{"formats":[{"name":"JSON","format":"json","url":"\/downloads\/2025\/code-json\/58.1-486.2.json"},{"name":"Plain Text","format":"text","url":"\/downloads\/2025\/code-text\/58.1-486.2.txt"},{"name":"XML","format":"xml","url":"\/downloads\/2025\/code-xml\/58.1-486.2.xml"},{"name":"HTML","format":"html","url":"\/downloads\/2025\/code-html\/58.1-486.2.html"}],"law_id":71204,"edition_id":1,"section_id":71204,"structure_id":15346,"section_number":"58.1-486.2","catch_line":"Withholding tax on Virginia source income of nonresident owners","history":"2007, c. 796; 2010, c. 120; 2011, c. 766.","full_text":"A\n\nFor the privilege of doing business in the Commonwealth, a pass-through entity that has taxable income for the taxable year derived from or connected with Virginia sources, any portion of which is allocable to a nonresident owner, shall pay a withholding tax under this section, except as provided in subsection C.B\n\n1. The amount of withholding tax payable by any pass-through entity under this article shall be equal to five percent of the nonresident owner’s share of income from Virginia sources of all nonresident owners as determined under this chapter, which may lawfully be taxed by the Commonwealth and which is allocable to a nonresident owner.2\n\nWhen determining the amount of withholding tax due under this section, the pass-through entity may apply any tax credits allowable under the Code of Virginia to the pass-through entity that pass through to nonresident owners; provided that in no event may the application of any credit or credits reduce the tax liability of any nonresident owner under this article to less than zero.C\n\nWithholding shall not be required:1\n\nFor any nonresident owner, other than a nonresident corporation, who is exempt from the tax imposed by this article. An owner shall be exempt from the tax imposed by this article only if the owner is, by reason of the owner’s purpose or activities, exempt from paying federal income taxes on the owner’s Virginia source income. The pass-through entity may rely on the written statement of the owner claiming to be exempt from the tax imposed by this article provided the pass-through entity discloses the name and federal taxpayer identification number for all such owners in its return for the taxable year filed under § 58.1-392;2\n\nFor any nonresident owner that is a corporation that is exempt from the tax imposed by Article 10 (§ 58.1-400 et seq.). For purposes of this subdivision, a corporation is exempt from the tax imposed by Article 10 only if the corporation, by reason of its purpose or activities, is exempt from paying federal income taxes on the corporation’s Virginia source income. The pass-through entity may rely on the written statement of the person claiming to be exempt from the tax imposed by Article 10 provided the pass-through entity discloses the name and federal taxpayer identification number for all such corporations in its return for the taxable year filed under § 58.1-392;3\n\nWhen compliance will cause undue hardship on the pass-through entity. However, no pass-through entity shall be exempt under this subdivision from complying with the withholding requirements of this section unless the Tax Commissioner, in his discretion, approves in writing the pass-through entity’s written petition for exemption from the withholding requirements of this section based on undue hardship. The Tax Commissioner may prescribe the form and contents of such a petition and specify standards for when a pass-through entity will not be required to comply with the withholding requirements of this section due to undue hardship. The standards for undue hardship, determined by the Tax Commissioner in his discretion, shall take into account (among other relevant factors) the ability of a pass-through entity to comply at reasonable cost with the withholding requirements of this section and the cost to the Commonwealth of collecting the tax directly from a nonresident owner who does not voluntarily file a return and pay the amount of tax due under this chapter with respect to his allocable Virginia taxable income; or4\n\nFor any nonresident person of the Commonwealth when the pass-through entity owns and leases four or fewer dwelling units in the Commonwealth, provided the pass-through entity discloses the name and federal taxpayer identification number for all such owners in its return for the taxable year filed under § 58.1-392. For the purposes of this subdivision, the term “person” shall mean the same as that term is defined in § 55.1-1200.D\n\n1. Each pass-through entity required to withhold tax under this section shall pay the amount required to be withheld to the Tax Commissioner at the same time that the return under Article 9 (\u00a7 58.1-390.1 et seq.), if required, is to be filed.2\n\nAn extension of time for filing the return under § 58.1-393.1 shall not extend the time for paying the amount of withholding tax due under this section. In cases of an extension of time for filing, the pass-through entity shall pay, by the due date specified in subsection A of § 58.1-392, at least 90 percent of the withholding tax due for the taxable year or 100 percent of the tax paid under this section for the prior taxable year, if that taxable year was a taxable year of 12 months and tax was paid under this section for that taxable year. The remaining portion of the tax due under this section, if any, shall be paid at the time the pass-through entity files the return required under § 58.1-392. If the balance due is paid by the last day of the extension period for filing such return and the amount of tax due with that return is 