New York Extends PTET Election Deadline and Modifies Estimated Payment Requirements for 2022

May 2022

BY

Janet BernierPrincipal, State and Local Taxes

Nicholas MontorioManaging Director, State & Local Taxes

Ozair MintyManaging Director, State & Local Taxes

On May 6, 2022, New York enacted S.B. 8948 to extend the deadline to make the pass-through entity tax (PTET) election for 2022 and to modify the PTET’s estimated payment requirements for 2022.
 

PTET Election Deadline

In general, New York’s PTET election must be made by the due date of the first estimated payment, which is March 15 for eligible calendar-year pass-through entities.  As part of its 2023 budget bill, New York recently expanded the benefits of its elective pass-through entity tax for some resident S corporation shareholders by defining two distinct classes of S corporations that can make the PTET election: (1) an “electing resident S corporation” and (2) an “electing standard S corporation.”  However, the budget bill failed to extend the deadline to make the 2022 PTET election for the newly created “electing resident S corporation” class.  Fortunately, S.B. 8948 corrects that oversight.
 
For tax year 2022 only, the due date to make the PTET election has been extended to September 15, 2022, provided that required estimated tax payments are made with the election (see below).  Also for tax year 2022 only, the certification that the S corporation has only New York resident shareholders, in order to be taxed as an “electing resident S corporation,” must be made by March 15, 2023.  Notably, the election deadline extension appears to apply to any pass-through entity, including partnerships, not just electing resident S corporations or standard S corporations. 
 
For tax year 2023 going forward, the PTET election must be made by the due date of the first estimated payment.  Also for tax year 2023 going forward, the certification to be treated as an “electing resident S corporation” must be made with the PTET election.  If an S corporation fails to properly make the required certification, then it will be considered an “electing standard S corporation” for New York PTET purposes.
 

PTET Estimated Payment Requirements

 S.B. 8948 also modifies New York’s 2022 estimated payment requirements.  For an election that is made after March 15, 2022, and before June 15, 2022, to be valid, the electing pass-through entity is required to make an estimated tax payment with its election that represents 25% of the required annual payment.  For an election that is made after June 15, 2022, and before September 15, 2022, to be valid, the electing pass-through entity is required to make an estimated tax payment with its election that represents 50% of the required annual payment.  However, all “electing resident S corporations” are required to have paid 75% of the required annual payment by September 15, 2023.