The New Jersey BAIT
As many may be aware, in early 2020, New Jersey enacted P.L.2019, c.320 the Pass-Through Business Alternative Income Tax (BAIT) Act, effective for tax years beginning on or after January 1, 2020.
In general for New Jersey tax purposes, income and losses of pass-through entities are passed through to their owners. The BAIT allows pass-through entities to elect to pay tax due on the owner’s share of distributive proceeds. The owner(s) may then claim a refundable tax credit for the amount of tax paid by the pass-through entity on their share of distributive proceeds.
As per the New Jersey BAIT website:
Pass-through entities included under this law are:
- federal S corporations that have made the New Jersey S corporation election; and
- Limited liability companies (LLCs).
The entity must have at least one member who is liable for tax on their share of distributive proceeds pursuant to the New Jersey Gross Income Tax Act, N.J.S.A. 54A:1-1 et seq., in a taxable year.
Single member limited liability companies and sole proprietorships may not elect to pay the Pass-Through Business Alternative Income Tax.
New Jersey Business Alternative Income Tax Extended Due Dates
Recently, New Jersey indicated that numerous New Jersey BAIT filing due dates were extended.
In particular, the State’s BAIT website was updated to “clarify” the revised due dates as set forth in the following excerpt from that website:
2020 Pass-Through Business Alternative Income Tax Due Dates
We are allowing the following forms and payments associated with them to be filed by 11:59 p.m. on May 17, 2021, without penalty or interest:
- PTE Election
- PTE-100 (tax return)
- PTE–200-T (extension of time to file PTE-100)
- PTE Revocation of Election
The PTE-200-T is a 6-month extension from March 15; therefore, the extended due date remains September 15.
The Revocation of Election form is now available.
The New Jersey BAIT Extension Can Be A Bait and Switch
The New Jersey extension of BAIT filings can be a “Bait and Switch” for the unwary. New Jersey did not extend the due date for the April 15, 2021 First Quarter BAIT Estimate form PTE-150.
New Jersey continues to provide guidance for taxpayers and their advisors with respect to the BAIT. As with any new adopted tax provision, the due dates as well the application of the BAIT require close attention.