10 percent or less of the tax due under this section for the taxable year, no penalty shall be imposed with respect to the balance so remitted. In addition to interest, if the underestimation of the balance of tax due exceeds 10 percent of the actual tax liability, there shall be added to the tax as a penalty an amount equal to two percent per month of the balance of tax due for each month or fraction thereof from the original due date for the filing of the withholding tax return to the date of payment. If the amount of withholding tax due under this section for the taxable year is less than the estimated withholding taxes paid for the taxable year by the pass-through entity, the excess shall be refunded to the pass-through entity or, at its election, established as a credit against withholding tax due under this section for the then current taxable year.3\n\nThe Tax Commissioner may, if he believes it necessary for the protection of trust fund moneys due the Commonwealth, require any pass-through entity to pay over to the Tax Commissioner the tax deducted and withheld under this section at any earlier time or times.E\n\n1. Each nonresident owner shall be allowed a credit for that owner’s share of the tax withheld by the pass-through entity under this section; provided, that when the distribution is to a corporation taxable under Article 10 (\u00a7 58.1-400 et seq.), the credit allowed by this subsection shall be applied against the corporation’s liability for tax under this chapter.2\n\nA nonresident owner’s share of any withholding tax paid by the pass-through entity shall be treated as distributed to such nonresident owner on the earlier of (i) the day on which such tax was paid to the Tax Commissioner by the pass-through entity or (ii) the last day of the taxable year for which such tax was paid by the pass-through entity.F\n\n1. Every pass-through entity required to deduct and withhold tax under this section shall furnish to each nonresident owner a written statement, as prescribed by the Tax Commissioner, showing (i) the amount of its allocable Virginia taxable income, whether or not distributed for federal income tax purposes by such pass-through entity to such nonresident owner; (ii) the amount deducted and withheld as tax under this section; and (iii) such other information as the Tax Commissioner may require.2\n\nA copy of the written statements required by this subsection shall be filed with the Virginia return filed under § 58.1-392 by the pass-through entity for its taxable year to which the distribution relates. The written statement shall be furnished to each nonresident owner on or before the due date of the pass-through entity’s return under § 58.1-392 for the taxable year, including extensions of time for filing such return, or a later date as may be allowed by the Tax Commissioner.G\n\nEvery pass-through entity required to deduct and withhold tax under this section is hereby made liable for the payment of the tax due under this section for taxable years beginning on or after January 1, 2008. Any amount of tax withheld under this section shall be held in trust for the Tax Commissioner. No nonresident owner shall have a right of action against the pass-through entity in respect to any moneys withheld from such owner’s distributive share and paid over to the Tax Commissioner in compliance with or in intended compliance with this section.H\n\nIf any pass-through entity fails to deduct and withhold tax as required by this section, and thereafter the tax against which such tax may be credited is paid, the tax so required to be deducted and withheld under this section shall not be collected from the pass-through entity, but the pass-through entity shall not be relieved from liability for any penalties or interest or additions to tax otherwise applicable in respect of such failure to withhold.","order_by":null,"text":{"0":{"id":256636,"text":"For the privilege of doing business in the Commonwealth, a pass-through entity that has taxable income for the taxable year derived from or connected with Virginia sources, any portion of which is allocable to a nonresident owner, shall pay a withholding tax under this section, except as provided in subsection C.","type":"section","prefixes":["A"],"prefix":"A","entire_prefix":"A","prefix_anchor":"A","level":1,"next_prefix":"B"},"1":{"id":256637,"text":"1. The amount of withholding tax payable by any pass-through entity under this article shall be equal to five percent of the nonresident owner’s share of income from Virginia sources of all nonresident owners as determined under this chapter, which may lawfully be taxed by the Commonwealth and which is allocable to a nonresident owner.","type":"section","prefixes":["B"],"prefix":"B","entire_prefix":"B","prefix_anchor":"B","level":1,"prior_prefix":"A","next_prefix":"B2"},"2":{"id":256638,"text":"When determining the amount of withholding tax due under this section, the pass-through entity may apply any tax credits allowable under the Code of Virginia to the pass-through entity that pass through to nonresident owners; provided that in no event may the application of any credit or credits reduce the tax liability of any nonresident owner under this article to less than zero.","type":"section","prefixes":["B","2"],"prefix":"2","entire_prefix":"B2","prefix_anchor":"B2","level":2,"prior_prefix":"B","next_prefix":"C"},"3":{"id":256639,"text":"Withholding shall not be required:","type":"section","prefixes":["C"],"prefix":"C","entire_prefix":"C","prefix_anchor":"C","level":1,"prior_prefix":"B2","next_prefix":"C1"},"4":{"id":256640,"text":"For any nonresident owner, other than a