Which states require a payment with a partnership's extension, how should a tiered partnership size it, and when are the penalties abated?

An extension moves the return, not the money

Every state read except Texas draws the same line. California: "An extension of time to file a tax return is not an extension of time to pay the tax" (FTB Form 3538 instructions). New York, on the elective tax: the extension is "not an extension of time to pay any tax due." Massachusetts: an extension to file "doesn't extend the due date for paying any tax due." Georgia: an extension "does not alter interest or penalty charges for late payment of tax." In Texas the extension is granted on a payment, and under the 90 percent option the Comptroller applies penalty and interest to any part of the remaining 10 percent not paid by the extended due date.

Five kinds of payment that do not wait for the extended return

• The elective entity tax, where elected. In California, the entity pays by June 15 of the taxable year the greater of $1,000 or 50 percent of the prior year's elective tax, then the remainder by the due date of the original return "without regard to any extension of time for filing the return" on Form FTB 3893 (Rev. and Tax. Code sections 19904(a)(2), 19914(a)(2)). The election "shall be made on an original, timely filed return" and not on an amended one (sections 19900(d), 19910(d)). For taxable years 2022 through 2025, a missed or short June 15 payment barred the election (section 19904(b)). For taxable years 2026 through 2030, under the new Part 10.4.1 added by SB 132 (Stats. 2025, Ch. 17), the entity "may make the election" even if no June 15 payment or a short one was made (section 19914(b)), but each qualified taxpayer's credit is "reduced by an amount equal to 12.5 percent of the qualified taxpayer's pro rata share of the amount due but not paid" on June 15 (section 17052.11(b)(2)(B)); both parts are operative only while the federal state and local tax deduction cap of IRC section 164(b)(6) remains in effect (sections 19906, 19916). In New York, an electing entity pays four installments, on March 15, June 15, September 15 and December 15 of the taxable year, each at least 25 percent of the required annual payment, and "must pay all the PTET by the original due date of the return," March 15; the online extension is for the return only. The annualized installment method is not available (NYS DTF, PTET page). The base is the income flowing to direct partners taxable under Article 22, so a corporate partner's share is outside it (TSB-M-21(1)C, (1)I). In Georgia, an electing partnership under O.C.G.A. section 48-7-23(b) pays its tax "by the statutory due date of the return (excluding extensions)," and the nonresident withholding statute "shall not apply" to it (section 48-7-129(e.1); Georgia Form 700 booklet). New Jersey's BAIT has its own extension form, PTE-200-T. How each election changes withholding and partner estimates is the subject of a separate article.
• Fixed entity-level charges. A California limited partnership's annual tax is "due and payable on the date the return is required to be filed," and Form FTB 3538 is the voucher when the return is extended; the extension does not reach the $800 tax (Rev. and Tax. Code section 17935(c); Form FTB 3538 instructions). A $400 first-year amount applies for taxable years beginning in 2027 through 2029 (section 17935(f)(2)). New York's LLC and partnership filing fee is due the same day, with "no extension of time to file Form IT-204-LL or pay the annual fee" (N.Y. Tax Law section 658(c)(3); Form IT-204-LL instructions). It rests on the preceding year's New York source gross income, so a lower tier's late K-1 moves a later fee and not this one.
• Entity charges paid during the year they cover. A California LLC's annual tax is due "on or before the 15th day of the fourth month of the taxable year" (section 17941(c)). Its fee is estimated and paid by the 15th day of the sixth month of the current year, with any balance due on the return's original date on Form FTB 3536 (section 17942(d)). Form FTB 3537, the LLC extension voucher, is for nonconsenting nonresident members' tax only, and its instructions bar its use for the annual tax or fee.
• Partner-level taxes the partnership pays. Georgia's nonresident withholding is due on the entity's return date "without regard to any extension," and an entity that fails to withhold and pay over "may be liable for a penalty equal to 25 percent of the amount not withheld and paid over" (O.C.G.A. section 48-7-129(a)(3), (d)(1); Form G-7-NRW). The duty rests on the entity that does business or owns property in Georgia "on its own and not as a result of being a member," and only "the members that directly own an interest" in it count. In a tiered structure the lower tier therefore withholds on the upper tier's whole share unless the upper tier elects in writing to withhold on its own nonresident members. Tax withheld at one level "can be claimed on a composite return at another level," and composite tax is likewise paid by the statutory date and not the extended one (Ga. Comp. R. & Regs. 560-7-8-.34(4), (5), (6)(b), as amended effective June 11, 2026; Form IT-CR). The 2026 amendment changed other paragraphs, among them (6)(c), which now sends Forms G2-RP and G2-LP with Form G-1003. New York's estimated tax on behalf of nonresident individual and C corporation partners is paid in four installments during the year, and Form IT-370-PF carries no partnership payment. No payment is made for a partner that is itself a partnership, so nothing flows up a tier, and a partner may remove itself by certifying on Form IT-2658-E or fall within the statute's group return and waiver exceptions (N.Y. Tax Law section 658(c)(4); Instructions for Form IT-2658). Pennsylvania's nonresident withholding runs quarterly, with a final catch-up payment due on the information return's date that may be sent with the extension request.
• Extensions conditioned on a payment, and one that is not. Texas grants the extension on payment of 90 percent of the tax reported on the November report, or 100 percent of the prior year's tax where the prior-year report was "filed on or before May 14" (Tex. Tax Code section 171.202(c)). An entity required to pay by electronic funds transfer extends first to August 15 and then to November 15 ((e), (f)). An entity whose prior-year report was late may extend only on the 90 percent payment ((i)), and an entity new to the tax in the previous year, or a separate entity that was in the prior year's combined report, cannot use the 100 percent option (34 Tex. Admin. Code section 3.585(c)(3)(B); Comptroller, Franchise Tax Extensions of Time to File). The rule prices a shortfall rather than voiding the extension (section 3.585(e)(3)). New Jersey denies the extension on Form PART-200-T unless 80 percent of the filing fee and installment payment is paid by the original date, and on Form CBT-206 unless 90 percent of the nonresident partner tax is paid, which a tiered partnership payment can supply; denial brings penalty and interest from the original due date. Massachusetts grants partnerships an automatic extension, but where a Form 3 filer owes tax the extension is voided if 80 percent of it is not paid by the original due date, with penalty and interest from that date (Mass. DOR extension page). California's extension is automatic and conditioned on nothing. A short payment costs the section 19132 penalty and interest, and a return filed after the extended date costs the section 19172 penalty of $18 per partner for each month, up to 12 months.

