Changes to Requirements for Estimated Tax Payments for Partnerships

For taxable years ending after 2002, the provision requiring partnerships, LLCs and S corporations to pay estimated tax for nonresident partners, members and shareholders is amended to exclude publicly traded partnerships. Waivers for non-publicly traded entities may be issued if:

•  Partners, members or shareholders are not subject to New York income

   tax or are filing New York income tax returns and paying estimated taxes

   when due

•  Other circumstances in which he or she determines that withholding is

   not necessary to ensure collection of income tax on New York source

    income allocable to the nonresident or C corporation

Effective with the January 15, 2004 payment (December 15, 2003 for partnerships who have corporate partners and elect to make the January 15 payment on December 15, 2003), C corporation partners and individual nonresident partners and shareholders may, if they qualify, claim exemption from the estimated tax provisions by filing Form CT-2658-E , Certificate of Exemption from Partnership estimated tax paid on behalf of corporate partners or Form IT-2658-E , Certificate of Exemption from Partnership estimated tax paid on behalf of nonresident individual partners and shareholders, with the partnership or New York S corporation. Once the partnership or New York S corporation receives the signed certificate, the partnership or New York S corporation may rely on that certificate and is not required to make any further estimated tax payments on behalf of that partner or shareholder.

A C corporation qualifies for the exemption and may file Form CT-2658-E if it meets either of the following conditions:

•  The corporation is not subject to the taxes imposed under Articles 9, 9-

   A, 32 or 35 of the New York State Tax Law (tax exempt corporations that

   are only subject to the tax on unrelated business under § 13 of the New

   York State Tax Law qualify under this rule)

•  The corporation certifies that it will comply, in its corporate capacity, with

   all New York State corporation estimated tax payment provisions and tax

   return filing requirements.

A nonresident individual qualifies for the exemption and may file Form IT-2658-E if he or she certifies that he or she will comply, in his or her individual capacity, with all the New York personal income tax estimated tax payment provisions and tax return filing requirements.

Exemption certificates will cover the estimated tax payments due for a two-year cycle, except for the initial certificate, which will cover the last payment due for tax year 2003, and the payments due for tax years 2004 and 2005. At the end of the two-year cycle all certificates will expire on the same day, regardless of when partners submitted the certificate (e.g., all of the initial certificates will expire on February 1, 2006.) All partners and shareholders who will continue to qualify for the exemption after that date must file a new certificate to keep the exemption in effect.

Any payments of estimated tax made on September 15, 2003, on behalf of a C corporation or nonresident individual who now qualifies for exemption from the estimated tax provisions, will not be refunded at this time. The partner or shareholder will claim credit for those payments when they file their New York income tax returns.