When the Internal Revenue Service adjusts a partnership's return under the centralized audit regime, how and when is each state told, who pays the state tax, and what happens when the partnership pushed the adjustment out federally but a state has no push-out?

What the federal regime hands the states

The federal centralized audit regime gives each state a set of dates and two ways the tax can be paid. It says nothing about state tax. Federally, an adjustment to a partnership's return produces an imputed underpayment (the amount the federal rules compute at the partnership level from the adjustments), and "the partnership shall pay an amount equal to such imputed underpayment in the adjustment year" (Internal Revenue Code section 6225(a)(1)). The adjustment year is, in the ordinary case, the year in which the notice of final partnership adjustment is mailed (section 6225(d)(2)(C)).

The partnership may instead push the adjustments out to its partners for the examined year (the reviewed year). The election is due "not later than 45 days after the date of the notice of final partnership adjustment" (section 6226(a)). On the election, "section 6225 shall not apply with respect to such underpayment," so the partnership is not assessed. Each partner instead adjusts its own tax for "the taxable year which includes the date the statement was furnished under subsection (a)" (section 6226(b)(1)). The partnership has 90 days after the notice is mailed to petition (section 6234(a)). Partner statements are due no later than 60 days after the adjustments are finally determined, which is when the time to petition expires or, if a petition is filed, when the court's decision becomes final (Treas. Reg. section 301.6226-2(b)(1)). A partner that is itself a partnership either passes the adjustment up to its own partners or pays at its own level, and either step is due by the extended due date of the audited partnership's adjustment-year return (Treas. Reg. section 301.6226-3(e)(3)(ii) and (e)(4)(ii)).

This article calls the first path the partnership-pays path and the second the push-out. A state may reach the partnership-pays path by an election or by imposing the tax directly on the partnership. Each state therefore needs its own rule for who reports, to whom, by when, and who pays.

How each state is told

Each state rule read makes the partnership itself report, and most also require each direct partner (a partner that holds its interest in the partnership itself, not through another entity) to report its share. In Georgia, the audited partnership files a federal adjustments report and notifies each direct partner, and the direct partners then act within 180 days (O.C.G.A. section 48-7-53(c)(2)(A) and (B)). Oregon requires the partnership to act first and the partners later (ORS 314.733(3)). In Texas, the duty falls on each taxable entity (Tax Code section 171.212(a)). In Illinois, it falls on any person, a term that includes a partnership (35 ILCS 5/506(b); 5/1501(a)(18)). The sources read do not say whether the Internal Revenue Service also notifies a state directly. A partner's federal statement gives the partner the federal figures. The state obligation is a separate report.

The report goes by different names and forms:

• Federal adjustments report. The Multistate Tax Commission model and the statutes of New Jersey, Georgia, Massachusetts, Minnesota and New York use this name. Massachusetts requires the report to identify each partner during the reviewed year, specify each item and amount, and explain whether and how the adjustment needs to be modified for state tax purposes (Technical Information Release 22-1).
• California. The partnership-level tax goes on the Partnership Level Tax line, which is line 26 of the 2025 Form 565 instructions. Those instructions say the tax is typically reported on an amended return. Franchise Tax Board (FTB) Publication 1008 (REV 07-2022) also describes a notification letter with a copy of the federal information and changes.
• Georgia. The Department of Revenue's 2025 Form IT-711 booklet directs a partnership with a federal partnership adjustment to file an amended Georgia return with the "Amended due to IRS Audit" box checked on page 1 of Form 700.
• New York. The Department of Taxation and Finance says partnerships "are also required to file a federal adjustments report with New York State," and directs an amended Form IT-204 for the reviewed year within 90 days, with amended partner returns within 180 days.
• Illinois. The notification is an amended partnership return, Form IL-1065-X.

The model and the clock

The Multistate Tax Commission model gives the partnership 90 days to report and direct partners 180 days, both measured from a final determination date. It also allows a partnership-pays election, noticed within 90 days and paid within 180. For an Internal Revenue Service audit it defines that date as the first day on which no federal adjustment remains to be finally determined. The Commission adopted the model in 2019 and approved technical corrections in November 2020. Its pages read do not list the states that enacted it, so this article describes the states read and does not say how many follow the model.

