STATE OF NEW YORK
________________________________________________________________________
9433
IN ASSEMBLY
March 7, 2022
___________
Introduced by M. of A. PAULIN -- read once and referred to the Committee
on Ways and Means
AN ACT to amend the tax law, in relation to pass-through entity tax for
electing resident and standard S corporations
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subsection (d) of section 860 of the tax law, as added by
2 section 1 of part C of chapter 59 of the laws of 2021, is amended and
3 two new subsections (j) and (k) are added to read as follows:
4 (d) Electing S corporation. Electing S corporation means any eligible
5 S corporation that made a valid, timely election pursuant to section
6 eight hundred sixty-one of this article that is either an electing resi-
7 dent S corporation or electing standard S corporation.
8 (j) Electing resident S corporation. An electing resident S corpo-
9 ration is an electing S corporation that certifies at the time of its
10 election that all of its shareholders are residents of New York for
11 purposes of article twenty-two of this chapter.
12 (k) Electing standard S corporation. An electing standard S corpo-
13 ration is an electing S corporation that is not an electing resident S
14 corporation.
15 § 2. Paragraph 2 of subsection (h) of section 860 of the tax law, as
16 added by section 1 of part C of chapter 59 of the laws of 2021, is
17 amended and a new paragraph 3 is added to read as follows:
18 (2) In the case of an electing standard S corporation, the sum of
19 [(i)] all items of income, gain, loss, or deduction derived from or
20 connected with New York sources to the extent they would be included
21 under paragraph two of subsection (a) of section six hundred thirty-two
22 of this chapter in the taxable income of a shareholder subject to tax
23 under article twenty-two of this chapter.
24 (3) In the case of an electing resident S corporation, the sum of all
25 items of income, gain, loss, or deduction to the extent they are
26 included in the taxable income of a shareholder subject to tax under
27 article twenty-two of this chapter.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD14749-04-2
A. 9433 2
1 § 3. Subsection (c) of section 861 of the tax law, as added by section
2 1 of part C of chapter 59 of the laws of 2021, is amended and a new
3 subsection (d) is added to read as follows:
4 (c) The annual election must be made by the due date of the first
5 estimated payment under section eight hundred sixty-four of this [chap-
6 ter] article and will take effect for the current taxable year. Only one
7 election may be made during each calendar year. An election made under
8 this section is irrevocable as of the due date.
9 (d) (1) An electing S corporation must certify at the time of its
10 election that all shareholders are residents of New York for purposes of
11 article twenty-two of this chapter to be considered an electing resident
12 S corporation.
13 (2) If an electing S corporation does not make a certification under
14 paragraph one of this subsection at the time of its election, the elect-
15 ing S corporation is automatically treated as an electing standard S
16 corporation.
17 (3) If an electing S corporation makes a certification under paragraph
18 one of this subsection to be an electing resident S corporation, this
19 certification is irrevocable as of the due date of the election.
20 § 4. Subsection (h) of section 865 of the tax law, as added by section
21 1 of part C of chapter 59 of the laws of 2021, is amended to read as
22 follows:
23 (h) Information provided to shareholders. Each electing S corporation
24 subject to tax under this article shall report to each shareholder its:
25 (1) direct share of the pass-through entity tax imposed on the elect-
26 ing S corporation; [and]
27 (2) the electing S corporation's status as an electing resident S
28 corporation or electing standard S corporation; and
29 (3) any other information as required by the commissioner.
30 § 5. Paragraph 3 of subsection (b) of section 612 of the tax law is
31 amended by adding a new subparagraph (C) to read as follows:
32 (C) Pass-through entity tax deduction. (i) In the case of a partner,
33 member or shareholder of an electing partnership or electing S corpo-
34 ration, the term "income taxes" in subparagraph (A) of this paragraph
35 shall not include the taxes imposed under article twenty-four-A of this
36 chapter to the extent such taxes are added to federal adjusted gross
37 income under subparagraph (A) of paragraph forty-three of this
38 subsection.
39 (ii) In the case of a partner, member or shareholder of a partnership
40 or S corporation, the term "income taxes" in subparagraph (A) of this
41 paragraph shall not include pass-through entity taxes substantially
42 similar to the tax imposed pursuant to article twenty-four-A of this
43 chapter imposed by another state of the United States, a political
44 subdivision of such state, or the District of Columbia upon income both
45 derived therefrom and subject to tax under this article to the extent
46 such taxes are added to federal adjusted gross income under subparagraph
47 (B) of paragraph forty-three of this subsection.
48 § 6. (a) Notwithstanding section 861 of the tax law as added by
49 section 1 of part C of chapter 59 of the laws of 2021 and amended by
50 section three of this act, the certification to be taxed as an electing
51 resident S corporation for the taxable year 2022, must be made by March
52 15, 2023 in a manner prescribed by the commissioner.
53 (b) Further for the taxable year 2022, notwithstanding section 864 of
54 the tax law, as added by section 1 of part C of chapter 59 of the laws
55 of 2021, an electing resident S corporation shall be required to make
56 estimated tax payments on March fifteenth and June fifteenth represent-
A. 9433 3
1 ing twenty-five percent of the required annual payment as if such elect-
2 ing resident S corporation was an electing standard S corporation.
3 However, all electing resident S corporations shall be required as of
4 September 15, 2022 to have paid seventy-five percent of the required
5 annual payment.
6 § 7. This act shall take effect immediately and shall apply to all
7 taxable years beginning on or after January 1, 2022.
