Senate Bill S8600

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   8600
 
                             I N  S E N A T E
 
                              March 21, 2022
                                ___________
 
 Introduced  by  Sen. SKOUFIS -- read twice and ordered printed, and when
   printed to be committed to the Committee on Investigations and Govern-
   ment Operations
 
 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:
 
   Section 1. Subsection (d) of section 860 of the tax law, as  added  by
 section  1  of  part C of chapter 59 of the laws of 2021, is amended and
 two new subsections (j) and (k) are added to read as follows:
   (d) Electing S corporation. Electing S corporation means any  eligible
 S  corporation  that  made  a valid, timely election pursuant to section
 eight hundred sixty-one of this article THAT IS EITHER AN ELECTING RESI-
 DENT S CORPORATION OR ELECTING STANDARD S CORPORATION.
   (J) ELECTING RESIDENT S CORPORATION.   AN ELECTING RESIDENT  S  CORPO-
 RATION  IS  AN  ELECTING S CORPORATION THAT CERTIFIES AT THE TIME OF ITS
 ELECTION THAT ALL OF ITS SHAREHOLDERS ARE  RESIDENTS  OF  NEW  YORK  FOR
 PURPOSES OF ARTICLE TWENTY-TWO OF THIS CHAPTER.
   (K)  ELECTING  STANDARD  S  CORPORATION. AN ELECTING STANDARD S CORPO-
 RATION IS AN ELECTING S CORPORATION THAT IS NOT AN ELECTING  RESIDENT  S
 CORPORATION.
   §  2.  Paragraph 2 of subsection (h) of section 860 of the tax law, as
 added by section 1 of part C of chapter 59  of  the  laws  of  2021,  is
 amended and a new paragraph 3 is added to read as follows:
   (2)  In  the  case  of  an electing STANDARD S corporation, the sum of
 [(i)] all items of income, gain, loss,  or  deduction  derived  from  or
 connected  with  New  York  sources to the extent they would be included
 under paragraph two of subsection (a) of section six hundred  thirty-two
 of  this  chapter  in the taxable income of a shareholder subject to tax
 under article twenty-two of this chapter.
   (3) IN THE CASE OF AN ELECTING RESIDENT S CORPORATION, THE SUM OF  ALL
 ITEMS  OF  INCOME,  GAIN,  LOSS,  OR  DEDUCTION  TO  THE EXTENT THEY ARE
 INCLUDED IN THE TAXABLE INCOME OF A SHAREHOLDER  SUBJECT  TO  TAX  UNDER
 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
 S. 8600                             2
 
