HARRY HUGHES, Governor

2677

IMPOSED BY THIS SECTION IF ON THE LAST DAY OF THE CORPORATION'S
TAXABLE YEAR THE CORPORATION HAS ANY SHAREHOLDERS WHO ARE NOT
MARYLAND RESIDENTS, AS DEFINED IN § 279(I) OF THIS ARTICLE.

(III) THE PERCENTAGE OF THE INCOME OF A

CORPORATION THAT IS SUBJECT TO THE TAX UNDER ITEM (II) OF THIS
PARAGRAPH SHALL EQUAL THE PERCENTAGE OF THE STOCK OF THE
CORPORATION OWNED ON THE LAST DAY OF THE CORPORATION'S TAXABLE
YEAR BY SHAREHOLDERS WHO ARE NOT MARYLAND RESIDENTS, AS DEFINED
IN § 279(I) OF THIS ARTICLE.

290.

(C) FOR THE PURPOSES OF SUBSECTION (A) OF THIS SECTION, THE
STATE SHALL DEEM ANY INCOME OR FRANCHISE TAX TAXES OR TAXES BASED
ON INCOME PAID TO ANOTHER STATE BY A SMALL BUSINESS CORPORATION
THAT HAS ELECTED TO BE TAXED IN ACCORDANCE WITH THE PROVISIONS OF
SUBCHAPTER "S" OF AS AN "S" CORPORATION UNDER THE INTERNAL
REVENUE CODE AS PAID ON A PRO RATA BASIS BY THE SHAREHOLDERS OF
THE CORPORATION.

312.

(A-2) (1) AN "S" CORPORATION AS DEFINED IN THE INTERNAL
REVENUE CODE SHALL WITHHOLD AND PAY OVER TO THE COMPTROLLER A TAX
FOR EACH NONRESIDENT SHAREHOLDER.

(2) THE TAX WITHHELD SHALL BE AT THE RATE OF 5
PERCENT OF EACH ITEM OF NET INCOME INCLUDABLE IN THE NONRESIDENT
SHAREHOLDER'S DISTRIBUTIVE SHARE OF "S" CORPORATION INCOME BASED
UPON THE SHAREHOLDER'S PRO RATA SHARE OF "S" CORPORATION INCOME
ATTRIBUTABLE TO BUSINESS CARRIED ON IN MARYLAND.

(3) THE RETURN AND REMITTANCE SHALL BE MADE TO THE
COMPTROLLER ON OR BEFORE THE LAST DAY OF THE "S" CORPORATION
TAXABLE YEAR.

(g) The taxes so withheld and paid by the employer OR "S"
CORPORATION to the Comptroller shall constitute payments on
account of the income tax which is levied and imposed elsewhere
in this subtitle, and shall be allowed as a credit against the
total tax due on the individual's income tax return for that

taxable year. Any amount withheld which is in excess of the

total amount of tax, interest and penalties due from that
individual under the provisions of this subtitle, shall be
refunded to the individual in the manner provided in this

article. Any amount of tax due, in excess of that withheld

and/or remitted by way of declaration of estimated tax, is due
and payable in full at the time fixed herein for filing a return.

(h) (4) Any employer OR "S" CORPORATION who negligently
shall fail either to withhold the required tax or to pay it to
the Comptroller as specified, or both, shall be held personally
and individually liable for all moneys so involved, and if the
employer is a corporate entity, the personal liability shall