The states do not measure from the same date:

• States that use the model's date. New Jersey, Minnesota, Georgia and Massachusetts use the model's approach. Minnesota's text reads "the first day on which no federal adjustment arising from that audit remains to be finally determined, whether by agreement, or, if appealed or contested, by a final decision with respect to which all rights of appeal have been waived or exhausted." For an amended return, refund claim or administrative adjustment request (a partnership's own request to change a federal return it filed), the date is the filing date (Minn. Stat. section 289A.381, subd. 10(1) and (3)).
• States that use the assessment date. California and New York measure from the date each adjustment is "assessed pursuant to Section 6203 of the Internal Revenue Code", meaning the date the Internal Revenue Service assesses it (Cal. Rev. and Tax. Code section 18622.5(b)(3); N.Y. Tax Law section 659-A(b)(5) is to the same effect).
• Oregon. The clock runs from the federal notice of final partnership adjustment (ORS 314.733(3)).
• Illinois and Texas. Illinois runs 120 days from the date the alteration "has been agreed to or finally determined," or the federal deficiency or refund has been assessed or paid (86 Ill. Adm. Code 100.9200). Texas runs 120 days from the date the revenue agent's report or other adjustment is final (Tax Code section 171.212(b)).

If the partnership pushes the adjustment out, it is not assessed. The section 6203 trigger in California and New York then has no stated basis on that path. The section below on the date on a push-out takes up this gap.

California: a different clock and a different default

California requires the partnership, not the partner, to report within six months after the section 6203 assessment date. This rule applies in place of the general rule for reporting federal changes in Cal. Rev. and Tax. Code section 18622 (section 18622.5(a)). California then follows the federal path. Any federal election applies for California, and "a separate election shall not be allowed," except as the same subdivision provides (section 18622.5(c)(1)).

• Partnership pays federally. California imposes tax on the partnership: "a tax is hereby imposed on the partnership determined as follows, in lieu of taxes owed by its direct partners and indirect partners" (section 18622.5(d)(1)(A)). Tax-exempt partners are excluded except for unrelated business taxable income. Partners that already filed an amended return and paid are also excluded. A corporate partner's adjustments, as apportioned (divided among states by formula) and allocated, are multiplied by the highest marginal rate in section 23151 or 23501. For nonresident individual and fiduciary partners and for tiered partners (partners that are themselves partnerships or other pass-through entities), the California source income attributable to the adjustments is multiplied by "the highest marginal tax rate applicable to individuals for the reviewed year." Resident partners' full distributive shares (their full shares of the partnership's income) are multiplied by the same rate.
• Partnership pushes out. The partnership files "an amended California Nonresident Group Return for all nonresident direct partners under Section 18535" and pays the additional tax, and each partner not on that return reports under section 18622 (section 18622.5(d)(2)).
• Unitary partners. A unitary partner (one whose business is operated together with the partnership's as a single enterprise) is carved out of the partnership-level tax and amends its own return under section 18622 (section 18622.5(c)(2)).
• Tiered partners. Each tiered and indirect partner reports and pays no later than 90 days after the time for filing and furnishing statements to tiered partners under federal section 6226 (section 18622.5(c)(4)).

A partnership that wants a different California result may file a request. The FTB must grant it in two cases. The first is after a federal push-out, if the partnership properly computes the tax under subdivision (d)(1)(A). The second is after federal payment, if the partnership shows that collection would not be impeded and follows the reporting in subdivision (d)(2) (section 18622.5(c)(3)(B) and (C)). The FTB's analysis of SB 790 (2019) says the bill would be effective and operative January 1, 2020, and refers to the original act as SB 274 (Stats. 2018, ch. 729).

The FTB's Tax News of March 2020 states of the Partnership Level Tax line that "This new line to report entity level tax first appeared on our 2018 tax forms" and that "There should be no amount entered for PLT on a timely filed original return". The FTB reported reaching out in the 2019 filing season to over 800 partnerships and limited liability companies that had entered an amount in error. Publication 1008 was issued after both acts but does not use the words 18622.5, election, push, 6225, 6226 or imputed, so the statute and the form instructions are the authority.

