Income/Franchise:
Ohio Department of Taxation Updates FAQ Guidance on New Elective PTE-Level Tax
FAQs: Pass-Through Entities & Fiduciaries – Electing Pass-Through Entities (EPTE) (IT 4738), Ohio Dept. of Tax. (1/23). Pursuant to new law in Ohio that permits qualifying pass-through entities (PTEs) to make an annual election to pay an entity-level state income tax for taxable years beginning on or after January 1, 2022 [see S.B. 246 (2022) and previously issued Multistate Tax Alert for more details on this new tax], the Ohio Department of Taxation updated its “frequently asked questions” (FAQs) implementation guidance to confirm, among other items, that:
The PTE tax election may be made on the extended Ohio PTE tax return, due on September 15 for calendar year filers; and
All partners must be included in the Ohio PTE tax return, including C corporations (as such, while the distributive income attributable to C corporations is included and taxed under the Ohio PTE tax, no corresponding credit is available for C corporations).
The updated FAQs also address application of the PTE tax credit in some tiered partnership situations. Please contact us with any questions.
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