nonresident corporation, who is exempt from the tax imposed by this article. An owner shall be exempt from the tax imposed by this article only if the owner is, by reason of the owner’s purpose or activities, exempt from paying federal income taxes on the owner’s Virginia source income. The pass-through entity may rely on the written statement of the owner claiming to be exempt from the tax imposed by this article provided the pass-through entity discloses the name and federal taxpayer identification number for all such owners in its return for the taxable year filed under § 58.1-392;","type":"section","prefixes":["C","1"],"prefix":"1","entire_prefix":"C1","prefix_anchor":"C1","level":2,"prior_prefix":"C","next_prefix":"C2"},"5":{"id":256641,"text":"For any nonresident owner that is a corporation that is exempt from the tax imposed by Article 10 (§ 58.1-400 et seq.). For purposes of this subdivision, a corporation is exempt from the tax imposed by Article 10 only if the corporation, by reason of its purpose or activities, is exempt from paying federal income taxes on the corporation’s Virginia source income. The pass-through entity may rely on the written statement of the person claiming to be exempt from the tax imposed by Article 10 provided the pass-through entity discloses the name and federal taxpayer identification number for all such corporations in its return for the taxable year filed under § 58.1-392;","type":"section","prefixes":["C","2"],"prefix":"2","entire_prefix":"C2","prefix_anchor":"C2","level":2,"prior_prefix":"C1","next_prefix":"C3"},"6":{"id":256642,"text":"When compliance will cause undue hardship on the pass-through entity. However, no pass-through entity shall be exempt under this subdivision from complying with the withholding requirements of this section unless the Tax Commissioner, in his discretion, approves in writing the pass-through entity’s written petition for exemption from the withholding requirements of this section based on undue hardship. The Tax Commissioner may prescribe the form and contents of such a petition and specify standards for when a pass-through entity will not be required to comply with the withholding requirements of this section due to undue hardship. The standards for undue hardship, determined by the Tax Commissioner in his discretion, shall take into account (among other relevant factors) the ability of a pass-through entity to comply at reasonable cost with the withholding requirements of this section and the cost to the Commonwealth of collecting the tax directly from a nonresident owner who does not voluntarily file a return and pay the amount of tax due under this chapter with respect to his allocable Virginia taxable income; or","type":"section","prefixes":["C","3"],"prefix":"3","entire_prefix":"C3","prefix_anchor":"C3","level":2,"prior_prefix":"C2","next_prefix":"C4"},"7":{"id":256643,"text":"For any nonresident person of the Commonwealth when the pass-through entity owns and leases four or fewer dwelling units in the Commonwealth, provided the pass-through entity discloses the name and federal taxpayer identification number for all such owners in its return for the taxable year filed under § 58.1-392. For the purposes of this subdivision, the term “person” shall mean the same as that term is defined in § 55.1-1200.","type":"section","prefixes":["C","4"],"prefix":"4","entire_prefix":"C4","prefix_anchor":"C4","level":2,"prior_prefix":"C3","next_prefix":"D"},"8":{"id":256644,"text":"1. Each pass-through entity required to withhold tax under this section shall pay the amount required to be withheld to the Tax Commissioner at the same time that the return under Article 9 (\u00a7 58.1-390.1 et seq.), if required, is to be filed.","type":"section","prefixes":["D"],"prefix":"D","entire_prefix":"D","prefix_anchor":"D","level":1,"prior_prefix":"C4","next_prefix":"D2"},"9":{"id":256645,"text":"An extension of time for filing the return under § 58.1-393.1 shall not extend the time for paying the amount of withholding tax due under this section. In cases of an extension of time for filing, the pass-through entity shall pay, by the due date specified in subsection A of § 58.1-392, at least 90 percent of the withholding tax due for the taxable year or 100 percent of the tax paid under this section for the prior taxable year, if that taxable year was a taxable year of 12 months and tax was paid under this section for that taxable year. The remaining portion of the tax due under this section, if any, shall be paid at the time the pass-through entity files the return required under § 58.1-392. If the balance due is paid by the last day of the extension period for filing such return and the amount of tax due with that return is 10 percent or less of the tax due under this section for the taxable year, no penalty shall be imposed with respect to the balance so remitted. In addition to interest, if the underestimation of the balance of tax due exceeds 10 percent of the actual tax liability, there shall be added to the tax as a penalty an amount equal to two percent per month of the balance of tax due for each month or fraction thereof from the original due date for the filing of the withholding tax return to the date of payment. If the amount of withholding tax due under this section for the taxable year is less than the estimated withholding taxes paid for the taxable year by the pass-through entity, the excess shall be refunded to the pass-through entity or, at its election, established as a credit against withholding tax due under this section for the then current taxable