BILL NUMBER: S625
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 § 861 of Tax Law to change the date for making the
state-level PTET election from March 15 to September 15, applicable to
tax years beginning on or after January 1, 2025.
Section 2: Amends § 864 of Tax Law to require that if a taxpayer makes
this election on or after March 15 and before June 15, the taxpayer must
pay twenty-five percent of the required estimated payment at the time of
election, if an election is made on or after June fifteenth and before
September fifteenth, the taxpayer must pay fifty percent of the required
estimated payment at the time of election.
Section 3: Amends § 868 of Tax Law to extend the adjustments being made
to the state-level PTET election to the city PTET election.
Section 4: Amends § 871 of Tax Law to extend the adjustments being made
to the state-level PTET election to the city PTET election.
Section 5: Sets the effective date
 
JUSTIFICATION:
This legislation seeks to amend the timeline for making the pass-through
entity tax (PTET) election, allowing eligible taxpayers to make the
election by September 15 of the applicable tax year instead of the
current deadline of March 15. This change provides existing taxpayers
with additional time to evaluate the implications of the election and
enables unincorporated businesses established after March 15 of a tax
year to participate in the PTET program for that year.
The PTET was introduced at the state level in 2021 to restore federal
deductibility of state taxes on business income paid under the personal
income tax system for entities such as Sub-S corporations, partnerships,
and LLCs. Since its adoption, the program has benefitted nearly 100,000
businesses, predominantly small and unincorporated. This limited amend-
ment to the statute not only grants taxpayers a more reasonable time-
frame to assess and make their annual election but also extends program
access to businesses formed after March 15th of a given tax year. In
doing so, this legislation more closely reflects the approach taken by
the majority of states, as thirty of thirty-three states with a PTET
mechanism provide longer election periods than New York.
 
LEGISLATIVE HISTORY:
Senate
2023: N/A
2024: S8115B, Advanced to Third Reading
Assembly
2023: A8451A, Referred to Ways and Means
2024: A8451A, Amend and Recommit 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 cover-
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, 2025.

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