On May 6, 2022, New York enacted S.B. 8948 to extend the deadline for “electing resident S corporations” to make the pass-through entity tax (PTET) election for 2022 and to modify the PTET’s estimated payment requirements for 2022.
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 an electing resident S corporation (an S corporation certifying at the time of its election that all its shareholders are residents of New York) in the tax year 2022 only, the PTET election has been extended to September 15, 2022. This extension does not apply to partnerships or electing standard S corporations. The tax year 2022 certification that the S corporation has only New York resident shareholders must be made by March 15, 2023.
S.B. 8948 also modifies New York’s 2022 estimated payment requirements for all electing pass-through entities. For an election made after March 15, 2022, and before June 15, 2022, to be valid, the electing pass-through entity must 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.