The Comptroller is considering requiring PTEs to make the election to be taxed at the entity level on the 510D with first estimated payment of a tax year beginning after December 31, 2022. The election will be irrevocable for that tax year. The election will be made yearly.
The policy/ procedure change is intended to provide clarity to the Comptroller and taxpayers, and to assist with the expeditious processing of year-end PTE returns.
The Comptroller is soliciting questions and concerns about this change in policy. The Comptroller also wishes to put practitioners on notice of this change for planning purposes. Please submit questions and concerns to email@example.com.
TG 10-102.1(b)(2)(ii) permits a pass-through entity to elect to pay tax on all members’ share of income at the entity level. The election operates as a work-around to the federal SALT deduction cap.
Until now, the election has been made on the PTE’s year-end return for the year the return covers. The PTE has been able to make estimated payments, but has not had to decide to make the election until the tax year was over.