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09. Do I need to withhold for nonresident members that are pass-through entities?

Yes. Your primary responsibility is to withhold for all nonresident members, individuals and business entities alike. However, if you can identify all of the ultimate nonresident individual (or business) taxpayers, you may withhold against those members' income if you prefer, but only after making a written request to the assessor and receiving approval to do so. For example, Partnership A (lower-tier entity) is partially owned by nonresident Partnership B (upper-tier entity), which is owned by nonresident Individual 1 and nonresident Individual 2. Partnership A (lower-tier entity) must withhold 8.5% of Partnership B's share of Maine-source income, and assign that withholding to Partnership B. If, however, Partnership A can identify the ultimate nonresident members, A may withhold 8.5% against each ultimate member's (Individual 1 and Individual 2) share of income. If a lower-tier entity is withholding for ultimate nonresident members, the lower-tier entity must also report the amount of withholding to those ultimate nonresident members. If the lower-tier entity is withholding for an upper-tier entity, the amount withheld must be reported to the upper-tier entity and the upper-tier entity must then report the appropriate portion of withholding to each member (resident and nonresident). If a lower-tier entity is withholding for ultimate nonresident members and the upper-tier entity generates no Maine-source income of its own, the upper-tier entity is not required to register with MRS.