3998                                                      VETOES

such state, the amount of income tax payable by him under this
subtitle shall be reduced by the amount of the income tax so paid
by him to such other state upon his producing to the Comptroller
satisfactory evidence of the fact of such payment; but
application of such credit shall not operate to reduce the tax
payable under this subtitle to an amount less than would have
been payable if the income subjected to tax in such other state
were ignored. The credit provided for by this section shall not
be granted to a taxpayer when the laws of such other state allow
a credit to such taxpayer substantially similar to that granted
by § 291 hereof.

(b) Notwithstanding the aforegoing, with respect to the
taxable year 1974 and each taxable year thereafter, the credit
provided for by this section operates to reduce only the State
income tax payable under this subtitle and does not operate to
reduce any local income tax imposed under § 283 of this article.

(C) FOR THE PURPOSES OF SUBSECTION (A) OF THIS SECTION, THE
STATE SHALL DEEM ANY INCOME TAXES OR TAXES BASED ON INCOME PAID
TO ANOTHER STATE BY A SMALL BUSINESS CORPORATION THAT HAS ELECTED
TO BE TAXED 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'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.