In a favorable ruling for taxpayers and tax preparers, Michigan has eliminated an administratively burdensome withholding requirement.

For tax years beginning after July 1, 2016 (i.e., calendar year 2017 returns), Michigan will no longer require flow-through entities to withhold on the distributive share of taxable income of their individual nonresident members or on the distributive share of business income of members that are corporations or other flow-through entities.

Also for tax years beginning after July 1, 2016, the annual reconciliation return of a flow-through entity (Form 4918) will no longer be required.

Taxpayers with Michigan-sourced income should review their situation with their accountant to determine if estimated tax payments are needed to cover any Michigan tax liabilities.

Please contact any member of the Somerset SALT team if you have any questions or would like assistance in reviewing how this applies to you.