State Pass-Through Entity Tax Updates: September 2023
The Colorado Department of Revenue (DOR) recently created an informational section on its website specifically for the state’s pass-through entity (PTE) Tax election. This SALT Parity Act Election landing page contains guidance and links for current and future elections, as well as newly issued guidance for making retroactive 2018-2021 tax year elections. These can be filed online through a taxpayer’s Revenue Online account beginning September 1, 2023, and until June 30, 2024.
The Illinois Department of Revenue recently issued an Informational Bulletin FY 2024-03. This bulletin provides guidance that the Department will abate penalties related to fourth quarter estimated payments of PTE Tax due on December 15, 2022 for pass-through entities if the required amount was paid on or before January 17, 2023. Taxpayers affected will automatically have their accounts adjusted to reflect the abated penalty.
On July 27, 2023, the Minnesota Department of Revenue issued updated guidance detailing changes to the state’s PTE Tax, beginning in tax year 2023, that were enacted under the legislation House File 1938 in May. The guidance explains the qualified entities that may elect the PTE Tax, which, starting in 2023, can include pass-through entities with entity owners and the qualified owners of the entity that the tax is imposed on. Starting in 2023, an electing partnership’s Minnesota PTE Tax is computed on the total distributive income of Minnesota resident partners. Electing partnerships must also complete the new Schedule PTE-RP, Pass-Through Entity Tax for Resident Partners, if any partners are Minnesota residents. For S-Corporations, the computation of the PTE Tax remains unchanged, based on the entity’s Minnesota source income for both resident and non-resident shareholders.
On August 2, 2023, the Mississippi Department of Revenue issued a summary of tax year 2022 forms and instructional changes related to House Bill 1668, enacted in March. House Bill 1668 revised the state’s initial PTE Tax legislation, updating the method by which a pass-through entity elects the PTE Tax and how tax credits generated by the entity pass to its owners.
On August 30, 2023, the Nebraska Department of Revenue released guidance on the state’s PTE Tax, recently enacted in May. As part of the legislation establishing the state’s PTE Tax, the election can be made retroactively to tax years beginning on or after January 1, 2018. The Department has created a section on their website with links to forms and instructions for making the election for the 2018-2022 tax years, as well as for 2023 and future tax years.
On August 17, 2023, The New York State Department of Taxation and Finance announced updates to its guidance pages for the New York State and New York City PTE Taxes, highlighting technical changes made by the state’s fiscal 2024 budget legislation, enacted in May.
On July 27, 2023, Oregon Governor Tina Kotek signed into law House Bill 2083, which will extend Oregon’s PTE Tax election through the end of 2025. Despite the Federal state and local tax (SALT)-cap enacted under the Tax Cuts and Jobs Act (TCJA), which is scheduled to sunset at the end of 2025 and was originally enacted under Oregon 2021 Senate Bill 727, the state’s PTE Tax election was only available for the 2022 and 2023 tax years. However, under this legislation, the state’s PTE Tax election will now be an option for taxpayers for the remaining period of the Federal SALT-cap.