A 2025 conformity act (SB 711, Stats. 2025, ch. 231) amended the section. A Senate Revenue and Taxation Committee conformity chart dated September 5, 2025 (a committee document, not law) lists the change under the label "Partnership terminology update". It describes the change as technical cleanup of subdivision (a), with a new definition of "partnership-related item" by cross-reference to federal law. The chart does not state that any deadline, rate or election changed. The article treats the amendment as a terminology update on that basis. The chaptered bill text was not read.

The 1 percent of section 17043

Nothing read says whether the "highest marginal tax rate applicable to individuals" in California's partnership-level tax includes the additional 1 percent tax of Cal. Rev. and Tax. Code section 17043. Section 17043(a) imposes "an additional tax" of 1 percent "in addition to any other taxes imposed by this part" on taxable income over $1,000,000. Section 18622.5(d)(1)(A)(iv) and (v) do not mention it. Section 18535(a), for the nonresident group return, names it expressly: the highest marginal rate "plus, in the case of any electing nonresident partner included on the group return who would be subject to Section 17043 when filing individually, an additional tax rate of 1 percent." The FTB's analysis of SB 790 describes the applicable rate as "at the highest rate that would be applicable to each type of partner," and Publication 1008 and line 26 of the 2025 Form 565 instructions state no rate.

Two readings follow. On the first, the rate is 12.3 percent: section 17043 is an additional tax, and the Legislature named it in section 18535 and not in section 18622.5. On the second, it is 13.3 percent: the 1 percent is a marginal rate that applies to individuals above $1,000,000, and a rule meant to approximate the partners' own tax would include it. No FTB source read chooses. On a push-out, the group return's 1 percent depends on each nonresident partner's own taxable income, not on the partner's share of the adjustment.

The date on a push-out in California and New York

On a push-out, no source read says when the California and New York clocks start. Both statutes define the date by the assessment of "each adjustment or resolution" under section 6203 (Cal. Rev. and Tax. Code section 18622.5(b)(3); N.Y. Tax Law section 659-A(b)(5)). FTB Publication 1008 reads it as the day the adjustment is assessed on the account transcript. A partnership that elects the push-out is not assessed, because "section 6225 shall not apply with respect to such underpayment." Yet California requires a partnership that "makes a federal election for alternative payment" to report within six months after "each final federal determination" (section 18622.5(a)), so the statute assumes a date exists. The New York Department runs its clocks from "the final federal determination date" without addressing the point.

Two readings are available, and no source read chooses between them:

1. Each partner's own assessment. Under this reading, each partner's section 6203 assessment of its additional tax for the year of the statement is the "each" determination the statute names. The words support this reading, but the partnership's single report would then depend on dates it may not know.
2. The date the adjustments are finally determined. This is the date under Treas. Reg. section 301.6226-2(b)(1), the end of the petition period or the date the court's decision becomes final. It gives one date the partnership knows.

The article states the gap and chooses neither. The worked example gives candidate dates measured from the date the adjustments are finally determined and from the date the partner statements are due.

The other six states read

New Jersey and Minnesota match the model's clocks, trigger date, election and highest-rate computation. New York keeps the clocks, election and highest rates but runs them from the section 6203 date. Massachusetts keeps the clocks and the election but taxes an electing partnership at the rates that apply to each partner, not the highest rate. Georgia keeps the report clocks but has an electing partnership pay within 90 days at one rate. Oregon runs longer clocks from the federal notice.

