N.Y. Tax Law § 659-A — Reporting of federal partnership adjustments

§ 659-a. Reporting of federal partnership adjustments. (a) If any item\nrequired to be shown on a federal partnership return, for any\npartnership that has a resident partner or any income derived from New\nYork sources, including any gross income, gain, loss, deduction,\npenalty, credit, or tax for any year of such partnership, including any\namount of any partner's distributive share, is changed or corrected by\nthe commissioner of internal revenue or other officer of the United\nStates or other competent authority, and the partnership is issued an\nadjustment under section sixty-two hundred twenty-five of the internal\nrevenue code or makes a federal election for alternative payment with\nthe internal revenue service as part of a partnership level audit, or\nfiles an administrative adjustment request, the partnership shall\nreport, in the manner prescribed by the commissioner, each change or\ncorrection in sufficient detail to allow for the computation of the New\nYork tax change or correction for the reviewed year within ninety days\nafter the date of each final federal determination, or ninety days after\nthe filing of an administrative adjustment request.\n (b) Definitions. As used in this section, the following terms shall\nhave the following meanings:\n (1) "Administrative adjustment request" means an administrative\nadjustment request filed by a partnership under section sixty-two\nhundred twenty-seven of the internal revenue code.\n (2) "Direct partner" means a partner that holds an interest directly\nin an impacted partnership during the reviewed year.\n (3) "Federal election for alternative payment" means the election\ndescribed in section sixty-two hundred twenty-six of the internal\nrevenue code, relating to alternative payment of imputed underpayment by\npartnership.\n (4) "Final federal adjustment" means a change to an item of gross\nincome, gain, loss, deduction, penalty, credit, or a partner's\ndistributive share, of an impacted partnership determined under section\nsixty-two hundred twenty-five of the internal revenue code that is\nconsidered fixed and final under the internal revenue code.\n (5) "Final federal determination date" means the date on which each\nadjustment or resolution resulting from an internal revenue service\nexamination is assessed pursuant to section sixty-two hundred three of\nthe internal revenue code.\n (6) "Impacted partnership" means a partnership that (i) was issued a\nfinal federal adjustment; or (ii) made a federal election for\nalternative payment with the internal revenue service as part of a\nfederal partnership level audit; or (iii) filed an administrative\nadjustment request with the internal revenue service.\n (7) "Indirect partner" means a partner, member, or shareholder in a\npartnership or other pass-through entity that itself held an interest\nindirectly, or through another indirect partner, in an impacted\npartnership during the reviewed year.\n (8) "New York election for alternative payment" means the election\ndescribed in paragraph three of subsection (d) of this section, relating\nto payment by the impacted partnership in lieu of taxes owed by its\ndirect and indirect partners.\n (9) "Reviewed year" has the meaning provided in paragraph one of\nsubsection (d) of section sixty-two hundred twenty-five of the internal\nrevenue code.\n (10) "Tiered partner" means any partner in an impacted partnership\nwhere such partner is a partnership, S corporation, or other\npass-through entity for New York tax purposes.\n (c) Reporting adjustments to federal taxable income. Where\npartnerships and partners were required to report final federal\nadjustments or administrative adjustment requests for federal purposes\nby taking such adjustments into account on a timely filed amended\nfederal income tax return for the reviewed year, such partnerships and\npartners shall report and pay any New York tax owed under article\nnine-A, twenty-two, thirty-three, or any law authorized by article\nthirty of this chapter in the same manner for the reviewed year. Such\npartnerships and partners shall report final federal adjustments arising\nfrom an audit or other action by the internal revenue service or\nreported by the taxpayer on a timely filed amended federal income tax\nreturn, including a return or other similar report filed pursuant to\nsection sixty-two hundred twenty-five of the internal revenue code, or\nfederal claim for refund by filing a federal adjustments report and, if\napplicable, such partnerships and partners shall pay the additional tax\ndue no later than one hundred eighty days after the final determination\ndate.\n (d) Reporting federal adjustments pursuant to a partnership level\naudit and administrative adjustment request. Except for adjustments\nrequired to be reported under subsection (c) of this section,\npartnerships and partners shall report final federal adjustments arising\nfrom a partnership level audit or an administrative adjustment request\nand make payments as required under this subsection in the year of\nadjustment.\n (1) Unless a de minimis exception applies, impacted partnerships must\nreport any final federal adjustments and administrative adjustment\nrequests regardless of tax impact. Such report must include the impacted\npartnership's direct and indirect partner identifying information and\nany other information the commissioner may require.