Sizing the payment when the K-1s arrive late

A prior-year safe harbor is the first choice wherever the state offers one, because it can be computed on the original due date from facts already known.

• California. The LLC fee carries no 10 percent estimate penalty "if the amount paid by the date prescribed in this subdivision is equal to or greater than the total amount of the fee of the limited liability company for the preceding taxable year" (section 17942(d)(2)).
• New York. The PTET required annual payment, which sets each installment, is the lesser of 90 percent of the current year's tax or 100 percent of the prior year's (90 percent of the current year where the entity did not elect for the prior year). Partner estimates are measured against the smaller of 90 percent of the current year's required estimated tax or 100 percent of the prior year's, or 110 percent where New York source income allocated to nonresident individuals and C corporations exceeds $150,000 (Instructions for Form IT-2658).
• Texas. The 100 percent option is open only where the prior-year report was filed by May 14, so a tiered entity that filed in November on extension must pay 90 percent of a tax it has not computed.

A safe harbor protects against the penalty it names; the balance still falls due on the original return date, and interest runs on it.

Where no safe harbor exists, the estimate is the defense. Georgia withholding has no prior-year measure in the statute, regulation or forms read, so the 25 percent penalty described above is the exposure for a short estimate. Texas prices a shortfall under the 90 percent option at the section 171.362 penalty, 5 percent of the tax due and a further 5 percent after 30 days, plus interest at the prime rate plus one percent from 60 days after the due date (Tex. Tax Code sections 171.362, 111.060).