• New York. The Department of Taxation and Finance says New York passed legislation in 2025 (Tax Law section 659-A). Within 90 days after the final determination date, the partnership files a federal adjustments report, notifies each direct partner, files amended returns, and files an amended group return (a single return filed for its nonresident partners) if it originally filed one (section 659-A(d)(2)(A)). Direct partners report and pay within 180 days, with penalty and interest from the original return's due date ((d)(2)(B)). The election is noticed within 90 days and paid within 180. It is paid at the highest rate "in effect for the reviewed year" for each partner type: Article 9-A (the corporate franchise tax) on a corporate partner's apportioned share, and Article 22 (the personal income tax) on a nonresident's allocated share and a resident's full share ((d)(3)). The election is irrevocable unless the commissioner decides otherwise ((d)(6)(A)). Unlike the model, New Jersey and Minnesota, subdivision (d)(3) as read excludes no exempt partner, combined-report corporate partner (a corporation that files a combined return with related corporations) or administrative adjustment request. Each clause of (d)(3)(B) is framed around a direct partner "subject to tax", and no source read says whether that framing alone leaves exempt partners out. For determinations before May 9, 2025, the Department gives May 11, 2026 as the report date.
• New Jersey. The partnership reports, notifies and pays within 90 days after the final determination date, and direct partners have 180 days. The election is noticed within 90 days and paid within 180. It is paid at the highest rate for each partner type, which the statute words as "highest tax rate under section 5 of P.L.1945, c.162" for corporate partners and "highest tax rate under N.J.S.54A:2-1" for individuals (N.J.S.A. 54:50-49(c), (d)). Exempt partners and administrative adjustment requests are excluded, and the election is irrevocable unless the Division of Taxation determines otherwise ((d), (g)(1)). The Division's page says the law applies to adjustments on or after January 1, 2020, and that the partnership-pays method is open only to a partnership the Internal Revenue Service audited. N.J.S.A. 54A:9-8(j) lets partners claim a credit or refund by amended return where adjustments "do not result in a federal imputed underpayment". Its words do not expressly refuse an ordinary refund claim where an underpayment exists.
• Massachusetts. The partnership's notice, report and partner notification are due within 90 days. Partner reports and payment are due within 180 days. The election is made within 90 days, with payment within 180 (G.L. c. 62C, section 30B(b)(1), (d), (e)(1)). A corporate partner in a combined report is excluded and accounts for its own tax. Other corporate shares are apportioned and multiplied by "the applicable rate of tax set forth in said chapter 63" (the corporate excise). A resident's share is multiplied by the chapter 62 (personal income tax) rate "applicable to each item of income". A nonresident's Massachusetts-sourced share is multiplied by "the rate of tax" under chapter 62. The clauses read use no highest-rate rule. The election is irrevocable unless the commissioner consents to revocation or finds it was made to avoid the proper tax ((e)(3)). Technical Information Release 22-1 notes that one audit can produce more than one final determination date.
• Minnesota. The same clocks apply (Minn. Stat. section 289A.382, subd. 2(b), 2(c), 3(a)). The election pays at the highest rate in section 290.06, subdivision 1, for direct corporate partners and direct exempt partners. It pays at the highest rate in subdivision 2c for direct individual, estate and trust partners and for tiered partners (subd. 3(a)(2)(iii) to (vi)). The election is barred for a corporate partner's unitary business income in a combined report, for administrative adjustment requests, and for a partnership with no other Minnesota reporting or payment obligation (subd. 3(b), 3(c)).
• Georgia. The statute was read as reproduced at Justia (2025 Code of Georgia). Within 90 days, the audited partnership reports, notifies its direct partners and files an amended composite return (the same kind of single return filed for nonresident partners) if one was originally filed. Direct partners act within 180 days (O.C.G.A. section 48-7-53(c)(2)). An electing partnership pays "no later than 90 days after the final determination date of the audited partnership," computed by applying "the rate provided in subsection (a) of Code Section 48-7-21" to the total, with exempt partners excluded ((c)(3)(A)(i), (c)(3)(E), (c)(3)(B)). The word "highest" does not appear in the section as read. The Department's booklet says to report within 180 days, while the statute gives the audited partnership 90. This article therefore states the statute as the law and the booklet as the Department's general instruction.
• Oregon. The statute was read at oregon.public.law, a non-official reproduction. The partnership reports within 180 days after the federal notice of final partnership adjustment, or 90 days after an amended filing if later. It also files an amended composite return for nonresident direct partners. Direct partners act within 270 days (ORS 314.733(3)(a), (3)(b)). The election is filed within 180 days and paid within 270, at the highest marginal rate for each partner type ((4)). The Department's page says that "the Oregon default requires the partners to report and pay the tax due," and the election is made by checking the "CPAR" box on Form OR-OC.

All six give tiered partners (Massachusetts says indirect partners) 90 days after the federal time for filing and furnishing statements (N.Y. Tax Law section 659-A(d)(4); N.J.S.A. 54:50-49(e); G.L. c. 62C, section 30B(f); Minn. Stat. section 289A.382, subd. 4; O.C.G.A. section 48-7-53(c)(2)(C); ORS 314.733(8)). The Oregon Department's page words the same date as 90 days after the extended due date of the audited partnership's return.

