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ROBERT L. EHRLICH, JR., Governor Ch. 444
ENTITY members by [an S corporation, a partnership, or a limited liability company]
A PASS-THROUGH ENTITY may not exceed the sum of all of the nonresident
[shareholders', partners', or] AND NONRESIDENT ENTITY members' shares of the
PASS-THROUGH entity's distributable cash flow.
(E) (1) (I) THE TAX IMPOSED UNDER SUBSECTION (B) OF THIS SECTION
DOES NOT APPLY WITH RESPECT TO THE DISTRIBUTIVE SHARE OR PRO-RATA SHARE
OF A MEMBER THAT IS ITSELF A PASS-THROUGH ENTITY FORMED UNDER THE LAWS
OF THE STATE OR QUALIFIED BY OR REGISTERED WITH THE DEPARTMENT OF
ASSESSMENTS AND TAXATION TO DO BUSINESS IN THE STATE.
(2) (II) A MEMBER OF A PASS-THROUGH ENTITY THAT IS ITSELF A
PASS-THROUGH ENTITY AS DESCRIBED IN PARAGRAPH (1) OF THIS SUBSECTION
THIS SECTION WITH RESPECT TO ANY OF ITS MEMBERS THAT ARE NONRESIDENTS
OR NONRESIDENT ENTITIES.
(2) THE TAX IMPOSED UNDER SUBSECTION (B) OF THIS SECTION DOES
NOT APPLY WITH RESPECT TO THE DIRECT OR INDIRECT DISTRIBUTIVE SHARE OR
PRO RATA SHARE OF A MEMBER THAT IS A REAL ESTATE INVESTMENT TRUST AS
DEFINED BY § 856 OF THE INTERNAL REVENUE CODE.
[(e)] (F) The Comptroller may provide by regulation for:
(1) the filing of composite returns by [an S corporation, partnership, or
limited liability company] A PASS-THROUGH ENTITY on behalf of its nonresident
[shareholders, partners, and] AND NONRESIDENT ENTITY members: and
(2) application of or exemption from the tax imposed under subsection
(b) of this section for [an S corporation, partnership, or limited liability company] A
PASS-THROUGH ENTITY:
(i) that files a composite return on behalf of nonresident
[shareholders. partners, or] AND NONRESIDENT ENTITY members; or
(ii) the nonresident [shareholders, partners, or] OR NONRESIDENT
ENTITY members of which are tax exempt [or pass-through entities],
[(f)] (G) (1) Subject to paragraph (2) of this subsection, if a partnership fails
to pay the tax when due the tax may be collected from the partners under the law
applicable to debts of the partnership, with the partnership and partners having
rights of contribution against any nonresident partner on whose behalf the tax is
paid.
(2) Unless it is established by the Comptroller that the partner
participated in a pattern of distributions to one or more partners with the intention of
defeating the partnership liability for the tax imposed under subsection (b) of this
section, any partner otherwise liable under paragraph (1) of this subsection shall be
liable for the tax imposed on the partnership only to the extent of distributions from
the partnership to that partner after the tax was due to be paid by the partnership.
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