The bill amends Section 40-18-24.4 of the Code of Alabama 1975, extending the due date for Alabama electing pass-through entities to make their tax election. Specifically, for tax years beginning on or after January 1, 2021, and through December 31, 2023, these entities can submit the necessary forms at any time during the tax year or by the fifteenth day of the third month following the close of that tax year. Starting from tax years beginning on or after January 1, 2024, the submission deadline will change to the due date for filing the applicable income tax return, including any granted extensions. Additionally, for tax years beginning on or after January 1, 2025, the election or revocation must be made on the timely filed return.

The bill also includes several deletions and insertions to clarify the process for electing pass-through entities. Notably, it removes the previous requirement for a specific submission date and replaces it with a more flexible timeline. The election to be taxed as an electing pass-through entity will be binding for that year and subsequent years unless revoked under the new guidelines. Furthermore, the bill stipulates that the election or revocation must be approved by a majority of the governing body and owners of the entity. The act will take effect immediately upon passage and approval by the Governor.

Statutes affected:
Introduced: 40-18-24, 40-18-24
Enrolled: 40-18-24, 40-18-24