NYS Extends PTET Election for 2022 to 9/15

New York State recently enacted S.8948 which extended the deadline to make the PTET (pass-through entity tax) election for the 2022 tax year. The original due date of the election was March 15 for the 2022 tax year. For 2022 only, the deadline will be September 15. Thus, entities wishing to make the PTET election for 2022, and who missed the original election date of March 15, now have until September 15 to make the election. Part of the reason this was enacted was due to the recent changes to the law allowing S corporations with all NY shareholders to calculate the tax on pre-apportioned income.

• If the election is made after March 15 but before June 15, the taxpayer must make an estimated payment of 25% of the tax due at the time of the election in order for the election to be valid.
• If the election is made after June 15 but before September 15, the taxpayer must make an estimated payment of 50% of the tax due at the time of the election in order for the election to be valid.

As a result of these changes, companies that missed the original deadline have been granted a reprieve and may now make the election if advantageous. This new extension also gives companies until September 15 to evaluate their operations for the year to determine whether or not the election will be advantageous, as opposed to having to predict the results of the last 10+ months of the year.

Also, S corporations with only New York state shareholders, who did not make the election due to a low New York business allocation, may now want to make the election, given the enhanced benefits available. This new provision also presents opportunities for restructuring for all entities to take advantage of these provisions.