Friday, January 09, 2015
State Tax Developments for Pass-Through Entities: Withholding
Requirements for Non-Resident Entity Owners
IPT Tax Report, January 2015
by Jennifer A. Zimmerman and JoAnna Fu Simek
This is the second in a series of
articles that will address some of the many challenging state and
local tax issues faced by pass-through entities, including
tiered groups of such entities. This article,
which focuses on income-tax withholding requirements for
non-resident entity owners, discusses the compliance
environment once nexus has been established. It
offers insights into the challenges of complying with state laws
and tips for tax planning.
entities ("PTEs") are usually aware that tax is due on the
income earned in the state by the ultimate owner of the entity.
PTEs owned by other PTEs or corporations (entities) pose an
interesting challenge because the requirement for tax compliance
for entities varies greatly from individual non-resident owners.
Entity owners may be treated as non-residents by definition, even
if the entity does business in the state in another capacity.
Businesses should not assume that tax treatment is equal regardless
To read the full article, click
A. Zimmerman is a partner in Horwood Marcus &
Berk's SALT Group. JoAnna Fu Simek is an accountant
working for BKD, LLP.
The Institute for Professionals in Taxation,
founded in 1976, is a 501(c)(3) non-profit educational association
serving over 4400 members representing approximately 1450
corporations, firms, or taxpayers throughout the United States and
Canada. It is the only professional organization that educates,
certifies and establishes strict codes of conduct for state and
local income, property and sales & use tax professionals who
represent taxpayers (government officials or organizations do not
qualify for membership). The Institute also provides excellent
educational programs in Value Added Tax (VAT) and Credits &
Incentives. IPT members represent the spectrum of business and
industry sectors of all sizes - from small firms to most Fortune
500 companies. What they share is a dedication to excellence and a
desire to further professionalism and cooperation within the tax