Page 99 - BusinessStructures & Forms

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
on its behalf. Also, it may arrange for its • If the corporation overpaid estimated income, social security, and Medicare
financial institution to submit a same-day tax, it may be able to get a quick refund by taxes that must be collected or withheld
payment (discussed below) on its behalf. filing Form 4466, Corporation Application are not collected or withheld, or these
EFTPS is a free service provided by the for Quick Refund of Overpayment of taxes are not paid. These taxes are
Department of the Treasury. Services Estimated Tax. See the instructions for generally reported on:
provided by a tax professional, financial Schedule J, Part III, line 15, later. • Form 720, Quarterly Federal Excise
institution, payroll service, or other third Tax Return;
party may have a fee. See section 6655 for more information • Form 941, Employer's QUARTERLY
To get more information about EFTPS on how to figure estimated taxes. Federal Tax Return;
• Form 943, Employer's Annual Federal
or to enroll in EFTPS, visit EFTPS.gov or Estimated tax penalty. A corporation Tax Return for Agricultural Employees;
call 800-555-4477. To contact EFTPS that does not make estimated tax • Form 944, Employer's ANNUAL
using the Telecommunications Relay payments when due may be subject to an Federal Tax Return; or
Services (TRS), for people who are deaf, underpayment penalty for the period of • Form 945, Annual Return of Withheld
hard of hearing, or have a speech underpayment. Generally, a corporation is Federal Income Tax.
disability, dial 711 and provide the TRS subject to the penalty if its tax liability is
assistant the 800-555-4477 number above $500 or more and it did not timely pay at The trust fund recovery penalty may be
or 800-733-4829. least the smaller of: imposed on all persons who are
determined by the IRS to have been
Depositing on time. For any deposit • Its tax liability for the current year, or responsible for collecting, accounting for,
• Its prior year's tax.
made by EFTPS to be on time, the or paying over these taxes, and who acted
corporation must submit the deposit by 8 Use Form 2220, Underpayment of willfully in not doing so. The penalty is
p.m. Eastern time the day before the date Estimated Tax by Corporations, to see if equal to the full amount of the unpaid trust
the deposit is due. If the corporation uses the corporation owes a penalty and to fund tax. See the Instructions for Form
a third party to make deposits on its figure the amount of the penalty. If Form 720, Pub. 15 (Circular E), Employer's Tax
behalf, they may have different cutoff 2220 is completed, enter the penalty on Guide, or Pub. 51 (Circular A), Agricultural
times. line 34. See the instructions for line 34. Employer's Tax Guide, for details,
Same-day wire payment option. If the Interest and Penalties including the definition of responsible
corporation fails to submit a deposit persons.
transaction on EFTPS by 8 p.m. Eastern If the corporation receives a notice Note. The trust fund recovery penalty will
time the day before the date a deposit is ! about penalties after it files its not apply to any amount of trust fund taxes
due, it can still make its deposit on time by CAUTION return, send the IRS an an employer holds back in anticipation of
using the Federal Tax Collection Service explanation and we will determine if the the credit for qualified sick and family
(FTCS). To use the same-day wire corporation meets reasonable-cause
payment method, the corporation will need criteria. Do not attach an explanation leave wages or the employee retention
credit that they are entitled to. See Pub. 15
to make arrangements with its financial when the corporation's return is filed. or Pub. 51 for more information.
institution ahead of time regarding
availability, deadlines, and costs. Interest. Interest is charged on taxes Other penalties. Other penalties can be
Financial institutions may charge a fee for paid late even if an extension of time to file imposed for negligence, substantial
payments made this way. To learn more is granted. Interest is also charged on understatement of tax, reportable
about the information the corporation will penalties imposed for failure to file, transaction understatements, and fraud.
need to provide to its financial institution to negligence, fraud, substantial valuation See sections 6662, 6662A, and 6663.
make a same-day wire payment, go to misstatements, substantial
IRS.gov/SameDayWire. understatements of tax, and reportable
transaction understatements from the due Accounting Methods
Estimated Tax Payments date (including extensions) to the date of Figure taxable income using the method of
payment. The interest charge is figured at accounting regularly used in keeping the
Generally, the following rules apply to the a rate determined under section 6621. corporation's books and records. In all
corporation's payments of estimated tax. Late filing of return. A corporation that cases, the method used must clearly show
• The corporation must make installment does not file its tax return by the due date, taxable income. Permissible methods
payments of estimated tax if it expects its including extensions, may be penalized include cash, accrual, or any other method
total tax for the year (less applicable 5% of the unpaid tax for each month or authorized by the Internal Revenue Code.
credits) to be $500 or more. part of a month the return is late, up to a
• The installments are due by the 15th maximum of 25% of the unpaid tax. The Generally, the following rules apply. For
day of the 4th, 6th, 9th, and 12th months minimum penalty for a return that is more more information, see Pub. 538,
of the tax year. If any date falls on a than 60 days late is the smaller of the tax Accounting Periods and Methods.
Saturday, Sunday, or legal holiday, the due or $450. The penalty will not be • A corporation, or a partnership that has
installment is due on the next regular imposed if the corporation can show that a corporation as a partner, cannot use the
business day. the failure to file on time was due to cash method of accounting unless it is a
• The corporation must use electronic reasonable cause. See Caution, earlier. small business taxpayer (defined later). A
funds transfer to make installment Late payment of tax. A corporation that tax shelter (defined in section 448(d)(3))
payments of estimated tax. may never use the cash method. See
• If, after the corporation figures and does not pay the tax when due may sections 448(a)(1) through (a)(3).
1
deposits estimated tax, it finds that its tax generally be penalized /2 of 1% of the However, see Nonaccrual experience
unpaid tax for each month or part of a
liability for the year will be more or less month the tax is not paid, up to a method for service providers in the
than originally estimated, it may have to maximum of 25% of the unpaid tax. See instructions for line 1a.
refigure its required installments. If earlier • Unless it is a small business taxpayer
installments were underpaid, the Caution, earlier. (defined below), a corporation must use
corporation may owe a penalty. See Trust fund recovery penalty. This an accrual method for sales and
Estimated tax penalty, later. penalty may apply if certain excise,

Instructions for Form 1120 -5-