New York’s Pass-Through Entity Tax (PTET) regime has been in force for only a short time, but it continues to evolve quickly. This elective tax allows certain businesses in New York to mitigate the detrimental effect of federal law that curtails an individual’s itemized deductions for state income tax. In the latest development, Governor Kathy Hochul of New York signed A.10080 and S.8948 into law on May 13.
This NY State legislation affects the PTET in two significant ways:
Relief for late 2022 New York PTE Elections:
- Partnerships and S Corporations that missed the March 15, 2022 deadline to elect into New York’s PTET for 2022, or that were formed after March 15, now have until September 15, 2022 to do so.
- Entities that elect-in by June 15, 2022 must pay 25% of their estimated tax payment obligation for 2022 with the election.
- Entities that elect-in between June 16 and September 15, 2022 must pay 50% of their estimated tax payment obligation for 2022 with the election.
- This relief ONLY applies to the 2022 tax year. Elections for 2023 and later years will still need to be made by March 15 of the year for which the election is to be effective (i.e., prior to the end of the effective year).
- New York S Corporations that have only New York residents as shareholders may elect to pay the New York PTET on 100% of the S Corporation’s income. The election for the 2022 taxable year must be made no later than March 15, 2023.
- All New York S Corporations who make the election to pay tax on 100% of their income for the 2022 taxable year must pay at least 75% of their estimated tax payment obligation by September 15, 2022 in order to avoid estimated tax penalties.
Alternative NY PTE Tax Base for NY S Corporations Owned 100% by NY Residents:
To learn more about the administration of the New York Pass-Through Entity Tax, please refer to our resource, “The Latest on the New York Pass-Through Entity Tax.”
For more information on how this tax may affect your business, please contact us.
Published on May 26, 2022