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 2023 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.
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.
When are payments due?
An electing entity must use the online application to pay estimated tax on the amount of the PTET calculated for the current taxable year. Estimated payments are due on or before March 15, June 15, September 15, and December 15 in the calendar year prior to the year in which the due date of the return falls. If the due date of the estimated payment falls on a Saturday, Sunday, or legal holiday, the payment is due on the next business day.
Each quarterly payment should be an amount equal to at least 25% of the required annual payment for the taxable year. The required annual payment is the lesser of:
- 90% of the PTET shown on the return of the electing entity for the taxable year; or
- 100% of the PTET shown on the return of the electing entity for the preceding taxable year.
If the entity did not opt in to the PTET for the preceding year, the required annual payment is 90% of the tax reported on the PTET return for the taxable year.
If you have any questions or would like assistance in determining the best option for your business, please reach out to your personal Sciarabba walker contact or email us at info@swcllp.com.