\n (2) Except for those subject to a properly made election for\nalternative payment under paragraph three of this subsection, any\nchanges or corrections made by the internal revenue service pursuant to\nsuch a final federal adjustment or as a result of an administrative\nadjustment request must be reported by the impacted partnership as\nfollows:\n (A) No later than ninety days after the final determination date, the\npartnership shall:\n (i) file a completed federal adjustments report, including any\ninformation as required by the commissioner;\n (ii) notify each of its direct partners of their distributive share of\nthe final federal adjustment, including any information required by the\ncommissioner;\n (iii) file an amended return as required under paragraph one of\nsubsection (c) of section six hundred fifty-eight and section six\nhundred fifty-nine of this article for the reviewed year;\n (iv) file an amended group return if the partnership originally filed\na group return, and remit the additional amount that would have been due\nunder subsection (c) of section six hundred fifty-eight of this article\nhad the final federal adjustments been properly reported originally as\nrequired; and\n (v) remit any additional amounts that would have been due under\nparagraph four of subsection (c) of section six hundred fifty-eight of\nthis article had the final federal adjustments been properly originally\nreported as required.\n (B) No later than one hundred eighty days after the final\ndetermination date, each direct partner of an impacted partnership that\nis taxed under article nine-A, twenty-two, thirty-three, or any law\nauthorized by article thirty of this chapter, other than a direct\npartner that is included on a group return under clause (iv) of\nsubparagraph (A) of this paragraph, shall:\n (i) file a federal adjustments report reporting their distributive\nshare of the adjustments reported to them by the impacted partnership\nunder clause (ii) of subparagraph (A) of this paragraph; and\n (ii) remit any additional amount of tax due, plus any penalty and\ninterest computed under this article based on the due date of the\noriginally filed return for the reviewed year, less any credit for\namounts paid or withheld and remitted on behalf of the direct partner.\n (3) New York election for alternative payment by the partnership. An\nimpacted partnership making an election under this subsection shall:\n (A) no later than ninety days after the final determination date, file\na completed federal adjustments report, including any information as\nrequired by the commissioner, and provide notice, in the manner required\nby the commissioner, that it is making the election under this\nsubsection.\n (B) no later than one hundred eighty days after the final\ndetermination date, pay an amount, in lieu of taxes owed by its direct\nand indirect partners. Such amount shall be determined based on the sum\nof the following:\n (i) for direct partners subject to tax pursuant to article nine-A or\nthirty-three of this chapter in the reviewed year, the partner's\ndistributive share of gross income or gain and deduction apportioned to\nNew York using the apportionment rules described in article nine-A of\nthis chapter multiplied by the highest tax rate under such article\nnine-A in effect for the reviewed year; and\n (ii) for a direct partner subject to tax under this article that is\ntreated as a nonresident pursuant to paragraph two of subsection (b) of\nsection six hundred five of this article in the reviewed year, the\npartner's distributive share of gross income or gain and deduction\nallocated to New York using the allocation rules described in this\narticle multiplied by the highest tax rate under this article in effect\nfor the reviewed year; and\n (iii) for a direct partner subject to tax under this article that is\ntreated as a resident pursuant to paragraph one of subsection (b) of\nsection six hundred five of this article in the reviewed year, the\npartner's distributive share of gross income or gain and deduction\nmultiplied by the highest tax rate under this article in effect for the\nreviewed year; and\n (iv) for a direct partner subject to tax under article thirty of this\nchapter that is treated as a resident pursuant to subsection (a) of\nsection thirteen hundred five of this chapter in the reviewed year, the\namount described in clause (iii) of this subparagraph and the partner's\ndistributive share of gross income or gain and deduction multiplied by\nthe highest tax rate under section thirteen hundred four of this chapter\nin effect for the reviewed year; and\n (v) for tiered partners, include the sum of:\n (I) the amount of gross income, gain or deduction from the adjustment\nthat would ultimately flow to a taxpayer subject to tax under article\nnine-A or thirty-three of this chapter in the reviewed year apportioned\nto New York using the apportionment rules described in article nine-A of\nthis chapter multiplied by the highest tax rate under such article\nnine-A in effect for the reviewed year; and\n (II) the amount of gross income, gain or deduction from the adjustment\nthat would ultimately flow to a taxpayer subject to tax under this\narticle and treated as a nonresident pursuant to paragraph two of\nsubsection (b) of section six hundred five of this article in the\nreviewed year allocated to New York using the allocation rules described\nin this article multiplied by the highest tax rate under this article in\neffect for the reviewed year; and\n (III) the amount of gross income, gain or deduction from the\nadjustment that would ultimately flow to a taxpayer subject to tax under\nthis article and treated as a resident pursuant to paragraph one of\nsubsection (b) of section six hundred five of this article in the\nreviewed year multiplied by the highest tax rate under this article in\neffect for the reviewed year; and\n (IV) any amount of gross income, gain or deduction from the adjustment\nthat cannot be established to be properly allocable to a taxpayer\ndescribed in items (I) or (II) of this clause, multiplied by the highest\ntax rate under this article in effect for the reviewed year; and\n (vi) any applicable penalty and interest as required by this article.\n (4) Tiered partners. The direct and indirect partners of an impacted\npartnership that are tiered partners, and all of the partners of those\ntiered partners that are subject to tax under article nine-a,\ntwenty-two, thirty-three, or any law authorized by article thirty of\nthis chapter, are subject to the reporting and payment requirements of\nparagraph two of this subsection and the tiered partners are entitled to\nmake the elections provided in paragraphs three and five of this\nsubsection. The tiered partners or their partners shall make all\nrequired reports and payments no later than ninety days after the time\nfor filing and furnishing statements to tiered partners and their\npartners pursuant to section sixty-two hundred twenty-six of the\ninternal revenue code and the regulations thereunder.