What the New York Form CT-6 (2016) Is For
New York Form CT-6 (2016) is used by a federal S corporation to formally elect S corporation treatment for New York State tax purposes. New York does not automatically follow a federal S election, so filing this form is required to receive pass-through tax treatment at the state level. Without this election, the corporation would be taxed as a C corporation for New York purposes, even if it is treated as an S corporation for federal purposes.
Once approved, the election allows corporate income, losses, deductions, and credits to flow through to shareholders. The corporation generally avoids entity-level New York income tax, although it must still file an annual franchise tax return and may be subject to fixed minimum taxes or fees.
When You’d Use New York Form CT-6
The CT-6 form is used when a corporation wants New York to recognize its S corporation status. This includes newly formed corporations, existing federal S corporations expanding into New York, or corporations that previously failed to make the state election.
The form is also used in situations involving late, retroactive, or corrected elections. Corporations that missed the original filing deadline or had an invalid election due to missing shareholder consents may still use New York Form CT-6 2016 to request relief, provided they meet New York’s requirements.
Key Rules or Details for 2016
To file New York Form CT-6 2016, the corporation must be a federal S corporation or have a pending federal S election, and it must be taxable under New York Tax Law Article 9-A. Corporations taxed under Article 9 or Article 33 generally do not qualify for this election. The CT-6 form must also reflect the corporation’s legal name exactly as it appears in New York records to avoid processing delays. For the 2016 tax year, the election is intended to secure New York S corporation treatment, allowing income to pass through to shareholders instead of being taxed at the corporate level.
Unanimous shareholder consent is required for New York Form CT-6 2016, and missing even one required signature can invalidate the election. If the election is made during the tax year, certain former shareholders may also need to consent, depending on when they owned stock. New York rules for 2016 also include circumstances where S corporation treatment may be mandatory, such as when investment income exceeds the applicable threshold. Once approved, the election remains in effect until it is terminated in accordance with New York procedures.
Step-by-Step (High Level)
Step 1: Gather Required Information
The corporation should collect all necessary identifying and ownership details before completing the 2016 New York Form CT-6.
- The corporation’s legal name as registered with New York State
- The federal employer identification number
- The tax year's ending date
- Complete shareholder ownership and contact information
Step 2: Complete the Corporate Information Section
The top portion of the CT6 form should reflect accurate corporate details that match New York records. The corporation should indicate whether the federal S election is approved or pending. If the federal election is pending, the corporation should be prepared to submit proof of approval as soon as it is received.
Step 3: List Shareholders and Obtain Consents
Each shareholder should be listed with complete ownership information and should sign the form or an attached consent statement. The total shares reported should match the corporation’s issued and outstanding shares. Inconsistent shareholder information can delay processing or cause the New York Form CT-6 2016 to be treated as invalid.
Step 4: Sign and Submit the Form
An authorized corporate officer should sign and date the form, certifying that the information is accurate. The corporation may submit the form by mail or fax to the New York State Department of Taxation and Finance. Late or retroactive filings should include a written explanation and any required supporting documentation.
Common Mistakes and How to Avoid Them
- Missing shareholder signatures: Confirm every required shareholder signs, including former shareholders when applicable, by reviewing stock and transfer records before filing.
- Using an incorrect or informal corporate name: Enter the exact legal name shown on file with the New York Department of State and verify it against incorporation records before submitting.
- Filing late without a reasonable cause explanation: Include a clear written explanation for the late filing and reference the applicable New York Tax Law provisions to support the request.
- Providing an incomplete reasonable-cause statement: Explain the facts, timeline, and corrective steps taken so the request does not get denied for being vague or unsupported.
- Submitting the form without a final accuracy check: Re-check names, dates, and entity details against official records to reduce avoidable processing delays.
What Happens After You File
After submission, the New York State Department of Taxation and Finance reviews the election to confirm eligibility, shareholder consent, and federal S corporation status. Processing times vary, and the corporation receives written notice of approval or denial. Until approval is granted, the corporation should continue filing as a C corporation if required.
If approved, the corporation must file a New York S corporation franchise tax return for 2016 and future years. Income and losses pass through to shareholders, who report them on their individual New York tax returns. The election remains in effect until it is formally terminated.
FAQs
Does New York automatically recognize a federal S corporation election?
New York does not automatically recognize a federal S election. A separate state election must be made using New York Form CT-6 2016 for the corporation to receive New York S corporation treatment.
Who must sign the CT6 form?
All shareholders who owned stock at the time the election is made must provide written consent. In certain situations, former shareholders who owned stock earlier in the tax year may also be required to consent.
Can New York Form CT-6 2016 be filed late?
It may be filed late if the corporation can demonstrate reasonable cause for missing the original deadline. Supporting documentation should be included with the form to request late election relief.
What happens if a shareholder refuses to consent?
The election cannot be approved without the unanimous consent of all shareholders. If even one required shareholder refuses to sign, the corporation will be taxed as a C corporation for New York tax purposes.
Is the election required every year?
The election is made once and remains in effect for future tax years. The corporation does not need to refile the CT6 form annually unless it chooses to terminate the election.
How is New York's S corporation status terminated?
Termination requires filing the appropriate New York termination form and obtaining the necessary level of shareholder approval. Once terminated, the corporation is treated as a C corporation for New York tax purposes.
