Eaton Peabody

Pass Through Entity Withholding

The Maine Legislature has enacted a new law requiring all pass-through entities with Maine-source income to withhold income taxes from each non-resident owner or beneficiary beginning in calendar year 2003. This withholding requirement is in addition to any wage withholding requirement.

For purposes of the new legislation, a pass-through entity is defined as a business in which the income of the business, and the resulting income tax liability, passes though the business to the members of that business. In general, any entity which is not taxed as a C corporation for federal tax purposes, is considered to be a pass-through entity. Pass-Through entities include S corporations, general partnerships, limited partnerships, trusts and limited liability companies.

For more information about pass through entities and withholding requirements, please contact Karen Doore kdoore@eatonpeabody.com, 207-947-0111 ext. 712.

This information is provided as general information, and is not a substitute for legal or other professional advice.