For tax years beginning on or after January 1, 2022, a pass-through entity will no longer be allowed to file a composite return on behalf of electing nonresident individual partners, members, or shareholders. Instead, the pass-through entity will be required to make quarterly estimated withholding payments on behalf of its nonresident individual owners and furnish a statement to them showing the amount of tax paid on their behalf for the tax year. The statement shall be furnished on a form to be released by the Kentucky Department of Revenue and furnished to the partner, member, or shareholder on or before the 15th day of the 4th month after the end of the pass-through entity’s taxable year. Thus, nonresident individuals that have historically not had a filing obligation due to a pass-through entity filing a composite return on their behalf may find themselves with a filing obligation beginning in 2022.
H.B. 249 also eliminates a pass-through entity’s obligation to withhold tax on behalf of a corporate partner.