As reasoning rather than authority, a prior-year proxy can fail in both directions in a tiered structure. A large lower-tier gain in the current year lowers the share of income sourced to states without the gain and raises it in the gain's state, so a prior-year percentage overpays some states and underpays others, and the safe harbors protect only against underpayment. New York's corporate rule describes a documented estimate as one built on what is known, with stated allowances for what is not (20 NYCRR 2392.1(e)(3)). It reaches the corporate taxes only, so it is not a method the partnership rules adopt.

When the estimate misses: reasonable cause and first-time relief

California. The late payment penalty applies "[u]nless it is shown that the failure is due to reasonable cause and not due to willful neglect," and the per-partner late filing penalty has the same exception (Rev. and Tax. Code sections 19132(a), 19172). A nonprecedential Office of Tax Appeals opinion states that reasonable cause "requires an analysis of an appellant's actions leading up to the late payment" and that "[d]ifficulty in calculating a tax liability does not, by itself, constitute reasonable cause for a late payment of tax," in a case where the LLC did not dispute that it had the information needed to calculate its tax (Appeal of Filament Lighting, LLC, 2026-OTA-077SCP (Nov. 21, 2025) (nonprecedential)). For a taxpayer relying on missing information, another nonprecedential opinion requires it to substantiate its efforts to obtain the information, to show the difficulty "directly caused the delay in payment," and to have made "a timely payment based upon a reasonable estimate" (Appeal of Maughan, 2019-OTA-426 (Dec. 18, 2019) (nonprecedential)). For the LLC's nonresident members' tax, the Form FTB 3537 instructions presume reasonable cause when 90 percent of the tax is paid by the original due date, and interest remains mandatory. One-time abatement under section 19132.5 is available to "[a]n individual taxpayer" for a return "filed by an individual," and in Filament the Office of Tax Appeals held that it could not grant the abatement to a business entity. Whether the 10 percent LLC fee estimate penalty can be waived for reasonable cause is not stated in section 17942(d) or the Form 3536 instructions.

New York. The partner estimate rules carry two different sanctions, and they stay apart. The underpayment addition in Tax Law section 658(c)(4)(C)(ii) is computed under section 685(c), which has no reasonable cause exception. Its only waivers are in section 685(d)(4), for "casualty, disaster or other unusual circumstances" that make the addition "against equity and good conscience," or for a taxpayer who retired after age 62 or became disabled. No source read says whether a late lower-tier K-1 is an "unusual circumstance." The $50 per-partner penalty in section 658(c)(4)(C)(i) does carry a reasonable cause exception, and 20 NYCRR 2392.1 governs it. Subdivision (c) denies reasonable cause where an extension could have been requested and was not, paragraph (d)(3) allows inability to assemble information only where a return with a statement of facts was timely filed and the ascertainable tax timely paid, and subdivision (e)(1) removes the ground altogether for Article 22, the personal income tax article that contains section 658. The regulation also presumes reasonable cause for the section 685(a)(2) late payment addition where the taxpayer obtained the automatic extension, the tax shown exceeds the tax paid by the due date by "no greater than 10 percent of the amount of tax shown on the tax return," and "any balance due shown on the tax return is remitted with such return" (20 NYCRR 2392.1(c)(2)). It is New York's counterpart to the FTB's 90 percent presumption and speaks to late payment of the tax shown on a return, not to the section 685(c) addition.

The PTET has its own version of the split. The Department's page says late or short PTET payments are penalized under the rules in Article 22, so the split is between the section 685(c) addition on the four installments (no reasonable cause; the section 685(d)(4) waivers only) and the section 685(a)(2) late payment addition on a balance paid after March 15 (reasonable cause, with the (c)(2) presumption where its conditions are met). No PTET-specific source read names either addition, and whether the presumption reaches a PTET annual return is unaddressed. The department's likely position is that, on a partner estimate or PTET installment underpayment, it answers a reasonable cause request with section 685(c) and (d)(4) and does not reach the regulation.

Other states. The Texas Comptroller may settle a claim for penalty or interest where the taxpayer "exercised reasonable diligence to comply" (Tex. Tax Code section 111.103(a)). Oregon waives a penalty for "circumstances beyond the taxpayer's control" that existed when the return or payment was due and otherwise considers a one-period waiver for a taxpayer with "a history of filing and paying on time" (Or. Admin. R. 150-305-0068). The Georgia and Massachusetts pages read state penalties but no waiver standard, and the sources read state no first-time relief for New York, Texas, Georgia or Massachusetts.

