Two issues here - first, there is to be NO refund on the Maryland 510 UNLESS nonresident taxes have been paid and there are no nonresidents. The program was giving full refund for everything but we got that fixed. Now the program is giving refunds if there is a net loss and that fix is in the works (who knows when).

But your issue is not exactly correct.  If $2,000 was paid with 510D and only $1,000 of tax is due then (a) there is to be no refund of the extra $1,000 on the 510, and (b) the members or stockholders get full credit on their K-1 for the $2,000 as that was what was paid in. No different for the nonresident treatment that has been there for many years.