Instructions For Form 807 - Composite Individual Income Tax Return


2016 807, Page 6
Instructions for Form 807, Michigan Composite Individual Income Tax Return
member(s) of the intermediate FTE. An intermediate FTE
Filing a Return
may not participate on behalf of an ultimate member that is
This form is used to report and pay individual income tax
a Michigan resident, a C corporation, or an entity that has
under Part 1 of Public Act 281 of 1967, as amended. It is
elected to file federally as a C corporation.
a collective individual income tax filing of the members
A composite return cannot be filed if less than two of the
participating, filed by a flow-through entity (FTE) on behalf of
members elect to participate in the composite filing.
those members. This return is not an entity-level filing for tax
Due Date of Return
imposed on the FTE. An FTE is defined as an S corporation,
a general partnership, a limited partnership, a limited liability
The 2016 composite return is for filers whose tax year ends in
partnership, or a limited liability company that is not taxed as a
2016. If the FTE’s tax year does not end in 2016, do not use
C corporation for federal income tax purposes.
this form. Use the appropriate year that corresponds to the
An FTE is not required to file a Composite Individual Income
year the ultimate owner will include the income in their federal
Tax Return (Form 807). Members of an FTE may elect to
individual income tax filing.
have the FTE file a composite return in lieu of members filing
The composite return for any tax period ending in 2016 is due
Individual Income Tax Returns (Form MI-1040). An FTE
April 18, 2017. The return for any period ending in 2017 will be
that does business in Michigan may file this return if it
due April 17, 2018.
is filing on behalf of two or more nonresident individual
If the FTE cannot file by the due date, a request for an
or trust partners, shareholders, or members. An FTE in a
extension can be filed before the original due date. See
tiered structure may also be eligible to file a composite return
“Requesting an Extension” on page 7.
(see below). An FTE may not file on behalf of a member
that is a C corporation or a member that files federally as a
Withholding Tax Payments
C corporation.
Effective July 1 2016, FTEs whose tax year begins after
The individual income tax filing obligation of a member is
June 30, 2016 are no longer subject to FTW requirements.
satisfied when the member participates in a composite filing so
FTEs whose tax year begins before July 1, 2016 are still
long as the member has no other Michigan-sourced income.
required to make withholding tax payments on behalf of
The filing entity and participating members must agree
all nonresident individual members (both participating and
to comply with the participation and reporting to member
nonparticipating) regardless of whether the FTE will file a
requirements as described in these instructions.
composite return.
Tiered Entities
The Michigan Annual Flow-Through Reconciliation Return
(Form 4918) must be filed before any Michigan withholding
An FTE is in a tiered structure if it has one or more members
can be claimed.
that are also FTEs. A tiered structure consists of a source
FTE and one or more intermediate FTEs. In this arrangement,
2017 Estimated Tax Payments
the intermediate FTE receives income from the source FTE
FTEs whose tax year begins July 1, 2016 or later are no
and the income is passed through to the intermediate FTE’s
longer subject to FTW requirements. FTEs may have to file
members. When a source FTE files a composite return on
estimated tax vouchers and pay estimated tax on behalf of each
behalf of its nonresident individual and trust members, an
participant. Estimated vouchers and payments are required if
intermediate FTE may elect to participate in the composite
the annual income tax liability for each participant is expected
filing. An intermediate FTE may participate only to the extent
to exceed $500 after exemptions and credits.
that the ultimate members in its tiered structure are nonresident
The estimated payments must be remitted with a Fiduciary
individuals or trusts. An intermediate FTE may not report its
Voucher for Estimated Income Tax (Form MI-1041ES) with the
own directly-generated income (loss) on the source FTE’s
name of the FTE and the FTE’s federal employer ID number
composite return.
(FEIN). Write “Composite return” on the top of the voucher.
Estimated payments should only be remitted for those
Participation Requirements
members who will participate on the Composite Return
The composite return is an individual income tax return and
(Form 807).
should be filed only on behalf of two or more nonresident
FTEs using a calendar tax year must file vouchers and pay
members subject to Michigan individual income tax.
quarterly estimated tax by April 15, July 15, October 15, and
A member may not participate in this return if the member:
January 15. FTEs that are not using a calendar year must file
• Was a Michigan resident (full-year or part-year)
vouchers and pay quarterly estimated tax on the appropriate
due dates that, in the FTE’s fiscal year, correspond to the
• Wishes to claim more than one Michigan exemption
calendar year. Fiscal year filer due dates apply regardless of the
• Is a C corporation or has elected to file federally as a
tax years of the participants.
C corporation
• I s an intermediate FTE and filer cannot identify the name,
address, account number, distributive share of Michigan
income and withholding paid on behalf of the ultimate


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