Update: 2022 Election Deadline for New York State Elective Pass-Through Entity Tax Extended to September 15, 2022

NYS PTET Election Deadline for 2022 Extended to September 15, 2022

On May 6, 2022, Governor Hochul signed into law a bill that extends the New York State Pass-Through Entity Tax (the “NYS PTET”) election deadline for the 2022 tax year to September 15, 2022. Previously, the election deadline for 2022 was March 15, 2022. The deadline extension allows taxpayers who previously missed the deadline an opportunity to elect to pay the NYS PTET for the 2022 tax year. For example, this would be very beneficial to entities that were not formed prior to the March 15^th deadline or for S corporations that, due to the changes enacted in April, may now receive a larger benefit for electing to pay the NYS PTET.

Updated Estimated Payment Requirements for the 2022 Tax Year 

Estimated tax payment requirements for entities electing to pay the tax after March 15, 2022, have been adjusted for 2022 as follows:

• For eligible partnerships or S corporations making the election after March 15, 2022, but prior to June 15, 2022, an estimated payment of 25% of the annual payment is due at the time of the election.
• For eligible partnerships or S corporations making the election after June 15, 2022, but prior to September 15, 2022, an estimated payment of 50% of the annual payment is due at the time of the election.
• Electing resident S corporations (i.e., S corporations whose owners are all New York State residents) are subject to special estimated tax rules.

Will NYS Change the Effective Date of the NYC PTET to January 1, 2022?

Our prior client alert (click here) discussed the elective NYC Pass-Through Entity Tax (the “NYC PTET”), which was recently enacted and is effective for years beginning on or after January 1, 2023.

As stated above, the NYS PTET election deadline for 2022 has been extended until September 15, 2022. The NYC PTET was apparently not effective until January 1, 2023, because, at the time of enactment, the NYS PTET election deadline for 2022 has already passed.  If New York State is willing and able to extend the election deadline for the NYS PTET, we see no reason why New York City cannot extend the deadline for the NYC PTET, allowing an election to be made for 2022, which would greatly benefit NYC residents and be tax neutral to New York City.

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If you have any questions regarding the NYC PTET or the NYS PTET rules, please contact your primary Kleinberg Kaplan attorney or one of the members of our Tax Department.