Form IT-2659-I: Instructions for Estimated Tax Penalties for Partnerships and NY S Corporations (2025)

Form IT-2659-I is the instruction booklet the New York State Department of Taxation and Finance publishes alongside Form IT-2659, Estimated Tax Penalties for Partnerships and New York S Corporations. If your partnership or S corporation didn’t pay enough estimated tax during the year, or paid it late, this document walks you through how the state calculates the penalty and how you report it. It’s not a form you file by itself — it’s the guide that explains how to fill out IT-2659 correctly.

These instructions apply to Tax Year 2025 and reflect the current underpayment penalty rules for pass-through entities that are subject to New York’s estimated tax requirements. Since New York treats certain partnerships and S corporations as having their own estimated payment obligations (separate from what individual partners or shareholders owe), the state needs a mechanism to penalize underpayment at the entity level, and that’s exactly what this form and its instructions address.

Who Needs This Form

You’ll need Form IT-2659 and its instructions if you’re filing on behalf of a partnership or a New York S corporation that was required to make estimated tax payments during 2025 and either underpaid, paid late, or skipped an installment entirely. This typically comes up for entities that owe New York’s filing fee or that have partners/shareholders subject to specific withholding or estimated payment rules tied to the entity’s income.

If your entity consistently met its quarterly estimated payment obligations on time and in full, you likely won’t need to touch this form. But if there’s any gap between what was due and what was actually paid — even a partial or temporary shortfall — the instructions in IT-2659-I explain how to determine whether a penalty applies and how much it will be.

When and How It’s Used

The instructions are used at the point you’re preparing your entity’s estimated tax penalty calculation, generally when filing your annual return or when the Department has flagged a shortfall in quarterly payments. The booklet breaks down the penalty computation period by period, showing how underpayment interest accrues from the original due date of each missed or short installment until it’s paid or until the return’s due date, whichever comes first.

Because this form ties directly into your partnership’s broader New York filing obligations, it often gets used in conjunction with the entity’s main return. If you’re also working through Form IT-204-I instructions for the New York Partnership Return, it’s worth reviewing both together, since the estimated tax figures reported on IT-204 often feed directly into the penalty calculation on IT-2659.

How to Get and Complete It

Form IT-2659-I is available as a PDF directly from the New York State Department of Taxation and Finance website. Unlike some state forms, this one is not fillable digitally — you’ll need to print it out and complete it by hand. Have your quarterly payment records, due dates, and amounts paid on hand before you start, since the calculation walks through each installment period separately.

Work through the instructions in order: they’ll have you identify the required installment amounts, compare them against what was actually paid by each due date, and calculate any resulting penalty using the applicable interest rate for the period. If your entity also has nonresident partners or shareholders with allocation questions, it may help to cross-reference Form IT-203-A instructions for business allocation, since allocation issues can affect how much estimated tax was actually owed in the first place.

Entities that also deal with New York City unincorporated business tax credits may find it useful to review the Form IT-219 instructions as well, particularly if credits affect your entity’s overall estimated tax liability for the year. Keep a copy of your completed IT-2659 and supporting payment records with your entity’s tax file in case the Department requests documentation later.