State & Local Tax Government Building

Kentucky House Bill (HB) 249 amended Kentucky Revised Statute 141.206(15) by striking provisions related to composite returns (filed on behalf of nonresident individual partners, members, or shareholders) for tax years beginning on or after January 1, 2022.

As a result, a pass-through entity may not file a composite return on behalf of its electing nonresident individual partners, members, or shareholders. The pass-through entity will instead be required to make quarterly estimated nonresident withholding payments on behalf of its nonresident individual partners, members, or shareholders and furnish a statement to those individuals showing the amount of tax paid on their behalf for the tax year. The statement shall be reported on a form to be released by the Kentucky Department of Revenue (DOR) and then provided to the partner, member, or shareholder on or before April 15 following the end of the pass-through entity’s tax year. 

In a discussion with the DOR, the department stated that nonresident withholding paid will satisfy a nonresident individual’s requirement to file an income tax return in the state if the income from any pass-through entities is their only Kentucky sourced income and the nonresident withholding is paid on that tax year. The group of nonresidents to whom the above sentence applies may file a return in Kentucky, but they are not required to.

If you have any questions regarding Kentucky’s enactment of HB 249 and its impact, contact your BKD Trusted Advisor™ or submit the Contact Us form below.

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