Filing the Pass-Through Entity Tax Return

Every Maryland pass-through entity must file a return on Form 510, even if it has no income or the entity is inactive. Every other pass-through entity that is subject to Maryland income tax law must also file on Form 510.

A multi-state pass-through entity that operates in Maryland, but is not subject to the Maryland income tax law is not required to file, although a return reflecting no income allocable to Maryland may be filed for record purposes. Letters in lieu of filing will not be accepted.

Qualified Sub-S Subsidiaries are treated as divisions under the Internal Revenue Code and are not considered as separate entities for Maryland purposes. These divisions will be included on the parent company's annual Maryland return.

Maryland will follow the IRS rules for a single member LLC electing to be disregarded as a separate entity ("check the box") and certain partnerships that do not actively conduct a business that have elected not to be treated as a partnership.