H.F. No. 4318 Summary

• Allows resident sole members of disregarded limited liability companies to claim income tax credits for net income taxes paid by the LLC to another state, effective for taxable years beginning after December 31, 2021.

• Expands the sales tax exemption for property used in a trade or business to include sales between a sole member of a disregarded LLC and the disregarded LLC itself, effective for sales and purchases made after June 30, 2022.

• Defines "disregarded limited liability company" as an LLC that is disregarded as an entity separate from its owner under the Internal Revenue Code for purposes of both tax credit and sales tax exemption provisions.

• Clarifies that single-member LLC members are treated similarly to S corporation shareholders and partnership partners in claiming tax credits for taxes paid by their entities to other states.