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Warner Norcross + Judd LLP is a corporate law firm with over 230 attorneys serving clients in nine offices throughout Michigan. Among the largest law firms in Michigan, Warner works in virtually all areas of business law.

Michigan Law Firm - Warner Norcross + Judd LLP

On December 20, 2021, Michigan Governor Gretchen Whitmer signed House Bill 5376 into law. House Bill 5376 is widely expected to save pass-through entity owners nearly $200 million dollars in federal income taxes on an annual basis. Pass-through entities (PTEs) include S corporations and partnerships (including limited liability companies treated as partnerships for federal income tax purposes).

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This new PTE tax election is available for the 2021 tax year.&nbsp;<strong>To take advantage of this election for taxable years beginning in 2021, calendar year filing PTEs must make the election no later than March 15, 2022.</strong>&nbsp;The time period of subsequent years is the 15<sup>th</sup>&nbsp;day of the third month following the close of the entity’s taxable year. Once made, the election is irrevocable for a period of three years.

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Warner first announced this new legislation in an eAlert posted on December 30, 2021, which can be read <a href="/updates/new-michigan-law-should-create-federal-tax-savings-for-pass-through-entity-owners/" target="_blank" rel="noreferrer noopener">here</a>. Subsequently, the Michigan Department of Treasury issued a notice with frequently asked questions concerning this new tax legislation, which can be found <a href="https://www.michigan.gov/documents/treasury/19773_FTE_tax_notice_745849_7.pdf" target="_blank" rel="noreferrer noopener">here</a>.

Warner’s Tax Law Practice Group continues to monitor federal and state tax issues as they develop, and issues eAlerts on legislation and other matters as needed. For more information regarding federal or state tax issues, please contact a member of Warner’s Tax Law Practice Group.

Action Needed to Elect Into Michigan’s New Flow-Through Entity Tax by March 15, 2022

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