The New York State Pass-Through Entity Tax (PTET) is an optional tax that partnerships or New York S corporations may annually elect to pay on certain income for tax years beginning on or after January 1, 2021.
Who is eligible?
Any partnership [including a limited liability company (LLC) treated as a partnership for federal income tax purposes] that has a filing requirement under Tax Law § 658(c)(1) and is not a publicly traded partnership. A partnership is eligible to make the election even if it has partners that are not eligible for the PTET credit, including, but not limited to, corporate partners.
Any New York S corporation (including an LLC treated as an S corporation for New York and federal income tax purposes) as defined by Tax Law § 208.1-A that is subject to the fixed dollar minimum tax under Tax Law § 209.
A federal S corporation that does not have nexus to New York is considered an ineligible corporation under Tax Law 620(b)(3)(B). These corporations are not eligible to opt-in to the PTET.
When to opt-in
For PTET taxable years 2022 and later, the eligible entity may opt-in on or after January 1 but no later than March 15. The election to opt-in to the PTET must be made online on an annual basis and is irrevocable.
UPDATE: New York State has extended the deadline to opt-in to September 15, 2022.
How to opt-in
Only an authorized person can opt-in to the PTET on behalf of an eligible entity. Visit the New York State Department of Taxation and Finance website and click the Election tab for instructions on how to do so.
If you have any questions or would like assistance to determine the best option for your business, please reach out to your personal Sciarabba walker contact or email us at firstname.lastname@example.org.