\n (5) Modified reporting and payment method. In the manner required by\nthe commissioner, an impacted partnership or tiered partner may enter\ninto an agreement with the commissioner to utilize an alternative\nreporting and payment method, including applicable time requirements or\nany other provision of this section, if the impacted partnership or\ntiered partner demonstrates that the requested method will reasonably\nprovide for the reporting and payment of taxes, penalties, and interest\ndue under the provisions of this section, or if the impacted partnership\nor tiered partner can show that their direct partners have agreed to\nallow a refund of the tax to the entity. Application for approval of an\nalternative reporting and payment method must be made by the impacted\npartnership or tiered partner within the time for election as provided\nin paragraph three or four of this subsection, as appropriate.\n (6) Effect of election by impacted partnership or tiered partner and\npayment of amount due. (A) The election made pursuant to paragraph three\nor five of this subsection is irrevocable, unless the commissioner, in\ntheir discretion, determines otherwise.\n (B) If properly reported and paid by the impacted partnership or\ntiered partner, the amount determined in subparagraph (B) of paragraph\nthree of this subsection, or similarly under an optional election\npursuant to paragraph five of this subsection, will be treated as a\npayment in lieu of taxes owed by its direct and indirect partners, to\nthe extent applicable, on the same final federal adjustment. The direct\npartners or indirect partners may not take any deduction or credit for\nthis amount or claim a refund of such amount. Provided, however, that\nnothing in this paragraph shall preclude a resident direct partner from\nclaiming a credit against taxes paid to the commissioner pursuant to\narticle twenty-two of this chapter for any amounts paid by the impacted\npartnership or tiered partner on such resident partner's behalf to\nanother state or local tax jurisdiction in accordance with the\nprovisions of section six hundred twenty of this article.\n (7) Failure of impacted partnership or tiered partner to report or\nremit. Nothing in this section shall prevent the commissioner from\nassessing direct or indirect partners for any taxes due, using the best\ninformation available, in the event that an impacted partnership, or a\ndirect or indirect partner of an impacted partnership, fails to timely\nreport or remit any report or additional taxes due required by this\nsection for any reason.\n (e) De minimis exception. The commissioner shall have the discretion\nto promulgate regulations to establish a de minimis amount upon which a\ntaxpayer shall not be required to comply with subsections (c) and/or (d)\nof this section.\n (f) Estimated tax payments during the course of a federal audit. An\nimpacted partnership may make estimated payments of the tax expected to\nresult from a pending internal revenue service audit, prior to the due\ndate of the federal adjustments report and prior to filing the report\nwith the commissioner. If an impacted partnership makes an estimated\npayment under this subsection, other than an estimated payment made\nunder paragraph four of subsection (c) of section six hundred\nfifty-eight of this article, such estimated payment must be accompanied\nby an irrevocable election under paragraph three of subsection (d) of\nthis section. The estimated tax payments shall be credited against any\ntax liability ultimately found to be due and will limit the accrual of\nfurther statutory interest on such amount. If the estimated tax payments\nexceed the final tax liability and statutory interest ultimately\ndetermined to be due, the taxpayer is entitled to a refund or credit of\nthe excess, provided the taxpayer files a federal adjustments report or\nclaim for refund or credit of tax pursuant to section six hundred\neighty-six of this article, no later than one year following the final\ndetermination date.\n (g) Claims for refund or credits of tax arising from a final federal\nadjustment. Except for final federal adjustments required to be reported\nfor the year of the adjustment, a taxpayer may file a claim for refund\nor credit of tax arising from federal adjustments on or before the later\nof:\n (1) the expiration of the last day for filing a claim for refund or\ncredit pursuant to section six hundred eighty-seven of this article,\nincluding any extensions; or\n (2) one year from the date a federal adjustment report pursuant to\nsubsection (c) or (d) of this section, as applicable, was due, including\nany extensions pursuant to subsection (h) of this section.\n (h) Scope of adjustments and extensions of time. (1) Unless otherwise\nagreed in writing by the taxpayer and the commissioner, any adjustments\nby the commissioner or the taxpayer made after the period of limitations\nfor assessment or refund has terminated under article nine-A,\ntwenty-two, thirty-three, or any law authorized by article thirty of\nthis chapter, is limited to changes to the taxpayer's tax liability\narising from such a final federal adjustment.\n (2) The time periods provided for in this section may be extended:\n (A) automatically, upon written notice to the commissioner, by sixty\ndays for an impacted partnership or tiered partner which has ten\nthousand or more direct partners; or\n (B) by written agreement between the taxpayer and the commissioner.\n (3) Any extension granted under this subsection for filing a federal\nadjustments report extends the last day prescribed by law for assessing\nany additional tax arising from the adjustments to federal taxable\nincome and the period for filing a claim for refund or credit of taxes\nunder article nine-A, twenty-two, thirty-three, or any law authorized by\narticle thirty of this chapter.\n