year.","type":"section","prefixes":["D","2"],"prefix":"2","entire_prefix":"D2","prefix_anchor":"D2","level":2,"prior_prefix":"D","next_prefix":"D3"},"10":{"id":256646,"text":"The Tax Commissioner may, if he believes it necessary for the protection of trust fund moneys due the Commonwealth, require any pass-through entity to pay over to the Tax Commissioner the tax deducted and withheld under this section at any earlier time or times.","type":"section","prefixes":["D","3"],"prefix":"3","entire_prefix":"D3","prefix_anchor":"D3","level":2,"prior_prefix":"D2","next_prefix":"E"},"11":{"id":256647,"text":"1. Each nonresident owner shall be allowed a credit for that owner’s share of the tax withheld by the pass-through entity under this section; provided, that when the distribution is to a corporation taxable under Article 10 (\u00a7 58.1-400 et seq.), the credit allowed by this subsection shall be applied against the corporation’s liability for tax under this chapter.","type":"section","prefixes":["E"],"prefix":"E","entire_prefix":"E","prefix_anchor":"E","level":1,"prior_prefix":"D3","next_prefix":"E2"},"12":{"id":256648,"text":"A nonresident owner’s share of any withholding tax paid by the pass-through entity shall be treated as distributed to such nonresident owner on the earlier of (i) the day on which such tax was paid to the Tax Commissioner by the pass-through entity or (ii) the last day of the taxable year for which such tax was paid by the pass-through entity.","type":"section","prefixes":["E","2"],"prefix":"2","entire_prefix":"E2","prefix_anchor":"E2","level":2,"prior_prefix":"E","next_prefix":"F"},"13":{"id":256649,"text":"1. Every pass-through entity required to deduct and withhold tax under this section shall furnish to each nonresident owner a written statement, as prescribed by the Tax Commissioner, showing (i) the amount of its allocable Virginia taxable income, whether or not distributed for federal income tax purposes by such pass-through entity to such nonresident owner; (ii) the amount deducted and withheld as tax under this section; and (iii) such other information as the Tax Commissioner may require.","type":"section","prefixes":["F"],"prefix":"F","entire_prefix":"F","prefix_anchor":"F","level":1,"prior_prefix":"E2","next_prefix":"F2"},"14":{"id":256650,"text":"A copy of the written statements required by this subsection shall be filed with the Virginia return filed under § 58.1-392 by the pass-through entity for its taxable year to which the distribution relates. The written statement shall be furnished to each nonresident owner on or before the due date of the pass-through entity’s return under § 58.1-392 for the taxable year, including extensions of time for filing such return, or a later date as may be allowed by the Tax Commissioner.","type":"section","prefixes":["F","2"],"prefix":"2","entire_prefix":"F2","prefix_anchor":"F2","level":2,"prior_prefix":"F","next_prefix":"G"},"15":{"id":256651,"text":"Every pass-through entity required to deduct and withhold tax under this section is hereby made liable for the payment of the tax due under this section for taxable years beginning on or after January 1, 2008. Any amount of tax withheld under this section shall be held in trust for the Tax Commissioner. No nonresident owner shall have a right of action against the pass-through entity in respect to any moneys withheld from such owner’s distributive share and paid over to the Tax Commissioner in compliance with or in intended compliance with this section.","type":"section","prefixes":["G"],"prefix":"G","entire_prefix":"G","prefix_anchor":"G","level":1,"prior_prefix":"F2","next_prefix":"H"},"16":{"id":256652,"text":"If any pass-through entity fails to deduct and withhold tax as required by this section, and thereafter the tax against which such tax may be credited is paid, the tax so required to be deducted and withheld under this section shall not be collected from the pass-through entity, but the pass-through entity shall not be relieved from liability for any penalties or interest or additions to tax otherwise applicable in respect of such failure to withhold.","type":"section","prefixes":["H"],"prefix":"H","entire_prefix":"H","prefix_anchor":"H","level":1,"prior_prefix":"G"}},"ancestry":[{"id":15346,"edition_id":1,"name":"Withholding by Pass-Through Entities","identifier":"16.1","label":"article","depth":4,"order_by":1,"parent_id":13152,"metadata":{},"date_created":"2026-06-26 03:54:06","date_modified":"2026-06-26 03:54:06","permalink":{"id":253911,"object_type":"structure","relational_id":15346,"identifier":"16.1","token":"58.1\/I\/3\/16.1","url":"\/58.1\/I\/3\/16.1\/","edition_id":1,"permalink":0,"preferred":1}},{"id":13152,"edition_id":1,"name":"Income Tax","identifier":"3","label":"chapter","depth":3,"order_by":1,"parent_id":12837,"metadata":{},"date_created":"2026-06-26 03:44:21","date_modified":"2026-06-26 03:44:21","permalink":{"id":253267,"object_type":"structure","relational_id":13152,"identifier":"3","token":"58.1\/I\/3","url":"\/58.1\/I\/3\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12837,"edition_id":1,"name":"Taxes Administered by the Department of Taxation","identifier":"I","label":"subtitle","depth":2,"order_by":1,"parent_id":12703,"metadata":{},"date_created":"2026-06-26 03:43:55","date_modified":"2026-06-26 03:43:55","permalink":{"id":252075,"object_type":"structure","relational_id":12837,"identifier":"I","token":"58.1\/I","url":"\/58.1\/I\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12703,"edition_id":1,"name":"Taxation","identifier":"58.1","label":"title","depth":1,"order_by":1,"parent_id":null,"metadata":{},"date_created":"2026-06-26 03:43:49","date_modified":"2026-06-26 