NYC Pass-Through Entity Tax Application Now Open
December 8, 2022
David Neuman, JD
The New York City Pass-Through Entity Tax (“NYC PTET”) online application is now available, allowing individuals eligible to opt in to the NYC PTET on behalf of an eligible city partnership or eligible city resident S corporation. Only an authorized person may make this election on behalf of an eligible city partnership or eligible city resident S corporation. Tax professionals may not make this election on behalf of their clients.
An eligible city partnership is any partnership (including an LLC treated as a partnership for federal income tax purposes) that has elected to participate in New York State’s Pass-Through Entity Tax (“NYS PTET”) and: (1) has a filing requirement under Tax Law § 658(c)(1); (2) is not a publicly traded partnership; and (3) has at least one partner or member that is a city resident individual. Similarly, an eligible city resident S corporation is any New York S corporation (including an LLC treated as an S corporation for New York State and federal income tax purposes) as defined by Tax Law § 208.1-A that has elected to participate in the NYS PTET and: (1) is subject to the fixed dollar minimum tax under Tax Law § 209; and (2) has only city resident individual shareholders. The NYC PTET is imposed on “New York City pass-through entity taxable income” at a flat rate of 3.876%.
The NYC PTET is an optional tax that certain entities may elect to pay with an effective date of January 1, 2022. The NYC PTET paid by partnerships or S corporations can be claimed as a credit against the New York State income tax liability of partners, members or shareholders.
Importantly, the eligible pass-through entity must have opted in to the NYS PTET by September 15, 2022. The deadline to make the election for tax year 2022 is March 15, 2023. In order to opt in, an eligible entity must use the online New York City Annual Election application, which is separate from the online application used to opt in to the NYS PTET. For tax years beginning January 1, 2023, an entity must elect to opt in to the NYC PTET and NYS PTET at the same time and via the same online application.
An entity electing to opt in to the NYC PTET is not required to make estimated tax payments for tax year 2022. This changes next year. For tax years beginning January 1, 2023, electing entities must make estimated tax payments on or before March 15, June 15, September 15, and December 15.
For any questions or clarifications, please reach out to your LMC professional.
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