SECTION 710:50-21-1. Subchapter "S" Corporations and 512S Oklahoma returns

(a)   A corporation having an election in effect under Subchapter S of the Internal Revenue Code shall not be subject to the Oklahoma income tax on the corporation. However, if any of the shareholders of such corporation are nonresidents of Oklahoma during any part of the corporation's taxable year, the corporation shall be taxed for such year on the nonresident shareholder's distributive share of income, unless the corporation files with its return for such year an agreement executed by each nonresident stockholder stating that such nonresident will file an Oklahoma Income Tax Return reporting his portion of Oklahoma taxable income.

(b)   The shareholders of a Subchapter "S" Corporation shall include in their taxable income their distributive share of such corporation's Federal income, subject to the modifications as set forth in 68 O.S. §2358 and 68 O.S. §2362.

(c)   A Subchapter "S" corporation that files its return without including necessary nonresident shareholder agreements, shall be taxed on such nonresident(s) shareholders distributive share of income. The method of filing the return shall be irrevocable for each tax period once the return is filed. However, if a nonresident shareholder fails to file his individual Oklahoma Income Tax Return the corporation will be assessed the tax.