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Michigan Form 4918 Due 2-28-13

Recently, several changes to the Michigan Income Tax Act went into effect establishing a new withholding requirement for flow-through entities that have members, partners, or shareholders that are C corporations or other flow-through entities (S corps, partnerships, LLPs, LLCs).  Specifically, a flow-through entity with business activity in Michigan that accrues more than $200,000 in apportioned business income for the year must withhold on the distributive share of C corporation members and other flow-through entities at a rate of 6%.  (Note that for an intermediate flow-through entity that has no business income sourced to Michigan other than business income received from a source flow-through entity, no additional withholding requirement exists.)

 
These changes are in addition to the already existing withholding requirement on flow-through entities with members, partners, or shareholders that are nonresident individuals. The rate of withholding on such individuals and trusts is 4.33%.
 
Flow-through withholding returns and payments are due to the Department on April 15, July 15, and October 15 of the flow-through entity's tax year and January 15 of the following year.
 
Flow-through entities are required to file Form 4918, Annual Flow-Through Withholding Reconciliation Return, due 2/28/13, or the last day of the 2nd month after the close of the tax year of the flow-through entity.

 

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