On Monday, July 1, 2024, the Assembly Revenue and Taxation Committee will hear SB 1501, the bill that would provide a fix for the current “all or nothing” June 15 passthrough entity elective tax prepayment requirement. Amendments to the bill since it was passed by the Senate are being proposed to:
- Remove the proposed 5% penalty that would be imposed against passthrough entities that failed to timely make the required June 15 payment and replace it with a 10% reduction in the amount of credit that can be claimed by the participating passthrough entity owners; and
- Allow taxpayers to still make the election whether the prepayment was not paid at all by June 15 or was underpaid by June 15 (the original version of SB 1501 only allowed those taxpayers who made no payment at all by June 15 to qualify for relief).
Even if passed by the Revenue and Taxation Committee, the bill would have to pass several more steps before it becomes law. If enacted, these changes would be effective beginning with the 2024 taxable year.
As we’ve previously reported, under current law, taxpayers wanting to make a passthrough entity tax election for the tax year must make a prepayment of the tax by June 15 of the tax year equal to the greater of:
- $1,000; or
- 50% of the passthrough entity tax due for the prior tax year.
The text of the current version of the bill is available at:
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