Interest is a separate question

Massachusetts states it directly: "Any amount due will incur interest even if a valid extension is on file." The Georgia booklet says the same of interest, California's Form 3537 instructions treat interest on the nonresident members' tax as mandatory, and Texas interest runs from 60 days after the due date. Penalty relief, where granted, does not of itself remove interest on tax paid after the original date.

A worked example

Facts (invented). A Delaware LLC taxed as a partnership (the "holding LLC") holds interests in six lower-tier partnerships that own commercial real estate and two operating businesses, and earns management fees of its own from a Texas office; it has no activity of its own in Georgia. Net distributive income from a taxable entity treated as a partnership is subtracted in computing its Texas total revenue, so on these facts its Texas tax rests on those fees (Tex. Tax Code section 171.1011(c)). Its partners are a C corporation (60 percent) and nonresident individuals who live in none of the states concerned (40 percent). It is registered in California, files in New York, Georgia and Texas, and has a calendar year. Its lower-tier K-1s arrive in August of the following year, and in the current year one lower tier sells a Georgia building at a large gain. The example assumes the holding LLC is a qualified entity for the California elective tax and an eligible entity for the New York PTET, with the individuals as the qualified taxpayers, so the C corporation partner's share is outside both bases. The computations are separate illustrations.

California elective tax. The prior year's elective tax paid was $90,000, so the June 15 prepayment is the greater of $1,000 or $45,000. - Path A: it pays $45,000 on June 15, and in August of the following year the current-year tax computes at $140,000. The $95,000 balance was due on March 15 of the following year without regard to extension, so it is late unless an estimated balance was paid by then. The FTB's page states no rate, so no penalty is computed. - Path B (taxable years 2026 through 2030): it pays nothing on June 15. The election survives on the timely filed original return, but the qualified taxpayers' credits are reduced in total by 12.5 percent of the unpaid $45,000, or $5,625, shared pro rata.

California LLC fee. Total income from California was $3,000,000 in the prior year (fee $6,000) and, known only in August of the following year, is $6,000,000 in the current year (fee $11,790). - Path A: by June 15 it pays $6,000 on Form FTB 3536. The shortfall is $5,790 ($11,790 less $6,000), but the payment equals the prior year's fee, so no 10 percent estimate penalty applies. The $5,790 balance was due by March 15 of the following year. Paid on August 15, five months late, it draws the section 19132 penalty: 5 percent, $289.50, plus 0.5 percent of the remaining tax, $28.95, "for each additional month or fraction thereof." If "additional" counts only the months after the first, four months add $115.80, for $405.30; if every month counts, five months add $144.75, for $434.25. Interest is added on either reading, and neither the statute's text nor an FTB pronouncement read resolves the two readings. - Path B: it pays $2,500 in June on a guess. The shortfall is $9,290 and the 10 percent estimate penalty is $929, because $2,500 is less than the prior year's $6,000.

California nonconsenting members' tax. One nonresident individual member (10 percent) does not sign the consent. The LLC pays $30,000 on Form FTB 3537 by March 15 of the following year, and the August K-1s put the tax at $33,000. The payment is 90.9 percent of the tax, so reasonable cause is presumed, and interest on the $3,000 balance is mandatory.

New York PTET. The base is the individuals' 40 percent. Prior-year PTET was $300,000, and the current-year PTET, known in August of the following year, is $600,000. The required annual payment is the lesser of $540,000 (90 percent of $600,000) or $300,000, so $300,000, paid as four installments of $75,000 on March 15, June 15, September 15 and December 15 of the current year. The $300,000 balance is due with the annual return on March 15 of the following year. The online extension moves the return to September 15 and the payment not at all, so the balance is late unless an estimated balance is paid by March 15. The installments carry no section 685(c) addition, and the late balance is a section 685(a)(2) question. The (c)(2) presumption would not help even if it reaches a PTET return, because only 50 percent of the tax shown was paid by March 15 and the $300,000 shortfall exceeds 10 percent of it, $60,000.

