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B. How do flow-through entities make an election to pay the flow-through entity tax?
The Implementation of the Michigan Flow-Through Entity Tax
B. How do flow-through entities make an election to pay the flow-through entity tax?
Only entities that affirmatively elect to file a return and pay the tax are subject to the flow-through entity tax. The election must be made by submitting an electronic payment to the Department through the procedures specified in Section II.G of this Notice. Any other manner of making the election – including, for example, the submission of a written election statement or a payment outside of Michigan Treasury Online (MTO) – is not a valid election. For the election to be timely, the payment must be received by the fifteenth day of the third month of the flow-through entity’s tax year. Although special rules apply for the initial implementation year, calendar year filers will ordinarily be required to make an election by March 15 of the tax year.6 An election made by a flow-through entity is effective for the tax year in which the election is made and for each of the next two successive tax years (i.e., three years total) and, once made, is irrevocable. An election payment must specify the initial tax year of the flow-through entity for which the election is being made.
Special Instruction for 2021. For flow-through entities with calendar or fiscal tax years beginning in 2021, the flow-through entity tax election may be made through April 15, 2022. Any election made through April 15, 2022, for tax year 2021 will be irrevocable for that tax year, plus the next two successive tax years. Flow-through entities can generally make the election for tax year 2021 by specifying a payment for the 2021 tax year that includes the combined amount of any unpaid quarterly estimated payments due for tax year 2021. Any flow-through entity electing after the due date of the flow-through entity tax annual return (March 31, 2022, for calendar year filers) should immediately file the return and include payment of the tax due. For entities electing after March 31, 2022, interest accruing from the initial due date of the return will apply; however, penalty will not be levied for the late filing of the return or payment of the tax. Any election made after April 15, 2022, will not be accepted as a valid election for that tax year.
Special Instruction for 2022. A calendar year flow-through entity that wants to make an irrevocable election for three tax years beginning with the 2022 tax year must do so no later than March 15, 2022. For any tax year beginning in 2022, elections must be made by submitting a payment through MTO. That payment – which may be either a nominal or greater amount, such as the first quarter estimated payment due on April 15, 2022 - must be designated as applicable to the 2022 tax year.
6MCL 206.813.