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MICHIGAN REPEALS FLOW-THROUGH ENTITY WITHHOLDING STARTING 2017

The Michigan Department of Treasury has recently issued guidance that has eliminated the requirement that flow-through entities (e.g., a partnership, S Corporation, or limited liability company) withhold income tax on a member's distributive share of income for tax years that begin on or after July 1, 2016. The new bill discontinues the flow-through entity's obligation to withhold taxes for their individual nonresident members, corporate members, and other flow-through entities.

For flow-through entities that use a calendar year end for tax reporting, this repeal will take effect beginning Jan. 1, 2017. Accordingly, affected entities should continue the normal withholding requirements through the end of 2016.

After the repeal, the nonresident flow-through members will be required to pay their estimated taxes directly to the State of Michigan. The new law does not change a flow-through entity's ability to file a composite return for nonresident members who are individuals.

For more information or questions on this topic, please contact your professional at UHY LLP in Detroit 313 964 1040, Farmington Hills 248 355 1040 or Sterling Heights 586 254 1040 or visit us on the web at www.uhy-us.com.

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Published by UHY LLP News.

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