Who bears the state tax

Who bears the state tax depends on whether the adjustment is pushed out or the partnership pays.

Push-out. Federally, the reviewed-year partners bear the tax, figured as if the items had been in the reviewed year and paid for the year in which the statement was furnished. For state tax the reviewed-year partners generally bear it too. In New York, New Jersey and Massachusetts they file amended returns for the reviewed year within 180 days and pay with penalty and interest. New York classifies each direct partner by its status "in the reviewed year" (N.Y. Tax Law section 659-A(d)(3)(B)). The exception is the nonresident group return and the composite return. In California the partnership files the amended group return and, under Cal. Rev. and Tax. Code section 18535(a), "the partnership as agent for the electing partners shall make the payments of tax." In Oregon the partnership files an amended composite return for nonresident direct partners (ORS 314.733(3)(a)(E)). On those returns the partnership writes the check, and the burden follows the partners' agreement, as on the partnership-pays path. Each partner computes its tax at its own rate, so a partner below the top bracket pays less than the partnership-pays figure. A partner that sold its interest before the adjustment still bears its reviewed-year share under the federal rule. Georgia defines a "direct partner" in the present tense, as "a person that holds an interest directly in an audited partnership," so the Georgia words differ from the federal rule on whether a former partner or the current holder is the direct partner (O.C.G.A. section 48-7-53(a)(4)).

Partnership pays. The state tax is paid in one payment. The rate is the highest rate for each partner type in California, New York, New Jersey, Minnesota and Oregon, one rate in Georgia, and the rates that apply to each partner in Massachusetts. The economic burden falls on whoever is a partner when the partnership pays, unless the operating agreement says otherwise. California, New Jersey, Massachusetts and Georgia bar the partners from taking a deduction or credit for the amount or claiming a refund of it in the state (section 18622.5(g)(3); N.J.S.A. 54:50-49(g)(2); G.L. c. 62C, section 30B(e)(4); O.C.G.A. section 48-7-53(c)(4)(B)). California, New York, Minnesota and Oregon each preserve a credit for tax paid to another state on the same income, but the partners who may claim it differ. New York keeps the credit for "a resident direct partner" (section 659-A(d)(6)), and Minnesota for "resident direct partners" (Minn. Stat. section 289A.382, subd. 5(c)). California's credit reaches "a partner" for amounts paid on the partner's behalf to another state and is not limited to residents (section 18622.5(g)(3)). Oregon's credit reaches resident and nonresident direct partners (ORS 314.733(10)(c)). The statutes do not say how the burden is shared among partners. That is a contract term.

Federal and state paths that do not match. In California the federal payment decides the state path unless the partnership requests otherwise (section 18622.5(c)). The New York Department's page directs amended returns and treats the alternative payment by the partnership as an election made by notice within 90 days. The page read does not tie the choice to the federal path.

When a state has no push-out

Every statute read that has an audit-regime provision allows both a partnership-pays route and a partner-reports route. A state with no push-out is therefore narrower than the question assumes. Two states in the sources read have no audit-regime provision, and they reach the same adjustment in different ways.

Texas has no push-out because of how its tax is built, not because partners must amend their own reports. The statutes were read at texas.public.law, a non-official reproduction. The franchise tax falls on the partnership as a taxable entity. A corporate partner's total revenue is reduced, to the extent included, by "net distributive income from a taxable entity treated as a partnership or as an S corporation for federal income tax purposes" (Tax Code section 171.1011(c)(1)(B)(iii); the same wording appears at (c)(2)(B)(iii) for a partnership partner). A federal partnership adjustment therefore reaches Texas through the partnership's own amended report, due "not later than the 120th day after the date the revenue agent's report or other adjustment is final" (section 171.212(b)), and not through the partners' margins. The adjustment is final when administrative appeals with the Internal Revenue Service or other competent authority are exhausted or waived. The Comptroller's rule repeats the 120 days (34 Tex. Admin. Code section 3.584(f)(2), (f)(4), (f)(5), read in a text current through August 30, 2019). Tax Code section 111.206 allows assessment for one year after the later of the day the report is required to be filed or the day it is received. If no report is filed, it allows assessment for one year after the day the final determination is discovered. Two points remain open. The first is a partnership that is not a taxable entity, whose share stays in the partner's total revenue. The second is the provision of Rule 3.584(d)(7) on tiered partnerships, which was not read.

