State Pass-Through Entity Tax Updates: November 2023
Contributor: Tony Konkol, Manager | State & Local Tax
On October 31, 2023, the Hawaii Department of Taxation issued Tax Information Release (TIR) No. 2023-03, which provides revised guidance and notice of proposed temporary administrative rules for the state’s Pass-Through Entity (PTE) Tax, replacing and superseding Tax Information Release No. 2023-01, which was published on July 21, 2023. The updated guidance in TIR No. 2023-03 further details the types of pass-through entities that may elect and computation of the Hawaii PTE Tax and provides new definitions and explanations for computing the tax for multi-tiered PTE situations.
On October 13, 2023, the Indiana Department of Revenue issued Information Bulletin No. 72B, PTE Tax. The Bulletin provides further detail and explanation on the state’s PTE Tax election from the Department’s tax year 2022 guidance, for topics such as the PTE Tax election process, computation of the tax, and reporting specifics for electing entities beginning tax year 2023. The Bulletin also highlights various differences to the election, reporting and computation of the state’s PTE Tax beginning tax year 2023 with comparison to corresponding tax year 2022 procedures and illustrates the application of the PTET topics covered with numerous example scenarios.
On October 27, 2023, the Louisiana Department of Revenue issued Revenue Information Bulletin No. 23-022, Changes to the Pass-Through Entity Election Act 450 of the 2023 Regular Session. The Bulletin provides further explanation of the additional PTE Tax election termination procedure and the PTE exclusion for individual shareholders, members or partners authorized by House Bill No. 428, effective for taxable periods beginning on or after January 1, 2023.
The automatic prospective termination established by the legislation requires written approval by at least 50% of ownership. However, approval is automatic, provided all requirements are timely satisfied. To request an automatic termination, the entity must apply by filing a new form recently issued by the Department: Form R-6983, Termination of the Pass-Through Entity Tax Election.
Following legislation enacted in July 2023, on October 12, 2023, the Ohio Department of Taxation issued updated Frequently Asked Questions guidance detailing the manner in which Ohio resident owners of pass-through entities can claim the Ohio resident credit for taxes paid to other states on their share of similar entity-level PTE Taxes paid to other states.