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    Brand-New NYC PTET

    S corporations, partnerships and LLCs that have New York City resident owners now have the option to elect to be subject to a brand-new voluntary New York City pass-through entity tax (PTET) system for the 2022 tax year.  While the NYC PTET was originally scheduled to become effective for the 2023 tax year, a new law in New York State that was enacted on August 31, 2022 (S09454) accelerates the effective date to the 2022 tax year.

    The NYC PTET works in a similar fashion to the New York State PTET, except that the NYC PTET computes the voluntary entity level tax using New York City resident income tax rates, and it allows owners of the entity to take a refundable credit against the New York City resident income tax liability on their New York personal income tax returns.

    Estimated tax payments are not required for the NYC PTET for the 2022 tax year, but entities may wish to make voluntary estimated payments on or before December 31, 2022 in order to obtain a federal tax deduction for the 2022 tax year.

    While the due date for making the NYC PTET election for the 2022 tax year is March 15, 2023, New York has indicated that entities that wish to make the NYC PTET election must first elect to be subject to the New York State PTET for the 2022 tax year. As discussed in our post on August 23, 2022, the due date for making the New York State PTET election for the 2022 tax year is September 15, 2022.

    As a result, even though the NYC PTET election is not due yet, entities that wish to elect into the NYC PTET must make sure that they have already made a timely election to be subject to the New York State PTET for the 2022 tax year, or they should make the New York State PTET election by September 15, 2022. 

    New York has indicated that it will provide guidance on making the NYC PTET election and making voluntary estimated tax payments in the near future.

    Our tax news has numerous other posts related to the pass-through entity tax.  Search our tax news archive for PTET to see these earlier posts.

    We will discuss changes to the PTET for the 2022 and 2023 tax years in our upcoming seminars in December and January. If you are not already registered, register here.

    The information provided herein is provided with the understanding that the author and publisher are not engaged in rendering legal, accounting or other professional service. As such, M + O = CPE, Inc. and the author disclaim any responsibility or liability for the information supplied herein or the application of said information.