Reporting Adjustments To Taxable Income

Under current law, partnerships and S corporations (pass-through entities) have 3 options for ensuring that the income taxes owed by nonresident owners will be paid. Pass-through entities may file a composite return on behalf of these owners, withhold an estimated tax payment, or collect and file an agreement that the owner will file a separate return. For income tax years beginning on and after January 1, 2024, section 1 of the bill consolidates the composite return and withholding options and clarifies the calculation of the required payment. Section 2 adopts the multistate tax commission's model statute for reporting adjustments to federal taxable income. When federal taxable income is adjusted by the internal revenue service, or by the taxpayer through an amended federal return, the taxpayer must also report that change to the state. Current law requires those changes to be reported within 30 days and does not address the new federal centralized partnership audit procedures. The bill provides additional time for reporting adjustments and allows pass-through entities to handle adjustments at the entity level on behalf of their owners.Section 3 changes the due date for income tax returns by C corporations. Current law requires state income tax returns to be filed by C corporations by April 15, and prior to 2017, the federal income tax return deadline for C corporations was March 15. This meant that the state's April 15 due date and October 15 extension deadline was one month after the federal due date. In 2017, congress moved the federal due date for C corporations to April 15. Section 3 restores the one-month lag by changing the state due date to May 15, with a November 15 extension deadline.Sections 4, 5, 6, 7, and 8 make conforming amendments.
(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)