Illinois has no audit-regime statute in the sources read, and the general federal-change rule applies. In the words of the Department of Revenue's regulation, a person must notify the Department of a federal alteration (a change made at the federal level) not later than 120 days after the alteration "has been agreed to or finally determined" or after the federal deficiency or refund has been assessed or paid (35 ILCS 5/506(b); 86 Ill. Adm. Code 100.9200). A partnership is a "person" under section 1501(a)(18), and its notification is Form IL-1065-X, filed and paid "within 120 days of IRS partial agreement or finalization," with a separate amended return for each federal finalization date. Partnership income tax "is paid at the partner's level," so each partner reports its own alteration under the same section. A notice of deficiency (the Department's notice of additional tax due) may issue "at any time within 2 years after the date such notification is given," or "at any time" if the taxpayer fails to notify (35 ILCS 5/905(e)(2), (d)). It is open whether a partner pushed out federally reports its reviewed-year share or its correction for the year in which the statement was furnished under section 506(b). No Department source read says. For a state with no audit-regime statute and no general rule that was read, no source read says what a partner pushed out federally must report.

Nonresident withholding and composite returns

Several statutes require the partnership to amend its composite returns and withholding reports within the partnership's own 90 days:

• Massachusetts. A partnership that reported or paid tax for partners "by means of a composite return or through pass-through entity withholding" must amend and pay any additional tax not later than 90 days after the final determination date, and is jointly and severally liable if it does not (G.L. c. 62C, section 30B(c)).
• Minnesota. The partnership files an amended composite report and amended withholding reports and pays the added amount (Minn. Stat. section 289A.382, subd. 2(b)(3) and (4)).
• Georgia. The partnership files an amended composite return if one was originally filed (O.C.G.A. section 48-7-53(c)(2)(A)(iii)).
• New York. The partnership files an amended group return if it originally filed one, and remits the added amounts that would have been due under Tax Law section 658(c) and under section 658(c)(4) (section 659-A(d)(2)(A)(iv) and (v)).
• New Jersey. The partnership files an amended composite return and pays any added tax (N.J.S.A. 54:50-49(c)(1)).
• Oregon. The partnership files an amended composite return for nonresident direct partners (ORS 314.733(3)(a)(E)).
• California. Nonresident direct partners go onto the amended group return only on a federal push-out (section 18622.5(d)(2)). No provision of section 18622.5 read addresses withholding on a pushed-out adjustment, and no FTB guidance read does.

Interest, penalties and limitation periods

Interest and penalties start running early. In California they run "from the original due date of the partnership return for the reviewed year" (Cal. Rev. and Tax. Code section 18622.5(d)(1)(B)). New York partners owe them from the due date of the originally filed return (N.Y. Tax Law section 659-A(d)(2)(B)). Georgia's run from the day after the reviewed year's due date, without extension (O.C.G.A. section 48-7-53(c)(6)). Federally, interest on a push-out runs from the due date of the return for the year to which the increase is attributable, at the underpayment rate, using 5 percentage points in place of 3 (Internal Revenue Code section 6226(c)(2)).

The periods in which a state may assess the tax also differ:

• California. The assessment period is open at any time where no report is filed. It is four years after a late report and two years after a timely one (section 18622.5(f)(3), (f)(1), (f)(2); section 19059(a) gives the same two years for a partner that reports under section 18622).
• The model and New Jersey. The model allows six years from the final determination date for an untimely report, absent fraud (model, section E(2)(c)). For an untimely report in New Jersey, notice must be mailed by the latest of three dates, and the third is, absent fraud, the end of six years after the final determination date (N.J.S.A. 54:50-50(b)(3)). For a timely report, N.J.S.A. 54:50-50(a)(1) sets two dates: the end of New Jersey's ordinary limitation periods and one year after the report is filed.
• Georgia. Absent fraud, the period is five years after the Internal Revenue Service notifies the commissioner. After a timely report, it is the later of the ordinary period or one year after the report (O.C.G.A. section 48-7-53(c)(6)).
• Massachusetts. The assessment period is suspended (tolled) while the partnership has not given the required notice and filing. The commissioner may assess partners directly if the partnership fails to report or pay (G.L. c. 62C, section 30B(b)(1), (i)).
• Illinois and Texas. See the section on states with no push-out.