03:43:49","permalink":{"id":251959,"object_type":"structure","relational_id":12703,"identifier":"58.1","token":"58.1","url":"\/58.1\/","edition_id":1,"permalink":0,"preferred":1}}],"structure_contents":[{"id":59667,"structure_id":15346,"section_number":"58.1-486.1","catch_line":"Definitions","url":"\/58.1-486.1\/","token":"58.1\/I\/3\/16.1\/58.1-486.1","metadata":false},{"id":71204,"structure_id":15346,"section_number":"58.1-486.2","catch_line":"Withholding tax on Virginia source income of nonresident owners","url":"\/58.1-486.2\/","token":"58.1\/I\/3\/16.1\/58.1-486.2","metadata":false},{"id":58398,"structure_id":15346,"section_number":"58.1-486.3","catch_line":"Penalty","url":"\/58.1-486.3\/","token":"58.1\/I\/3\/16.1\/58.1-486.3","metadata":false}],"previous_section":{"id":59667,"structure_id":15346,"section_number":"58.1-486.1","catch_line":"Definitions","url":"\/58.1-486.1\/","token":"58.1\/I\/3\/16.1\/58.1-486.1","metadata":false},"next_section":{"id":58398,"structure_id":15346,"section_number":"58.1-486.3","catch_line":"Penalty","url":"\/58.1-486.3\/","token":"58.1\/I\/3\/16.1\/58.1-486.3","metadata":false},"metadata":false,"official_url":"https:\/\/law.lis.virginia.gov\/vacode\/58.1-486.2\/","history_text":"

This law was first created in 2007. The record of its establishment is cataloged in chapter 796<\/a> of that year\u2019s edition of \u201cActs of Assembly,\u201d the annual state publication listing all changes made to the Code of Virginia in that year. It has been modified 2 times. Those modifications are cataloged by \u201cThe Acts of Assembly,\u201d a state publication, by year and chapter. Those modifications that can be read on the General Assembly\u2019s website will be linked accordingly. Those modifications are as follows: in 2010, chapter 120<\/a>; in 2011, chapter 766<\/a>.<\/p>","references":[{"id":63964,"section_number":"58.1-513","catch_line":"Limitations; transfer of credit; gain or loss from tax credit","order_by":null,"url":"\/58.1-513\/"}],"refers_to":[{"id":59823,"section_number":"58.1-390.1","catch_line":"Definitions","order_by":null,"url":"\/58.1-390.1\/"},{"id":62314,"section_number":"58.1-392","catch_line":"Reports by pass-through entities","order_by":null,"url":"\/58.1-392\/"},{"id":78819,"section_number":"58.1-393.1","catch_line":"Extension of time for filing return by pass-through entity","order_by":null,"url":"\/58.1-393.1\/"},{"id":60955,"section_number":"58.1-400","catch_line":"Imposition of tax","order_by":null,"url":"\/58.1-400\/"}],"permalink":{"id":253917,"object_type":"law","relational_id":71204,"identifier":"58.1-486.2","token":"58.1\/I\/3\/16.1\/58.1-486.2","url":"\/58.1-486.2\/","edition_id":1,"permalink":0,"preferred":1},"url":"\/58.1-486.2\/","token":"58.1\/I\/3\/16.1\/58.1-486.2","dublin_core":{"Title":"Withholding tax on Virginia source income of nonresident owners","Type":"Text","Format":"text\/html","Identifier":"\u00a7 58.1-486.2","Relation":"Code of Virginia"},"html":"\n\t\t\t\t\t\t

A.<\/span> For the privilege<\/span> of doing business in the Commonwealth, a pass-through entity that has taxable income for the taxable year derived from or connected with Virginia sources, any portion of which is allocable to a nonresident owner, shall pay a withholding tax under this section, except as provided in subsection C. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

B.<\/span> 1. The amount of withholding tax payable by any pass-through entity under this article shall be equal to five percent of the nonresident owner’s share of income from Virginia sources of all nonresident owners as determined under this chapter, which may lawfully be taxed by the Commonwealth and which is allocable to a nonresident owner. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> When determining the amount of withholding tax due under this section, the pass-through entity may apply any tax credits allowable under the Code of Virginia to the pass-through entity that pass through to nonresident owners; provided that in no event may the application of any credit or credits reduce the tax liability of any nonresident owner under this article to less than zero. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

C.<\/span> Withholding shall not be required: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> For any nonresident owner, other than a nonresident corporation<\/span>, who is exempt from the tax imposed by this article. An owner shall be exempt from the tax imposed by this article only if the owner is, by reason of the owner’s purpose or activities, exempt from paying federal income taxes on the owner’s Virginia source income. The pass-through entity may rely on the written statement of the owner claiming to be exempt from the tax imposed by this article provided the pass-through entity discloses the name and federal taxpayer<\/span> identification number for all such owners in its return for the taxable year filed under § 58.1-392<\/a>; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> For any nonresident owner that is a corporation<\/span> that is exempt from the tax imposed by Article 10 (§ 58.1-400<\/a> et seq.). For purposes of this subdivision, a corporation<\/span> is exempt from the tax imposed by Article 10 only if the corporation<\/span>, by reason of its purpose or activities, is exempt from paying federal income taxes on the corporation<\/span>’s Virginia source income. The pass-through entity may rely on the written statement of the person<\/span> claiming to be exempt from the tax imposed by Article 10 provided the pass-through entity discloses the name and federal taxpayer<\/span> identification number for all such corporations<\/span> in its return for the taxable year filed under § 58.1-392<\/a>; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

