Residency, Nonresident Withholding Requirements and Pass-Through Entities

Attorney Richard Litwin

Advice On Residency - Residency Questionnaire and Document Request

Over the past decade, telecommuting has become a standard business practice. I-Phones, Droids, wi-fi and teleconferencing facilitate working from a remote location and not in Georgia. Those who can do so work as much as possible from a condo in Florida or a mountain home in Tennessee. Some take it a step further. They try to claim Florida or Tennessee as their state of residence for tax purposes, so that they don't have to pay the 6% personal income tax in Georgia. A Georgia resident seeking to change his/her residence to another state cannot simply stay out of Georgia for 183 days during the year. Under the "presumption of continuing residence," the Georgia resident must also show to the satisfaction of the Department of Revenue that he or she is a legal resident of another state.

You may be current Georgia resident seeking to change your residency. Or, you may now live in another state (such as Florida or Tennessee) and believe that you have taken sufficient steps to abandon your Georgia domicile. If you have received a Residency Questionnaire and Document Request from the Department of Revenue, you need to understand the critical steps that must be taken to ensure compliance and avoid a tax dispute (or even jail time).

At The Litwin Law Firm, P.C., we can help you navigate the residency maze by determining whether the steps you have taken or plan to take are sufficient to change your tax residence legally from Georgia to another state. We also assist clients who have received a Residency Questionnaire and Document Request from the Department of Revenue. Richard Litwin is an AV-rated* lawyer who focuses on state and local taxation matters and tax disputes.

Withholding on Distributions to Nonresident Members, Partners and Shareholders - Nonresident Withholding Audits

Partnerships, S Corporations, and Limited Liability Companies doing business in Georgia must withhold and remit to the Department of Revenue a percentage of distributions paid or credited to non-resident members.  Effective for tax years beginning January 1, 2012, the burden is eased, as such entities must remit withholdings on a nonresident member’s share of taxable income sourced to Georgia, whether distributed or not.

A business that fails to withhold subjects all members or partners (not simply those managing the business) to joint and several liability for the tax, interest and a 25% penalty. All members of the entity, no matter how little they are involved in operating the entity, can be held liable personally. All pass-through entities with ties to Georgia should verify whether they are withholding on nonresident members/partners’ share of taxable income sourced to Georgia.

The Georgia Department of Revenue conducts Nonresident Withholding Audits to ensure compliance with the nonresident withholding laws. If the pass-through entity conducts business in Georgia and has not remitted nonresident withholdings, then the entity may receive a Department of Revenue request to conduct a Nonresident Withholding Audit. At The Litwin Law Firm, P.C., we can assist partnerships, limited partnerships, limited liability limited partnerships, S corporations and limited liability companies with assessing exposure to the nonresident withholding rules. We have extensive experience interpreting and analyzing the nonresident withholding rules. Businesses must be familiar with the deadlines for filing withholding returns and paying withholding taxes. Businesses must also be aware of the composite return options, which serve as an alternative to withholding.

Specializing in State and Local Tax Law — Call (678) 990-0600

At our Atlanta, Georgia-based law firm, we focus on state and local tax law. For knowledgeable advice regarding tax disputes from an experienced tax law attorney, call or contact our law office.

* CV, BV, and AV are registered certification marks of Reed Elsevier Properties Inc., used in accordance with the Martindale-Hubbell certification procedures, standards, and policies. Martindale-Hubbell is the facilitator of a peer review rating process. Ratings reflect the confidential opinions of members of the Bar and the judiciary. Martindale-Hubbell ratings fall into two categories: legal ability and general ethical standards.

The Litwin Law Firm, P.C., based in Atlanta, Georgia, represents clients statewide including Fulton County, Dekalb County, Decatur County, Cobb County, Douglas County, Forsyth County, Gwinnett County, Rockdale County, Henry County, Clayton County, Carroll County, Fayette County, Paulding County, Bartow County, Richmond County, Muscogee County, Columbia County, Clarke County, Chatham County Dougherty County, Glynn County and Cherokee County including the cities of Sandy Springs, Alpharetta, Roswell, Carrollton, Decatur, Marietta, Smyrna, Duluth, Cumming, Woodstock, Athens, Brunswick, Gainesville, Douglasville, Newnan, Peachtree City, Lawrenceville, Stockbridge, McDonough, Rome, Augusta, Savannah, Macon, Columbus, Albany and Dalton.

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