Worked example

All parties, facts and dates in this example are invented.

Facts. A Delaware limited liability company taxed as a partnership distributes commercial refrigeration equipment from facilities in California and New York. For 2023 (the reviewed year) it has three partners: a California corporation with 40 percent that is not unitary with the partnership, a New York-resident individual outside New York City with 35 percent, and a Texas-resident individual with 25 percent. A federal examination increases 2023 ordinary income by $2,000,000. The example assumes that 40 percent of the adjustment is apportioned or sourced to California and 30 percent to New York for each partner, and that each individual is taxed at the highest rate the statute names. For New York that rate is 10.90 percent, which requires New York taxable income over $25,000,000. It is the highest rate "in effect for the reviewed year" under section 659-A(d)(3)(B), so the push-out and partnership-pays figures match. A partner below that rate would pay less on a push-out. A corporate partner of a partnership doing business in New York is subject to the Article 9-A tax as the commissioner's regulations describe (Tax Law section 209(1)(f)). Its New York rate is 7.25 percent whatever its own base, because the election takes the highest rate. On a push-out, a partner with a business income base of $5,000,000 or less would pay 6.5 percent. The partnership has no Texas or Illinois filing of its own on these facts.

Assumed federal calendar. The notice of final partnership adjustment is mailed Tuesday, March 3, 2026. The section 6226 election deadline, 45 days later, is Friday, April 17, 2026. The time to petition ends 90 days after mailing, on Monday, June 1, 2026, and the adjustments are then finally determined. Partner statements are due 60 days later, Friday, July 31, 2026. On the partnership-pays path only, the example has the Internal Revenue Service assess the adjustments against the partnership on Wednesday, June 24, 2026. That date does not exist on the push-out path: the partnership is not assessed, and the only section 6203 assessments are of the partners' additional tax for the year the statements were furnished (2026), which fall in 2027 at the earliest.

State calendar, partnership-pays path only (assumed dates).

• California report, six months after June 24, 2026: Thursday, December 24, 2026.
• New York partnership report or election notice, 90 days after June 24, 2026: Tuesday, September 22, 2026.
• New York partner returns or the partnership's election payment, 180 days after June 24, 2026: Monday, December 21, 2026.

The following dates are for comparison only, because the facts give the partnership no tiered partner and no Oregon, Texas or Illinois filing. Tiered partners in California, New York and Georgia have 90 days after July 31, 2026, which is Thursday, October 29, 2026. Texas and Illinois run 120 days from June 1, 2026, which is Tuesday, September 29, 2026. Oregon runs 180 and 270 days from the March 3, 2026 notice, which are Sunday, August 30, 2026 and Saturday, November 28, 2026. Whether Oregon moves a weekend due date forward was not verified.

Calendar on the push-out path (open). No source read states the California or New York trigger on a push-out. Measured from June 1, 2026, the date the adjustments became final, 90 days is Sunday, August 30, 2026 and 180 days is Saturday, November 28, 2026 (both weekend days), and California's six months is Tuesday, December 1, 2026. Measured from July 31, 2026, the statement date, 90 days is Thursday, October 29, 2026 and 180 days is Wednesday, January 27, 2027. Under the first reading above, each partner's own assessment falls in 2027 at the earliest. These are candidate dates and not the rule, because the trigger date is itself open. In California, assessment is allowed for four years after a late report and at any time if no report is filed (section 18622.5(f)(1), (f)(3)). For that reason the Practice notes calendar from the earliest candidate date.

Tax if the partnership pays at the state (2023 rates).

California. The corporate rate is 8.84 percent under section 23151(f)(2), and the individual rate is 12.3 percent, the top rate in Cal. Const. art. XIII, section 36(f)(2) (Cal. Rev. and Tax. Code section 18622.5(d)(1)(A)):

• Corporate partner: the $800,000 share has a California portion at 40 percent of $320,000, and the tax at 8.84 percent is $28,288.
• New York-resident partner: the $700,000 share has a California source portion of $280,000, and the tax at 12.3 percent is $34,440.
• Texas-resident partner: the $500,000 share has a California source portion of $200,000, and the tax at 12.3 percent is $24,600.
• California total: $87,328.

