Maryland: PTE Forms Released, Filing and Payment Deadlines Extended

August 2021

BY

Scott SmithNational Tax Office Technical Practice Leader, State and Local Taxes

Elil ArasuGreater Washington D.C. Office Managing Director, Greater Washington D.C. State and Local Tax Practice Leader

The Maryland Comptroller’s Office has released the long-awaited Forms 510 and 511 for filing pass-through entity (PTE) returns for 2020 and thereafter (along with instructions) and extended the filing deadline. The forms are used by an electing PTE to report and remit tax and were released on June 29, 2021 after the state legislature enacted S.B. 523, S.B. 496 and S.B. 787, all of which contain language impacting the new Maryland PTE election. The Comptroller also issued the updated Administrative Release No. 6, which provides further guidance on the PTE election.


Tax Return Filing Extension for PTEs

In light of the release of the forms and guidance, on June 30 the Comptroller extended the filing deadline for PTE 2020 income tax returns to September 15, 2021. No interest or penalties will be charged for taxpayers that file Forms 510 or 511 and pay any outstanding liabilities by September 15. Notably, the extension applies only to late payment penalties, not to penalties or interest assessed on the underpayment of estimated tax.

The Comptroller’s announcement also mentions that while the individual income tax return filing deadlines were not extended to September 15, 2021, certain individual income tax filers whose 2020 Maryland Forms 502 or 505 filings were amended or delayed because they did not timely receive the Maryland K-1s as a result of the extended due date for PTEs may apply for relief from penalties and interest related to the PTE filing. Form 511 must be filed electronically.
 

Computation of the Tax

S.B. 787 addressed the definition of the electing PTE’s taxable income. The taxable income of a PTE is defined as the portion of a PTE’s income under the Internal Revenue Code, calculated without regard to any deduction for taxes based on net income that are imposed by a state or political subdivision of a state that is derived from or reasonably attributable to the trade or business of the PTE in Maryland. To the extent federal taxable income includes interest income from federal obligations, such income is to be subtracted.