Form 941e-Me - Pass-Through Entity Withholding Exemption Form

INSTRUCTIONS, continued

2) The entity must then submit to MRS

Exemption Authorization).

An entity

all of the members of the upper tier

a Pass-through Entity Withholding

must attach a letter of explanation

entity are exempt from withholding on

Exemption form (Form 941E-ME).

to Form 941E-ME in order to apply

that income. The statement must list

for a requested exemption. If an

the category of exemption for which

3) The entity must make estimated

unusual situation occurs in which the

each member (of the upper-tier entity)

payments

(Form

1040ES-ME)

taxpayer believes the entity should

qualiﬁ es.

The lower-tier entity is to

on behalf of the composite ﬁ ling

be exempt from the withholding law,

retain this statement for a period of no

group as long as the aggregate

or the entity would like to propose an

less than three years.

Maine income tax liability is greater

alternate application of the withholding

than $1,000. All members of the

If the lower-tier entity has one or more

requirement, the entity may apply for an

composite

return

are

grouped

members that are pass-through entities

exemption. In order to apply, a Pass-

together and treated as one ﬁ ler

and one or more members that are

through Entity Withholding Exemption

for estimated tax purposes. If the

individuals for which the lower-tier

Form (941E-ME) must be completed,

tax liability of the composite group

entity withholds, the lower-tier entity

accompanied by a letter of explanation.

is anticipated to exceed $1,000,

may request a partial exemption for the

An exemption can be requested at any

the entity must make four equal

members of the upper-tier entity(ies) by

time during the year but, if granted, it

estimated payments in order to avoid

checking the “requested” box on Form

is only valid for the remainder of the

the penalty for the underpayment of

941E-ME, with an attached statement

calendar year. If the exemption request

estimated tax. Estimated payments

identifying the need for the partial

involves a complicated structure, more

for the composite group are due

exemption.

than 60 days may be required for MRS

based on 8.5% of Maine-source

An upper-tier entity that is partially

to issue a decision. If MRS is not able

entity income. As with any estimated

exempt must identify the portion of its

to issue a decision prior to the quarterly

payments, they may be based

Maine-source distributive income that

withholding deadline, a notice will be

either on 90% of the current year’s

is subject to Maine withholding, and

sent to the entity; temporary withholding

Maine-source

member

income

the lower-tier entity will notify Maine

is required until a ﬁ nal decision can

or 100% of the previous year’s

Revenue Services of the need for a

be made.

The notice of exemption

Maine-source member income. For

partial exemption.

In these cases,

authorization will apply only to the

more information about estimated

Maine income tax must be withheld

calendar year for which it is requested.

payments, see the instructions and

from the portion of the Maine-source

worksheets for Forms 1040ES-ME

New members during the year. If

distributive income of each nonresident

and 2210ME.

a new member joins the entity during

upper-tier

entity that is not 100%

the year and agrees to participate in

4) The

ﬁ nal

requirement

for

the

exempt.

the compliant or composite groups, the

composite ﬁ ling exemption is the

If all nonresident members qualify

entity is not required to notify Maine

ﬁ ling of the composite return.

for one or more exemptions and, if

Revenue Services.

However, the

Instructions for the composite ﬁ ling

required, the entity properly ﬁ les Form

entity must collect either a Compliant

can be found with Schedule 1040C-

941E-ME, the entity is not required to

Taxpayer Afﬁ davit or a Composite Filing

ME. Along with the composite

Participation Statement from that person

return (ﬁ led on Form 1040ME),

through entity withholding account.

at that time. For compliant taxpayer

the entity must complete and

members, a new List of Participating

include Schedule 1040C-ME and

Members need not be submitted to

Schedule NRC, which asks for the

MRS until the following year. If a new

name, ownership percentage, ID

member does not participate either as

number (SSN, EIN, etc.) and share

a compliant taxpayer or in a composite

of Maine-source income for each

ﬁ ling, the entity must withhold from

participating member.

Maine-source income for that member.

If any one of these four steps is not

Tiered entities. For purposes of

met, the withholding requirement is

withholding, tiered entities exist when

not waived and the entity will be liable

one pass-through entity is a member

for withholding payments and related

of another pass-through entity. The

interest and penalty charges.

non-member (lower-tier) entity must

Requested exemptions. Requested

withhold for the member (upper-tier)

exemptions are for members that

entity. If the entity required to withhold

do not qualify for the compliant

(lower-tier entity) includes, on Form

taxpayer, composite ﬁ ling or automatic

941LM-ME,

pass-through

entity

exemptions. Requested exemptions

member (upper-tier entity), the lower

are those which require prior written

tier entity must obtain a statement from

authorization from MRS (Notice of

an ofﬁ cer of the upper-tier entity that

Form 941e-Me - Pass-Through Entity Withholding Exemption Form - 2011 Page 4

Related Articles

Related forms

Related Categories