New York. The corporate rate is 7.25 percent under section 210.1(a), and the individual rate is 10.90 percent under section 601(a)(1)(B)(vi), the 2023 table (Tax Law section 659-A(d)(3)(B)):

• Corporate partner: the $800,000 share has a New York portion at 30 percent of $240,000, and the tax at 7.25 percent is $17,400.
• Resident partner: the full $700,000 share is taxed at 10.90 percent, which is $76,300.
• Texas-resident partner: the $500,000 share has a New York portion of $150,000, and the tax at 10.90 percent is $16,350.
• New York total: $110,050.

The total for the two states, before interest and penalty, is $87,328 plus $110,050, or $197,378.

If the partnership pushes out federally. In California, the partnership files an amended nonresident group return for the two nonresident partners, with tax of $34,440 plus $24,600, or $59,040 at 12.3 percent, before any additional 1 percent under section 18535(a). The corporate partner amends under section 18622 ($28,288). In New York, the partnership files an amended Form IT-204 for 2023, and each partner files its own amended return ($17,400, $76,300 and $16,350 at the assumed rates). The state tax is the same here, on the assumptions stated. The differences are who writes the check, whose own tax attributes apply, and when. The dates are open, because the section 6203 trigger has no stated basis once the partnership is not assessed.

The 1 percent, both readings. On the 12.3 percent reading, the California group return is $59,040. On the 13.3 percent reading, the return is $37,240 on $280,000 at 13.3 percent, plus $26,600 on $200,000 at 13.3 percent, for a total of $63,840. On a push-out the 1 percent depends on each nonresident partner's own taxable income, so $63,840 is a ceiling on these facts and not a computed figure. The partnership-pays California total would be $28,288 plus $63,840, or $92,128, on the 13.3 percent reading, against $87,328 on the 12.3 percent reading.

What the example leaves out. It ignores interest, which starts at the original due date of the reviewed-year return in both states, penalties, and state modifications to the federal adjustment. It also omits four points. First, it omits the New York-resident partner's New York credit for the California tax on the same $280,000 share. Section 659-A(d)(6) preserves that credit for a resident direct partner even on the partnership-pays path. The credit's limit was not read, so the $197,378 total is a figure before that credit and taxes the California-sourced share in both states. Second, it omits that the Texas-resident partner pays tax in two states with no home-state credit on these facts. Third, it omits two items: New York City tax does not arise because the resident partner is outside the City, and the Texas franchise tax depends on whether the partnership does business in Texas. Fourth, it omits that the corporate partner's own New York apportionment on a push-out would replace the assumed 30 percent.

Practice notes

Calendar each state's dates from the date that state measures from, not from the federal date. California and New York measure from the section 6203 assessment date. Oregon measures from the notice of final partnership adjustment. Illinois and Texas measure from the date the federal change is final. New Jersey, Massachusetts, Minnesota and Georgia measure from the first day no federal adjustment remains to be finally determined. On a push-out, calendar California and New York from the earliest candidate date, the date the adjustments became final under Treas. Reg. section 301.6226-2(b)(1). In California, assessment is allowed for four years after a late report and at any time if no report is filed. Decide the state election before the federal election deadline passes. In California the federal path decides the state path unless a different election is requested and granted, and in New York the election is a notice within 90 days.

Add an operating-agreement clause that says who bears state tax paid under a partnership-pays election and under a push-out, and who may bind the partnership as state partnership representative. The statutes read do not allocate the burden among partners. Consider estimated payments in New York during a large audit, which the statute allows before the due date of the federal adjustments report. For a tiered structure, calendar the lower tier's statement date and then 90 days after it for each upper tier. Add composite, group and withholding returns to the checklist. Massachusetts, Minnesota, Georgia and New Jersey require amended composite or withholding reports inside the partnership's 90 days. New York requires an amended group return, and Oregon an amended composite return for nonresident direct partners. Report a California partnership-level tax on the Partnership Level Tax line, which is typically part of an amended partnership return. Leave the line empty on a timely original return. For Illinois, calendar 120 days on Form IL-1065-X from each federal finalization date and file a separate amended return for each. G&G State Tax Group advises partnerships and their partners on federal audit adjustments, state reporting and multistate procedure alongside its state and local tax practice.