3.<\/span> When compliance will cause undue hardship on the pass-through entity. However, no pass-through entity shall be exempt under this subdivision from complying with the withholding requirements of this section unless the Tax Commissioner<\/span>, in his discretion, approves in writing the pass-through entity’s written petition<\/span> for exemption from the withholding requirements of this section based on undue hardship. The Tax Commissioner<\/span> may prescribe the form and contents of such a petition<\/span> and specify standards for when a pass-through entity will not be required to comply with the withholding requirements of this section due to undue hardship. The standards for undue hardship, determined by the Tax Commissioner<\/span> in his discretion, shall take into account (among other relevant factors) the ability of a pass-through entity to comply at reasonable cost with the withholding requirements of this section and the cost to the Commonwealth of collecting the tax directly from a nonresident owner who does not voluntarily file a return and pay the amount of tax due under this chapter with respect to his allocable Virginia taxable income; or <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

4.<\/span> For any nonresident person<\/span> of the Commonwealth when the pass-through entity owns and leases four or fewer dwelling units in the Commonwealth, provided the pass-through entity discloses the name and federal taxpayer<\/span> identification number for all such owners in its return for the taxable year filed under § 58.1-392<\/a>. For the purposes of this subdivision, the term “person<\/span>” shall mean the same as that term is defined in § 55.1-1200<\/a>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

D.<\/span> 1. Each pass-through entity required to withhold tax under this section shall pay the amount required to be withheld to the Tax Commissioner<\/span> at the same time that the return under Article 9 (\u00a7 58.1-390.1<\/a> et seq.), if required, is to be filed. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> An extension of time for filing the return under § 58.1-393.1<\/a> shall not extend the time for paying the amount of withholding tax due under this section. In cases of an extension of time for filing, the pass-through entity shall pay, by the due date specified in subsection A of § 58.1-392<\/a>, at least 90 percent of the withholding tax due for the taxable year or 100 percent of the tax paid under this section for the prior taxable year, if that taxable year was a taxable year of 12 months and tax was paid under this section for that taxable year. The remaining portion of the tax due under this section, if any, shall be paid at the time the pass-through entity files the return required under § 58.1-392<\/a>. If the balance due is paid by the last day of the extension period for filing such return and the amount of tax due with that return is 10 percent or less of the tax due under this section for the taxable year, no penalty<\/span> shall be imposed with respect to the balance so remitted. In addition to interest, if the underestimation of the balance of tax due exceeds 10 percent of the actual tax liability, there shall be added to the tax as a penalty<\/span> an amount equal to two percent per month of the balance of tax due for each month or fraction thereof from the original due date for the filing of the withholding tax return to the date of payment. If the amount of withholding tax due under this section for the taxable year is less than the estimated withholding taxes paid for the taxable year by the pass-through entity, the excess shall be refunded to the pass-through entity or, at its election, established as a credit against withholding tax due under this section for the then current taxable year. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

3.<\/span> The Tax Commissioner<\/span> may, if he believes it necessary for the protection of trust<\/span> fund moneys due the Commonwealth, require any pass-through entity to pay over to the Tax Commissioner<\/span> the tax deducted and withheld under this section at any earlier time or times. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

E.<\/span> 1. Each nonresident owner shall be allowed a credit for that owner’s share of the tax withheld by the pass-through entity under this section; provided, that when the distribution is to a corporation<\/span> taxable under Article 10 (\u00a7 58.1-400<\/a> et seq.), the credit allowed by this subsection shall be applied against the corporation<\/span>’s liability for tax under this chapter. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> A nonresident owner’s share of any withholding tax paid by the pass-through entity shall be treated as distributed to such nonresident owner on the earlier of (i) the day on which such tax was paid to the Tax Commissioner<\/span> by the pass-through entity or (ii) the last day of the taxable year for which such tax was paid by the pass-through entity. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

