PTET Election Instructions and Due Date
New York State has authorized an entity-level tax to be paid by partnerships and S corporations. The Pass-Through Entity Tax (PTET) is an elective tax that would allow the pass-through entity with income in New York State to pay tax on behalf of the partners/shareholders. For the individual partners/shareholders, the State and Local Tax Deduction (SALT) is currently limited to an annual deduction of $10,000; however, the entity-level tax circumvents the limitation by allowing a deduction without limitation for the PTET paid by the entity on the federal income tax return. The election is done on an annual basis, as follows:
Who Can Make the Election?
Only an authorized person may make this election on behalf of an eligible partnership or eligible S corporation. Tax professionals may not make this election on behalf of their clients.
The following types of businesses are not eligible to opt in:
- single-member LLCs (unless they elect to be treated as an S corporation for New York State purposes);
- sole proprietorships;
- non-profit corporations; and
- corporations that are not New York S corporations.
When To Make the Election
An S corporation intending to file as a resident S corporation for 2022 must certify when it files its annual PTET return or extension, that all its shareholders are residents of New York State for purposes of Article 22.
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 after the due date of its first PTET estimated payment.
What Is the Election Period?
An electing entity that is a calendar-year taxpayer for federal purposes must use a calendar-year basis to elect, file and pay the PTET. An electing entity that is a fiscal-year taxpayer must elect, file and pay the PTET for the calendar year in which its fiscal year ends.
Example: A partnership’s fiscal year is March 1, 2021, through February 28, 2022. The partnership can make the election on January 1, 2022, for the 2022 PTET taxable year, because the partnership’s fiscal year ended during the 2022 calendar year.
If an electing entity has more than one tax year within a calendar year, it can make only one election during each calendar year.
How To Make the Election
An authorized person can opt in to the PTET on behalf of an eligible entity through the entity’s Business Online Services account. If the entity does not have a Business Online Services account, the authorized person will need to create one.
To opt in to the PTET:
- Log in to (or create) the eligible entity’s Business Online Services account.
- Select the ≡ Services menu in the upper-left corner of the Account Summary homepage.
- Select Corporation tax or Partnership tax, then choose PTET web file from the expanded menu.
- On the Form Selection page, choose Pass-through entity tax (PTET) annual election.
Important: The authorized person must electronically sign and attest to having the electing entity’s authorization.
Once the election is made, please forward the confirmation to your Dannible & McKee partner representative.
If you have questions about the PTET election, feel free to contact Nicholas L. Shires, CPA, or your Dannible & McKee partner representative for assistance. You can also contact us at 315-472-9127 or email@example.com.