Professional Services Accounting ARTICLE -
Required Withholding by states on LLCs, LLPs and Limited Partnerships

Target Audience: Law Firm Professionals, Lawyers, LLCs, LLPs and limited partnerships

More states are requiring LLCs, LLPs and limited partnerships (limited liability entities) to withhold state income tax on the nonresident's share of the entities income. Below is a chart showing the 28 states that currently require withholding. The states marked under the "Consent" column can avoid withholding by having the nonresidents consent to jurisdiction and agree to pay the state income tax on their distributive share of the entity's state sourced income. Some states may assess the tax against the entity if the nonresident does not remit the appropriate state income tax. The states marked under the "Composite" column can avoid withholding by filing a composite tax return for the nonresidents. Also listed are states that impose a tax or fee at the entity level. The tax assumes that the entity is treated as a partnership, not a corporation. Please contact us should you have any questions regarding these requirements.

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