Composite Returns and Nonresident Withholding for Pass-Through Entities: Navigating the Multistate Complexities

Determining Whether to File Composite Returns, Dealing With Withholding Requirements

Recording of a 110-minute CPE webinar with Q&A


Conducted on Wednesday, February 8, 2017
Recorded event now available


This webinar will offer tax professionals a deep dive into thorough and timely presentation of the composite tax provisions and withholding requirements of pass-through entities with nonresident shareholders and/or partners. The panel will provide an advanced level look at the specific issues facing tax advisers to pass-through entities surrounding composite returns and withholding requirements for pass-through entities that have nonresident shareholders.

Description

A significant challenge for tax advisers working with pass-through entities is navigating the landscape of reporting and withholding where the pass-through entity has nonresident shareholders or partners. Key issues include determining whether electing out of mandatory withholding is an available option, and evaluating whether filing a composite return is the optimal tax strategy for the entity and its shareholders.

While states are all over the map in terms of their regimes for collecting tax from nonresident shareholders of pass-through entities, there are some common themes. Most states have some sort of mandatory withholding scheme; however, some states provide the option to elect out of mandatory withholding, generally through filing composite tax returns.

There are strategic considerations advisers must take into account in determining whether to file a composite return, and filing composites may not be the best option for some pass-throughs.

A principal benefit of filing a composite return is the convenience for partners or shareholders in avoiding the filing of nonresident state income tax returns. This benefit is frequently offset by states, particularly those with high top marginal rates, imposing tax at the top rate on income reported on a composite return.

Further, a composite return may preclude an individual shareholder from claiming credits or deductions that may apply if the taxpayer filed a nonresident return. Tax advisers must be able to evaluate specific circumstances and understand various tax impacts to determine whether to advise filing a composite return.

Listen as our experienced panel offers a comprehensive view of states’ approaches to taxing corporations on multistate partnership income.

Outline

  1. Landscape of withholding requirements and composite returns
  2. Withholding requirements on nonresident shareholders/partners
  3. Measures to enforce nonresident filing and payment of taxes
  4. Mechanics of electing and filing composite returns
  5. Taxation of disposition of interest by nonresident
  6. Tax reporting and planning issues specific to S corporations
  7. Elections and strategies

Benefits

The panel will discuss these and other important questions:

  • Which states offer elections other than defaulting to withholding on nonresident partners or shareholders?
  • What are the built-in exceptions to withholding requirements for pass-through entities with nonresident shareholders?
  • Which states offer the option of electing to file composite returns? Which states require composites?
  • When should a pass-through entity not elect to file a composite return?
  • What are the specific risks to identify and avoid in withholding for nonresident shareholders or partners?

Learning Objectives

After completing this course, you will be able to:

  • Identify alternatives to withholding for pass-through entities with nonresident partners or shareholders
  • Determine the circumstances in which filing a composite return may not be advantageous for pass-through entity owners
  • Recognize state requirements for filing composite returns
  • Ascertain the special circumstances that impact S corp composite returns
  • Verify that the disposition of pass-through interests are correctly reported on state filings

Faculty

Jeffrey K. Schuetz, CMI, Partner
RubinBrown, St. Louis

Mr. Schuetz focuses on state and local tax services and is a member of his firm's Construction Services and Manufacturing and Distribution Services Industry Groups. He provides tax consulting and planning services to clients. He has more than 17 years of federal, state and local tax experience, and previously worked as a tax manager at Insituform Technologies Inc. and as a field auditor with the Missouri Department of Revenue. He presents at various educational forums.

JoAnna Fu Simek, Director
BKD, Oakbrook Terrace, Ill.

Ms. Simek focuses on federal and state income tax planning for C-corps, S-corps, partnerships, LLCs, and individuals. She specializes in consolidated corporations and unitary groups, particularly for firms involved in manufacturing/distribution, technology/software, and start-ups. In the area of state and local sales and use tax consulting she counsels on audit defense, reverse audits, voluntary disclosure agreements, research matrices, transaction analysis, mergers and acquisitions, certificate management systems, protest procedures and support, and nexus studies. She also works on international tax compliance for US companies and US tax implications for foreign companies.


Recordings

CPE On-Demand

Includes video streaming of full program plus handouts (available within a week of the live webinar).

Strafford is a NASBA-approved CPE provider for On-Demand webinars.

This program is eligible for 2.0 CPE credits.

  • Field of Study: Taxes.
  • Level of Knowledge: Intermediate.
  • Advance Preparation: Printing and reviewing Program Outlines and materials.
  • Teaching Method: Seminar/Lecture.
  • Delivery Method: QAS Self-Study.
  • Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex state income tax forms and schedules for individuals and pass-through entities; supervisory authority over other preparers/accountants. Knowledge and understanding of withholding requirements, composite returns, nonresident filing, and payment of taxes by pass-through entities.

On-Demand Webinar & CPE Processing $182.00


Recorded Event

Includes full event recording plus handouts.

Note: Self-study CPE and EA credits are not offered on recorded events.

Recorded Webinar Download $147.00

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DVD (Slide Presentation with Audio) $147.00 plus $9.45 S&H

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Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).

Program Materials

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Program Materials

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