New York partner estimates. The prior year's required estimated tax for the nonresident individuals and the C corporation partner was $200,000, with New York source income allocated to them above $150,000, so the prior-year measure is 110 percent, or $220,000. Ninety percent of the current year's $500,000, known in August of the following year, is $450,000. The smaller figure, $220,000, is $55,000 per installment on April 15, June 15, September 15 and January 15, and paying it avoids the section 685(c) addition however large the current year turns out.

Texas extension. The prior-year Texas tax was $8,000, below the $10,000 of franchise tax paid in the preceding fiscal year that makes a taxpayer an electronic funds transfer payer (Tex. Tax Code section 111.0625(b)), so the single May extension applies. The holding LLC is part of no Texas combined group. - Path A: the prior-year report was filed on or before May 14. In May the holding LLC requests the extension and pays $8,000, the 100 percent option. The extension holds however large the November report is, and the balance is paid with the report by November 15. - Path B: the prior-year report was filed in November on extension, so the 100 percent option is closed. The holding LLC pays $16,000 on its own estimate under the 90 percent option, and the November report shows $20,000. Ninety percent is $18,000, so the shortfall the rule prices is $2,000, on which the section 171.362 penalty is $100, and a further $100 after 30 days, plus interest. If the $4,000 balance is not paid by November 15, the rule adds penalty and interest on 10 percent of the tax, $2,000.

Georgia withholding. The lower-tier partnership that owns the Georgia building does business in Georgia on its own, so it is the withholding agent, and its direct member, the holding LLC, is the nonresident member whose whole distributive share is withheld on (Ga. Comp. R. & Regs. 560-7-8-.34(4)(a), (4)(d)). - Path A: the lower tier estimates the holding LLC's share of Georgia-sourced taxable income at $1,500,000 and withholds 4 percent, $60,000, on Form G-7-NRW by its unextended return date. The August K-1s put the share at $2,500,000, so withholding is $100,000, the shortfall is $40,000, and the 25 percent penalty the statute allows on the amount not withheld is $10,000, plus interest. - Path B: the holding LLC elects in writing under paragraph (5) to withhold on its own nonresident members, which relieves the lower tier unless the holding LLC fails to withhold as elected. The computation counts the individual members only; the regulation's treatment of the C corporation member is not addressed here. Their 40 percent of the $1,500,000 estimate is $600,000, and 4 percent is $24,000. On the August figures their share is $1,000,000, withholding is $40,000, the shortfall is $16,000 and the same penalty is $4,000. - Path C: the lower tier elects the section 48-7-23(b) entity tax. The withholding section "shall not apply," and the tax is paid on Form IT-560C by the statutory due date.

What the example shows. The safe harbors are computed from last year's numbers and hold whatever the K-1s later say, but they remove the estimate penalty and not the balance, which on these facts is late in California and New York unless an estimated balance is paid by March 15. Where none exists, as with Georgia withholding and Texas for a late prior-year filer, the estimate carries the penalty risk.

Practice notes

The sound sequence is a payment calendar built from the original due dates and not the extended ones: the elective tax dates first, then California's LLC tax in April and fee estimate in June of the year itself, New York's filing fee and partner installments, and Georgia withholding at the tier that owes it. Within each state the prior-year safe harbor comes first, followed by a separate decision on whether the current-year picture justifies an estimated balance by the original date. In Texas the opening question each year is whether the prior-year report went in by May 14. Where no safe harbor exists, the estimate's basis is written down when it is made: what lower-tier data was in hand, what was missing, and what allowance was added, which is the record New York's corporate rule and the Office of Tax Appeals ask for. Each California payment goes on its own voucher: 3893 for the elective tax, 3538 for a limited partnership's tax, 3536 for an LLC's fee and fee balance, and 3537 only for nonconsenting nonresident members' tax. In Georgia the tier that withholds is settled at the start of the year, along with any election to withhold at the upper tier or to pay the section 48-7-23(b) tax. An upper tier's extension estimates are read by others, since its partners size their own estimated payments from them. G&G State Tax Group provides extension payment planning and penalty abatement requests for tiered partnerships alongside its state and local tax practice.