New York State Department of Taxation and Finance (Department) explained in two recent technical memoranda¹ several changes in tax return due dates for partnerships, trusts, and most C corporations (in response to recent federal changes to the same due dates). The memoranda also addressed changes to the mandatory first installment (MFI) for certain corporations and changes to the procedures for remitting the MFI for payments due on or after March 15, 2017. In addition, the state increased the Metropolitan Transit Authority (MTA) surcharge tax rate beginning for the 2017 tax year. (The MTA surcharge is an additional tax assessed against businesses based on their intra-New York state apportionment to the MTA region (generally, the City of New York and certain of its surrounding counties.))

Amended due dates

Due dates for the following New York State tax returns have changed:²

— Form IT-204, Partnership Return (and attachments) is due March 15 (previously April 15) for tax years beginning on or after January 1, 2016.

— Form IT-204-LL, Partnership, Limited Liability Company (LLC) and Limited Liability Partnership (LLP) Filing Fee Payment Form is due March 15 (previously March 1) for tax years ending on or after April 13, 2016.

— Most C corporation tax returns are due April 15 (previously March 15) for tax years beginning on or after January 1, 2016.³

The length of time for automatic extensions for partnership and fiduciary tax returns has also changed to conform to the comparable federal extensions. No changes were made to the length of time for extensions for corporate tax returns (i.e., automatic six-month extension with requests for up to two additional three-month extensions).

Notwithstanding the change in due dates for corporate tax returns, the MFI of the tax and the corresponding MTA surcharge must still be paid on or before the 15th day of the third month following the close of each tax year. (See below for changes to the procedures for remitting the MFI.)

Changes to MFIs of estimated tax for corporations

For MFI payments due on or after March 15, 2017, New York also now requires the second preceding year's tax to be the basis for determining whether certain corporations must make an MFI payment and the amount of that payment. New York C corporations subject to tax under Article 9-A, and corporations subject to tax under Article 9, Sections 184, 186-a, and 186-e, and Article 33, whose tax after credits for the second preceding tax year exceeds $1,000, must pay an MFI of estimated tax. If the second preceding year's tax after credits exceeds $1,000 and the corporation is subject to the MTA surcharge, it must also pay an MFI of estimated MTA surcharge. Corporate taxpayers that do not have a second preceding tax year because a return was not required to be filed do not have to make an MFI payment. However, these corporate taxpayers still must make a declaration of estimated tax, and pay the remaining three installments of estimated tax and MTA surcharge with Form CT-400, Estimated Tax for Corporations.

For corporations required to pay an MFI, the MFI must be computed by multiplying the tax (or MTA surcharge) imposed for the second preceding tax year by:

— 25%, if the franchise, excise, or gross receipts tax imposed for the second preceding tax year was equal to or less than $100,000, or

— 40%, if the franchise, excise, or gross receipts tax imposed for the second preceding tax year exceeded $100,000

Authorized life insurance corporations taxable under Article 33 must use 40% if the tax imposed for the second preceding tax year exceeded $1,000.

Beginning with MFI payments due on or after Mach 15, 2017, the payment of the MFI of estimated tax and MTA surcharge for most corporate taxpayers can no longer be made with the prior year's tax return or MTA surcharge return or with the request for an extension of time to file such returns. MFI payments must be made on the new Form CT-300, Mandatory First Installment (MFI) of Estimated Tax for Corporations.⁴ The remaining installments of estimated tax and MTA surcharge will continue to be paid with Form CT-400, Estimated Tax for Corporations.

MTA rate

For tax years beginning on or after January 1, 2017, and before January 1, 2018, the MTA surcharge rate increases to 28.3% (previously 28%) of the taxpayer's corporation franchise tax.⁵ The rate will remain the same in succeeding tax years unless the New York Tax Commissioner determines a new rate.⁶

Implications

These changes generally conform to recent changes to federal tax filing deadlines contained in Section 2006 of Public Law 114-41 (which generally amended Section 6072 of the Internal Revenue Code of 1986, as amended as well as formally changing the due date for specific forms), aligning federal and New York state return due dates for business taxpayers. Taxpayers should consider the new MTA rate for estimated tax and provision purposes.

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ENDNOTES

¹ N.Y. Dept. of Taxn. and Fin., TSB-M-16(9)C, (7)I (Dec. 9, 2016). N.Y. Dept. of Taxn. and Fin., TSB-M-16(10)C (Dec. 9, 2016).

² The dates in the bullets immediately below assume the taxpayer is a calendar-year taxpayer.

³ See table in TSB-M-16(9)C, (7)I for all due date and extension changes.

⁴ The Form CT-300 will be available on the Tax Department's website.

⁵ Amended N.Y. Comp. Codes and Regs. tit. 20, Section 9-1.2(c).

⁶ New York City has not issued guidance yet in this area.