What the New York Form CT-6 (2018) Is For
New York Form CT-6 (2018) is used by a federal S corporation to elect treatment as a New York S corporation for state tax purposes. New York does not automatically recognize a federal S election, so filing this form is required to receive pass-through tax treatment at the state level. Without an approved election, the corporation is taxed as a C corporation in New York.
Once approved, the corporation generally pays only the fixed dollar minimum franchise tax, while income, losses, and deductions pass through to shareholders. Shareholders then report their share of income on their individual New York tax returns. The election remains in effect until it is formally terminated or revoked.
When You’d Use New York Form CT-6
New York Form CT-6 is filed when a corporation wants its New York tax treatment to match its federal S corporation status. Corporations use the form either before the start of the tax year or within the first two and a half months of the tax year the election is intended to cover. Newly formed or newly registered foreign corporations also use this form shortly after beginning business in New York.
The CT-6 form may also be filed late if the corporation missed the original deadline and qualifies for relief. In those cases, the corporation must request that the New York State Department of Taxation and Finance treat the election as timely based on reasonable cause.
Key Rules or Details for 2018
To be eligible, the corporation must already be a federal S corporation or have a pending federal election. It must also be taxable under New York Tax Law Article 9-A, which generally includes most business corporations operating in the state. Corporations taxed under other articles, such as insurance companies, are not eligible.
All shareholders must consent to the election for it to be valid. Every individual or entity that owns shares on the effective date of the election is required to sign the form or a separate consent statement. In certain situations, former shareholders may also need to consent if they owned shares during the early part of the tax year.
The federal S election must come first. If the Internal Revenue Service ultimately denies the federal election, the New York election will not take effect even if Form CT-6 was filed and accepted conditionally.
Step-by-Step (High Level)
Step 1: Confirm Eligibility
Confirm that it qualifies as a federal S corporation and is taxable under Article 9-A. It should also verify that all shareholders are willing and able to provide consent. Any eligibility issues should be resolved before completing the form.
Step 2: Complete the Form
The corporation must enter its legal name exactly as registered with the New York State Department of State, along with its Employer Identification Number and the date it began operating in New York. The intended effective tax year and the federal S election date must also be provided. Accuracy is critical, as inconsistencies can delay approval.
Step 3: Collect Shareholder Information and Signatures
Each shareholder must be listed with identifying information, including address and ownership percentage. Every required shareholder must sign the consent section. If additional space is needed, continuation sheets should follow the same format as the main form.
Step 4: Sign and Submit
An authorized corporate officer must sign and date the certification section. The completed CT-6 form is submitted by fax or mail to the New York State Department of Taxation and Finance. The postmark or fax date determines the filing date.
Common Mistakes and How to Avoid Them
- Missing shareholder signatures: Identify every required signer (including former shareholders when applicable) and confirm all signatures are included before filing.
- Overlooking a required signer due to outdated records: Review stock ledgers, transfer history, and current ownership records to ensure no shareholder is missed.
- Using an incorrect legal name: Enter the corporation’s name exactly as it appears in state records, including punctuation and spacing, and verify it in advance.
- Misunderstanding filing deadlines: Confirm the due date for the intended effective year and file early to avoid an unintended shift in effective date.
- Missing a late-election relief request when filing late: Include a clear, reasonable-cause explanation and any required relief request language when submitting after the deadline.
What Happens After You File
After submission, the New York State Department of Taxation and Finance reviews the election to confirm eligibility and proper consent. This review process may take several weeks, depending on the completeness of the filing. The department may request additional information if issues are identified.
Once approved, the corporation receives written confirmation of its New York S corporation status. From that point forward, the corporation must file the New York S corporation franchise tax return, rather than the standard C corporation return. The election remains effective for future years unless it is terminated.
FAQs
Who must file New York Form CT-6 (2018)?
Any federal S corporation that wants New York to recognize its S corporation status must file New York Form CT-6 2018. This includes both domestic and foreign corporations doing business in New York.
What is the filing deadline for the CT-6 form?
The form must be filed during the tax year preceding the year it will take effect or by the fifteenth day of the third month of the tax year. Newly formed or newly registered corporations follow a similar timing rule based on their start date.
Can a New York Form CT-6 be filed after the due date?
Yes, late filing relief may be available if the corporation can demonstrate reasonable cause for missing the deadline. The request must be included with the form and explained in detail.
Does the election apply automatically every year?
Once approved, the election continues indefinitely. The corporation does not need to refile each year unless it terminates or revokes the election.
What happens if one shareholder does not consent?
Unanimous shareholder consent is required for a valid election to be held. If a needed shareholder does not consent, the election cannot take effect for that tax year.
Is New York's S corporation tax the same as the federal S corporation tax?
No, New York has its own rules. While income generally passes through to shareholders, the corporation still owes a fixed dollar minimum franchise tax based on New York receipts.
How is the election terminated?
Termination occurs by filing the appropriate termination form or when the corporation no longer meets the qualification requirements. Specific ownership changes or loss of federal S status can also result in automatic termination.
