LDR Streamlines PTE Election Documentation Requirements

The Louisiana Department of Revenue (“LDR”) has issued Revenue Information Bulletin 26-007, announcing a change to the documentation required for shareholders, partners, and members of entities that elect to pay Louisiana’s Pass-Through Entity (“PTE”) tax beginning with the 2025 taxable year. Owners of electing PTEs will no longer be required to submit a pro forma federal income tax return or nonresident worksheet with their initial Louisiana filing.

Existing regulation LAC 61:I.1001(C)(4)(d) requires each owner to submit Form R-6981, Statement of Owner’s Share of Entity Level Tax Items, together with a pro forma federal return (Form 1040 or 1041 for residents). Each nonresident owner must submit a worksheet from Louisiana Form IT-540B. Revenue Information Bulletin 26-007 provides that, starting in 2025, owners must still submit Form R-6981, but the pro forma federal return or nonresident worksheet will be required only upon request by LDR. The Department intends to amend LAC 61:I.1001 to reflect this revised requirement.

The Bulletin also reiterates that the PTE election does not change the total amount of income subject to Louisiana tax. In no event may Louisiana taxable income be greater or less than it would have been absent the election. Where the deduction reported on Form R-1968 does not accurately reflect Louisiana taxable income, taxpayers are encouraged to submit a pro forma federal return or nonresident worksheet to support the correct computation, even if not initially required.

This update reduces administrative burdens while preserving LDR’s ability to verify reported income through document requests. Taxpayers making the PTE election should adjust their filing procedures for 2025 and beyond and continue to maintain supporting documentation in anticipation of potential review by the Department. For more information, contact Liskow attorneys Bob Angelico, Leon Rittenberg III, Caroline Lafourcade, and Kevin Naccari, and visit Liskow's Tax Practice page.