholder's pro rata share of the income attributable to the State reflected on the corporation's return for the taxable period. An S corporation shall be entitled to recover a payment made pursuant to the preceding sentence from the shareholder on whose behalf the payment was made.

4. (d) The agreements required to be filed pursuant to subsection (c) shall be filed at the following times:

   1. (1) At the time the annual return is required to be filed for the first taxable period for which the S corporation became subject to this part, and
   2. (2) At the time the annual return is required to be filed for any taxable period in which the corporation had a nonresident shareholder on whose behalf such an agreement has not been previously filed.
5. (e) Any amount paid by the corporation to this State pursuant to subsection (b) or (c) shall be considered to be a payment by the shareholder on account of the income tax imposed on the shareholder for the taxable period.
6. (f) Any officer of any S corporation who wilfully fails to provide any information, file any return or agreement, make any payment, or maintain any account as required by this section or by section 231-15.6 shall be guilty of a misdemeanor.

[L 1990, c 16, pt of §1]