F.<\/span> 1. Every pass-through entity required to deduct and withhold tax under this section shall furnish to each nonresident owner a written statement, as prescribed by the Tax Commissioner<\/span>, showing (i) the amount of its allocable Virginia taxable income, whether or not distributed for federal income tax purposes by such pass-through entity to such nonresident owner; (ii) the amount deducted and withheld as tax under this section; and (iii) such other information as the Tax Commissioner<\/span> may require. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> A copy of the written statements required by this subsection shall be filed with the Virginia return filed under § 58.1-392<\/a> by the pass-through entity for its taxable year to which the distribution relates. The written statement shall be furnished to each nonresident owner on or before the due date of the pass-through entity’s return under § 58.1-392<\/a> for the taxable year, including extensions of time for filing such return, or a later date as may be allowed by the Tax Commissioner<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

G.<\/span> Every pass-through entity required to deduct and withhold tax under this section is hereby made liable for the payment of the tax due under this section for taxable years beginning on or after January 1, 2008. Any amount of tax withheld under this section shall be held in trust<\/span> for the Tax Commissioner<\/span>. No nonresident owner shall have a right of action against the pass-through entity in respect to any moneys withheld from such owner’s distributive share and paid over to the Tax Commissioner<\/span> in compliance with or in intended compliance with this section. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

H.<\/span> If any pass-through entity fails to deduct and withhold tax as required by this section, and thereafter the tax against which such tax may be credited is paid, the tax so required to be deducted and withheld under this section shall not be collected from the pass-through entity, but the pass-through entity shall not be relieved from liability for any penalties or interest or additions to tax otherwise applicable in respect of such failure to withhold. <\/i><\/a><\/p><\/section>","plain_text":" CODE OF VIRGINIA\n\nWITHHOLDING TAX ON VIRGINIA SOURCE INCOME OF NONRESIDENT OWNERS (\u00a7 58.1-486.2)\n\nA. For the privilege of doing business in the Commonwealth, a pass-through\nentity that has taxable income for the taxable year derived from or connected\nwith Virginia sources, any portion of which is allocable to a nonresident owner,\nshall pay a withholding tax under this section, except as provided in subsection\nC.\n\nB. 1. The amount of withholding tax payable by any pass-through entity under\nthis article shall be equal to five percent of the nonresident owner’s\nshare of income from Virginia sources of all nonresident owners as determined\nunder this chapter, which may lawfully be taxed by the Commonwealth and which is\nallocable to a nonresident owner.\n\n 2. When determining the amount of withholding tax due under this section, the\n pass-through entity may apply any tax credits allowable under the Code of\n Virginia to the pass-through entity that pass through to nonresident owners;\n provided that in no event may the application of any credit or credits reduce\n the tax liability of any nonresident owner under this article to less than\n zero.\n\nC. Withholding shall not be required:\n\n 1. For any nonresident owner, other than a nonresident corporation, who is\n exempt from the tax imposed by this article. An owner shall be exempt from the\n tax imposed by this article only if the owner is, by reason of the\n owner’s purpose or activities, exempt from paying federal income taxes\n on the owner’s Virginia source income. The pass-through entity may rely\n on the written statement of the owner claiming to be exempt from the tax\n imposed by this article provided the pass-through entity discloses the name\n and federal taxpayer identification number for all such owners in its return\n for the taxable year filed under § 58.1-392;\n\n 2. For any nonresident owner that is a corporation that is exempt from the tax\n imposed by Article 10 (§ 58.1-400 et seq.). For purposes of this\n subdivision, a corporation is exempt from the tax imposed by Article 10 only\n if the corporation, by reason of its purpose or activities, is exempt from\n paying federal income taxes on the corporation’s Virginia source income.\n The pass-through entity may rely on the written statement of the person\n claiming to be exempt from the tax imposed by Article 10 provided the\n pass-through entity discloses the name and federal taxpayer identification\n number for all such corporations in its return for the taxable year filed\n under § 58.1-392;\n\n 3. When compliance will cause undue hardship on the pass-through entity.\n However, no pass-through entity shall be exempt under this subdivision from\n complying with the withholding requirements of this section unless the Tax\n Commissioner, in his discretion, approves in writing the pass-through\n entity’s written petition for exemption from the withholding\n requirements of this section based on undue hardship. The Tax Commissioner may\n prescribe the form and contents of such a petition and specify standards for\n when a pass-through entity will not be required to comply with the withholding\n requirements of this section due to undue hardship. The standards for undue\n hardship, determined by the Tax Commissioner in his discretion, shall take\n into account (among other relevant factors) the ability of a pass-through\n entity to comply at reasonable cost with the withholding requirements of this\n section and the cost to the Commonwealth of collecting the tax directly from a\n nonresident owner who does not voluntarily file a return and pay the amount of\n tax due under this chapter with respect to his allocable Virginia taxable\n income; or\n\n 4. For any nonresident person of the Commonwealth when the pass-through entity\n owns and leases four or fewer dwelling units in the Commonwealth, provided the\n pass-through entity discloses the name and federal taxpayer identification\n number for all such owners in its return for the taxable year filed under\n § 58.1-392. For the purposes of this subdivision, the term\n “person” shall mean the same as that term is defined in §\n 55.1-1200.