BILL NUMBER: S625A
SPONSOR: SKOUFIS
 
TITLE OF BILL:
An act to amend the tax law, in relation to the timing of annual tax
elections
 
PURPOSE:
This bill would amend the tax law to allow a taxpayer to make the PTET
election by September 15 of the tax year to which the election applies.
Current law requires the election to be made by March 15 of the tax
year.
 
SUMMARY OF PROVISIONS:
Section 1: Amends subsection (c) of section 861 of the tax law, to make
the state-level PTET election from March fifteenth to September
fifteenth.
Section 2: Amends subsection (b) of section 864 of the Tax Law to
mandate that taxpayers making an election on or after March fifteenth
and before June fifteenth must remit twenty-five percent of the required
estimated payment at the time of election. For elections made on or
after June fifteenth and before September fifteenth, taxpayers must
remit fifty percent of the required estimated payment at the time of
election.
Section 3: Amends subsection (c) of section 868 of the tax law to
require the annual election to be taxed under this article; it must be
made by September fifteenth of the taxable year. If an election made
under Section 861 is revoked or invalidated, any election under this
section is automatically invalidated.
Section 4: Amends subsection (b) of section 871, to provide that elect-
ing city partnerships or electing city S corporations making an election
by March fifteenth must make estimated tax payments in four equal
installments-March fifteenth, June fifteenth, September fifteenth, and
December fifteenth-each representing twenty-five percent of the required
annual payment. Elections made between March fifteenth and June
fifteenth require an initial payment of twenty-five percent at the time
of election, with the remaining installments due on June fifteenth,
September fifteenth, and December fifteenth. Elections made between June
fifteenth and September fifteenth require a payment of fifty percent at
the time of election, followed by two payments of twenty-five percent on
September fifteenth and December fifteenth. Elections made on September
fifteenth require a payment of seventy-five percent at the time of
election, with the remaining twenty-five percent due on December
fifteenth.
Section 5: Sets effective date
 
JUSTIFICATION:
This legislation extends the deadline for eligible taxpayers to make the
Pass-Through Entity Tax (PTET) election from March fifteenth to Septem-
ber fifteenth of the applicable tax year. This change grants existing
taxpayers additional time to evaluate the election's impact and enables
unincorporated businesses established after March 15th to participate in
the PTET program within the same tax year.
Enacted initially at the state level in 2021, the PTET was designed to
restore federal deductibility of state taxes on business income paid
under the personal income tax, benefiting Subchapter S corporations,
partnerships, and limited liability companies (LLCs). Since its
adoption, the program has supported nearly one hundred thousand primari-
ly small, unincorporated businesses.
This targeted amendment provides taxpayers with a more flexible election
period, aligning New York's approach with the majority of states.
Currently, thirty of the thirty-three states with a PTET mechanism offer
longer election windows than New York. By implementing this change, the
legislation enhances accessibility to the program while ensuring that
taxpayers have sufficient time to make informed decisions regarding
their tax obligations.
 
LEGISLATIVE HISTORY:
Senate
2023: N/A
2024: S8115B, Committed to Rules
Assembly
2023: A8451, Referred to ways and means
2024: A8451, Referred to ways and means
 
FISCAL IMPLICATIONS:
The PTET was designed to be revenue-neutral to the state, and this
legislation will have no impact on total state revenues. The legislation
would provide a modest financial benefit to the state based on the tech-
nical components of how the tax works. Specifically, the tax rate appli-
cable to many flow-through entities is higher than the personal income
tax rate payable by the underlying owners of the entity. This tax over-
age is ultimately refunded to the partners, but the State essentially
gets an interest-free loan from PTET participants.
 
EFFECTIVE DATE:
This act shall take effect immediately and shall apply to taxable years
beginning on or after January 1, 2026.

Statutes affected:
S625: 861 tax law, 861(c) tax law, 868 tax law, 868(c) tax law
S625A: 861 tax law, 861(c) tax law, 868 tax law, 868(c) tax law