Unified Nonresident Income Tax Return (Form 765)
For Owners of S Corporations, Partnerships and Limited Liability Companies
A business pass-through entity (S corporation, partnership or limited liability company) that transacts business in Virginia and has two or more qualified nonresident owners may file a unified nonresident individual income tax return on behalf of all of its qualified owners. All nonresident owners of the pass-through entity who qualify to participate in the unified return must participate if unified filing is elected. If any qualified owner declines to participate, the other qualified owners may not file a unified return.
A qualified owner is a natural person who is a direct owner of the entity filing the unified return, and a nonresident of Virginia with Virginia source income from that entity for the taxable year. If the qualified owner has other income from Virginia sources that is not derived from a pass-through entity, the owner must file file a Virginia Nonresident Income Tax Return (Form 763) to account for that income. Income reported in the unified filing on Form 765 should be deducted on Form 763. An individual who is a qualified nonresident owner in more than one pass-through entity may participate in multiple unified returns.
A pass-through entity that files a unified return on behalf of its nonresident owners is not required to withhold Virginia income tax from distributions made to those owners. Instead, the entity should make estimated tax payments on a unified basis under its own federal employer identification number, using Form 760ES.
An entity that wishes to file a unified return on behalf of owners who do not meet the definition of "qualified owner" must apply to the Tax Commissioner for permission to file a unified return. The request should be addressed to Tax Commissioner, Virginia Department of Taxation, P.O. Box 2475, Richmond, VA 23218-2475.