Instructions For Form 2220 - Underpayment Of Estimated Tax By Corporations

2016

Department of the Treasury

Internal Revenue Service

Instructions for Form 2220

Underpayment of Estimated Tax by Corporations

Who Must Pay the Underpayment

Section references are to the Internal Revenue Code unless

otherwise noted.

Penalty

Future Developments

Generally, a corporation is subject to the penalty if it did not

timely pay at least the smaller of:

For the latest information about developments affecting Form

1. The tax shown on its 2016 return, or

2220 and its instructions, such as legislation enacted after

2. The tax shown on its 2015 return (if it filed a 2015

they were published, go to

return showing at least some amount of tax and the return

was for a full 12 months). However, a large corporation can

What’s New

base only its first required installment on the prior year's tax.

Changes in period of underpayment of estimated taxes.

In these instructions, “return” generally refers to the

For tax years beginning after 2015, in figuring the penalty for

corporation's original return. However, an amended return is

underpayment of corporate estimated taxes, the period for

considered the original return if the amended return is filed by

underpayment generally runs from the installment due date

the due date (including extensions) of the original return.

to the earlier of the date the payment is actually paid or the

Also, for purposes of determining a required installment, if an

15th day of the 4th month after the close of the tax year.

amended return is filed for the prior tax year, then “prior tax

Special rules apply to C corporations with tax years ending

year” includes the amended return, but only if the amended

June 30 and to S corporations. See the instructions for Part

return is filed before the applicable installment due date.

IV.

The penalty is figured separately for each installment due

Time for payment of estimated taxes for certain large

date. Therefore, the corporation may owe a penalty for an

corporations. Corporations with assets of $1 billion or more

earlier due date even if it paid enough tax later to make up

(determined as of the end of the corporation’s preceding tax

the underpayment. This is true even if the corporation is due

year), must increase the required installment of estimated tax

a refund when its return is filed. However, the corporation

due in July, August, or September of 2017 by 0.25% of the

may be able to reduce or eliminate the penalty by using the

amount that otherwise would have been due for that

annualized income installment method or the adjusted

installment. The amount of the next required installment

seasonal installment method. See the instructions for Part II

would be decreased by an equal amount to reflect the

for details.

increase in the previous installment.

Exception to the Penalty

General Instructions

A corporation will not have to pay a penalty if the tax shown

on the corporation's 2016 return (the Form 2220, Part I, line 3

Purpose of Form

amount) is less than $500.

How To Use Form 2220

Corporations (including S corporations), tax-exempt

organizations subject to the unrelated business income tax,

Complete lines 1 through 3 of Part I. If line 3 is $500 or

and private foundations use Form 2220 to determine:

more, complete the rest of Part I to determine the required

Whether they are subject to the penalty for underpayment

annual payment and go to Part II.

of estimated tax and, if so,

Check one or more boxes in Part II if the corporation uses

The amount of the underpayment penalty for the period

the adjusted seasonal installment method, the annualized

that applies.

income installment method, or if the corporation is a large

Who Must File

corporation.

Generally, the corporation does not have to file this form with

If the corporation checked a box in Part II, attach Form

2220 to the income tax return. Be sure to check the box on

its income tax return because the IRS will figure the amount

of any penalty and notify the corporation of any amount due.

Form 1120, page 1, line 33; or the comparable line of any

However, even if the corporation does not owe a penalty,

other income tax return the corporation is required to file (for

example, Form 1120-C, 1120-L, or 1120S).

complete and attach this form to the corporation's tax return if

the Part I, line 3 amount is $500 or more and any of the

Complete Part III to determine the underpayment for any of

following apply.

the installment due dates.

If there is an underpayment on Part III, line 17 (column (a),

1. The adjusted seasonal installment method is used.

(b), (c), or (d)), go to Part IV to figure the penalty.

2. The annualized income installment method is used.

Complete Schedule A if the corporation uses the adjusted

3. The corporation is a large corporation (as defined in

seasonal installment method and/or the annualized income

the instructions for Part II, line 8) figuring its first required

installment method.

installment based on the prior year's tax.

Jan 18, 2017

Cat. No. 64293P

Instructions For Form 2220 - Underpayment Of Estimated Tax By Corporations - 2016

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