Change In Michigan Flow-Through Withholding Requirement

Change In Michigan Flow-Through Withholding Requirement

Polk and Associates CPAMichigan lawmakers passed a bill earlier this year to amend the Income Tax Act to discontinue requirements that flow-through entities withhold income tax on  nonresident members distributive share of income for year ends beginning after June 30, 2016.

What does this mean for you?  If you have a fiscal year end that begins before July 1, 2016, the flow-through entity will be required to file quarterly withholding tax returns on the distributive share of income for nonresident members who are individuals, C-corporations and other flow-through entities.  These quarterly returns are due by the 15th day of the 4th, 7th 10th and the last day of the 1st month following the end of the tax year for the fiscal year Flow-through entity.  The annual tax return is due by the last day of the 2nd month following the end of the tax year of the fiscal year Flow-through entity.

Most flow-through entities are calendar year ends, so they will be required to file 2016 quarterly tax returns by April 15th, July 15th, October 15th and January 15 2017. The annual tax return will be due by February 28, 2017. No returns will be required for the calendar year Flow-through entities beginning January 1, 2017.

The flow-through entities are not required to withhold income taxes on members distributive share of income for year ends beginning after July 1, 2016.

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