   § 3. Subsection (c) of section 861 of the tax law, as added by section
 1  of  part  C  of  chapter 59 of the laws of 2021, is amended and a new
 subsection (d) is added to read as follows:
   (c)  The  annual  election  must  be made by the due date of the first
 estimated payment under section eight hundred sixty-four of this  [chap-
 ter] ARTICLE and will take effect for the current taxable year. Only one
 election  may  be made during each calendar year. An election made under
 this section is irrevocable AS OF THE DUE DATE.
   (D) (1) AN ELECTING S CORPORATION MUST CERTIFY  AT  THE  TIME  OF  ITS
 ELECTION THAT ALL SHAREHOLDERS ARE RESIDENTS OF NEW YORK FOR PURPOSES OF
 ARTICLE TWENTY-TWO OF THIS CHAPTER TO BE CONSIDERED AN ELECTING RESIDENT
 S CORPORATION.
   (2)  IF  AN ELECTING S CORPORATION DOES NOT MAKE A CERTIFICATION UNDER
 PARAGRAPH ONE OF THIS SUBSECTION AT THE TIME OF ITS ELECTION, THE ELECT-
 ING S CORPORATION IS AUTOMATICALLY TREATED AS  AN  ELECTING  STANDARD  S
 CORPORATION.
   (3) IF AN ELECTING S CORPORATION MAKES A CERTIFICATION UNDER PARAGRAPH
 ONE  OF  THIS  SUBSECTION TO BE AN ELECTING RESIDENT S CORPORATION, THIS
 CERTIFICATION IS IRREVOCABLE AS OF THE DUE DATE OF THE ELECTION.
   § 4. Subsection (h) of section 865 of the tax law, as added by section
 1 of part C of chapter 59 of the laws of 2021, is  amended  to  read  as
 follows:
   (h)  Information provided to shareholders. Each electing S corporation
 subject to tax under this article shall report to each shareholder its:
   (1) direct share of the pass-through entity tax imposed on the  elect-
 ing S corporation; [and]
   (2)  THE  ELECTING  S  CORPORATION'S  STATUS AS AN ELECTING RESIDENT S
 CORPORATION OR ELECTING STANDARD S CORPORATION; AND
   (3) any other information as required by the commissioner.
   § 5. Paragraph 3 of subsection (b) of section 612 of the  tax  law  is
 amended by adding a new subparagraph (C) to read as follows:
   (C)  PASS-THROUGH  ENTITY TAX DEDUCTION. (I) IN THE CASE OF A PARTNER,
 MEMBER OR SHAREHOLDER OF AN ELECTING PARTNERSHIP OR  ELECTING  S  CORPO-
 RATION,  THE  TERM  "INCOME TAXES" IN SUBPARAGRAPH (A) OF THIS PARAGRAPH
 SHALL NOT INCLUDE THE TAXES IMPOSED UNDER ARTICLE TWENTY-FOUR-A OF  THIS
 CHAPTER  TO  THE  EXTENT  SUCH TAXES ARE ADDED TO FEDERAL ADJUSTED GROSS
 INCOME  UNDER  SUBPARAGRAPH  (A)  OF  PARAGRAPH  FORTY-THREE   OF   THIS
 SUBSECTION.
   (II)  IN THE CASE OF A PARTNER, MEMBER OR SHAREHOLDER OF A PARTNERSHIP
 OR S CORPORATION, THE TERM "INCOME TAXES" IN SUBPARAGRAPH  (A)  OF  THIS
 PARAGRAPH  SHALL  NOT  INCLUDE  PASS-THROUGH  ENTITY TAXES SUBSTANTIALLY
 SIMILAR TO THE TAX IMPOSED PURSUANT TO  ARTICLE  TWENTY-FOUR-A  OF  THIS
 CHAPTER  IMPOSED  BY  ANOTHER  STATE  OF  THE UNITED STATES, A POLITICAL
 SUBDIVISION OF SUCH STATE, OR THE DISTRICT OF COLUMBIA UPON INCOME  BOTH
 DERIVED  THEREFROM  AND  SUBJECT TO TAX UNDER THIS ARTICLE TO THE EXTENT
 SUCH TAXES ARE ADDED TO FEDERAL ADJUSTED GROSS INCOME UNDER SUBPARAGRAPH
 (B) OF PARAGRAPH FORTY-THREE OF THIS SUBSECTION.
   § 6. (a) Notwithstanding section 861  of  the  tax  law  as  added  by
 section  1  of  part  C of chapter 59 of the laws of 2021 and amended by
 section three of this act, the certification to be taxed as an  electing
 resident  S corporation for the taxable year 2022, must be made by March
 15, 2023 in a manner prescribed by the commissioner.
   (b) Further for the taxable year 2022, notwithstanding section 864  of
 the  tax  law, as added by section 1 of part C of chapter 59 of the laws
 of 2021, an electing resident S corporation shall be  required  to  make
 estimated  tax payments on March fifteenth and June fifteenth represent-
 S. 8600                             3
 
 ing twenty-five percent of the required annual payment as if such elect-
 ing resident S corporation  was  an  electing  standard  S  corporation.
 However,  all  electing  resident S corporations shall be required as of
 September  15,  2022  to  have paid seventy-five percent of the required
 annual payment.
   § 7. This act shall take effect immediately and  shall  apply  to  all
 taxable years beginning on or after January 1, 2022.