\n\nD. 1. Each pass-through entity required to withhold tax under this section shall\npay the amount required to be withheld to the Tax Commissioner at the same time\nthat the return under Article 9 (\u00a7 58.1-390.1 et seq.), if required, is to be\nfiled.\n\n 2. An extension of time for filing the return under § 58.1-393.1 shall\n not extend the time for paying the amount of withholding tax due under this\n section. In cases of an extension of time for filing, the pass-through entity\n shall pay, by the due date specified in subsection A of § 58.1-392, at\n least 90 percent of the withholding tax due for the taxable year or 100\n percent of the tax paid under this section for the prior taxable year, if that\n taxable year was a taxable year of 12 months and tax was paid under this\n section for that taxable year. The remaining portion of the tax due under this\n section, if any, shall be paid at the time the pass-through entity files the\n return required under § 58.1-392. If the balance due is paid by the last\n day of the extension period for filing such return and the amount of tax due\n with that return is 10 percent or less of the tax due under this section for\n the taxable year, no penalty shall be imposed with respect to the balance so\n remitted. In addition to interest, if the underestimation of the balance of\n tax due exceeds 10 percent of the actual tax liability, there shall be added\n to the tax as a penalty an amount equal to two percent per month of the\n balance of tax due for each month or fraction thereof from the original due\n date for the filing of the withholding tax return to the date of payment. If\n the amount of withholding tax due under this section for the taxable year is\n less than the estimated withholding taxes paid for the taxable year by the\n pass-through entity, the excess shall be refunded to the pass-through entity\n or, at its election, established as a credit against withholding tax due under\n this section for the then current taxable year.\n\n 3. The Tax Commissioner may, if he believes it necessary for the protection of\n trust fund moneys due the Commonwealth, require any pass-through entity to pay\n over to the Tax Commissioner the tax deducted and withheld under this section\n at any earlier time or times.\n\nE. 1. Each nonresident owner shall be allowed a credit for that owner’s\nshare of the tax withheld by the pass-through entity under this section;\nprovided, that when the distribution is to a corporation taxable under Article\n10 (\u00a7 58.1-400 et seq.), the credit allowed by this subsection shall be applied\nagainst the corporation’s liability for tax under this chapter.\n\n 2. A nonresident owner’s share of any withholding tax paid by the\n pass-through entity shall be treated as distributed to such nonresident owner\n on the earlier of (i) the day on which such tax was paid to the Tax\n Commissioner by the pass-through entity or (ii) the last day of the taxable\n year for which such tax was paid by the pass-through entity.\n\nF. 1. Every pass-through entity required to deduct and withhold tax under this\nsection shall furnish to each nonresident owner a written statement, as\nprescribed by the Tax Commissioner, showing (i) the amount of its allocable\nVirginia taxable income, whether or not distributed for federal income tax\npurposes by such pass-through entity to such nonresident owner; (ii) the amount\ndeducted and withheld as tax under this section; and (iii) such other\ninformation as the Tax Commissioner may require.\n\n 2. A copy of the written statements required by this subsection shall be filed\n with the Virginia return filed under § 58.1-392 by the pass-through\n entity for its taxable year to which the distribution relates. The written\n statement shall be furnished to each nonresident owner on or before the due\n date of the pass-through entity’s return under § 58.1-392 for the\n taxable year, including extensions of time for filing such return, or a later\n date as may be allowed by the Tax Commissioner.\n\nG. Every pass-through entity required to deduct and withhold tax under this\nsection is hereby made liable for the payment of the tax due under this section\nfor taxable years beginning on or after January 1, 2008. Any amount of tax\nwithheld under this section shall be held in trust for the Tax Commissioner. No\nnonresident owner shall have a right of action against the pass-through entity\nin respect to any moneys withheld from such owner’s distributive share and\npaid over to the Tax Commissioner in compliance with or in intended compliance\nwith this section.\n\nH. If any pass-through entity fails to deduct and withhold tax as required by\nthis section, and thereafter the tax against which such tax may be credited is\npaid, the tax so required to be deducted and withheld under this section shall\nnot be collected from the pass-through entity, but the pass-through entity shall\nnot be relieved from liability for any penalties or interest or additions to tax\notherwise applicable in respect of such failure to withhold.\n\nHISTORY: 2007, c. 796; 2010, c. 120; 2011, c. 766.","edition":{"id":1,"name":"2025","slug":"2025","date_created":"2026-06-21 22:39:22","date_modified":"2026-06-21 22:39:22","current":1,"order_by":1,"last_import":null}}