Nebraska Department of Revenue Publishes PTET Forms
On September 1, 2023, the Nebraska Department of Revenue (NDOR) published forms to implement Nebraska’s new pass-through entity tax (PTET) law.
In May, we published an alert discussing Nebraska’s PTET law. This law potentially impacts 2023 filings. The NDOR worked diligently to implement these changes and publish the forms in a timely, streamlined manner. To aid in implementing these changes, the NDOR created a PTET specific website. This website includes forms for making the PTET elections, and a portal to upload the forms.
For the retroactive application of Nebraska’s PTET law (2018-2022), a pass-through entity (an entity taxed as a partnership or subchapter S corporation) will upload Form PTET-E and the associated Schedule PTET with their Form 1065N or Form 1120-SN. The payment will then be allocated to the owners on their associated Schedule K-1N. Prior individual returns will not need to be amended and PTET payments for prior years are intended to generate a federal deduction for the tax year that the pass-through entity actually makes the payment. In other words, a 2023 payment for tax years 2018-2022 is intended to generate a 2023 federal deduction.
For 2023 and future tax years, a similar Form PTET-E allows a pass-through entity to make a PTET election for the applicable year.
The forms include instructions and payment options for the electing pass-through entity. It is important to note that in order for an electing pass-through entity to generate a federal deduction in 2023, the PTET payment must be submitted to the NDOR prior to December 31, 2023. For 2024 and future tax years, an electing pass-through entity will be required to make estimated PTET payments.
Nebraska’s PTET law is a taxpayer friendly development for owners of pass-through entities that do business in Nebraska. In addition, the law maximized the potential benefit by including a retroactive application of the PTET for tax years 2018-2022, which is in place for 2023 returns.
The authors of this alert were deeply involved in the passage of Nebraska’s PTET law and will continue to work with the NDOR to address any additional questions as they arise.
For any questions regarding Nebraska's PTET law, feel free to contact one of our business tax attorneys in our Tax Practice.