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about making a same-day wire payment

Form 720, Quarterly Federal Excise

For details, including exceptions, see

and download the Same-Day Payment

Tax Return;

section 475, the related regulations, and

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Worksheet, visit

Form 941, Employer’s QUARTERLY

Rev. Rul. 97-39, 1997-39 I.R.B, 4.

Federal Tax Return;

Dealers in commodities and traders in

Estimated Tax Payments

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Form 944, Employer’s ANNUAL

securities and commodities may elect,

Federal Tax Return; or

with some exceptions, to use the

Generally, the following rules apply to the

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Form 945, Annual Return of Withheld

mark-to-market accounting method. To

RIC’s payments of estimated tax.

Federal Income Tax.

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The RIC must make installment

make the election, the RIC must file a

statement describing the election, the first

payments of estimated tax if it expects its

The trust fund recovery penalty may

tax year the election is to be effective,

total tax for the year (less applicable

be imposed on all persons who are

and in the case of an election for traders

credits) to be $500 or more.

determined by the IRS to be responsible

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in securities or commodities, the trade or

The installments are due by the 15th

for collecting, accounting for, and paying

day of the 4th, 6th, 9th, and 12th months

business for which the election is made.

over these taxes, and who acted willfully

Except for new taxpayers, the statement

of the tax year. If any date falls on a

in not doing so. The penalty is equal to

must be filed by the due date (not

Saturday, Sunday, or legal holiday, the

the full amount of the unpaid trust fund

including extensions) of the income tax

installment is due on the next regular

tax. See the Instructions for Form 720 or

return for the tax year immediately

business day.

Pub. 15 (Circular E), for details, including

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preceding the election year and attached

Use Form 1120-W, Estimated Tax for

the definition of responsible persons.

to that return, or if applicable, to a request

Corporations, as a worksheet to compute

Other penalties. Other penalties can be

for an extension of time to file that return.

estimated tax.

imposed for negligence, substantial

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If the RIC overpaid its estimated tax, it

For more details, see Rev. Proc. 99-17,

understatement of tax, reportable

1999-7 I.R.B. 52, and sections 475(e) and

may be able to get a quick refund by filing

transaction understatements, and fraud.

(f).

Form 4466, Corporation Application for

See sections 6662, 6662A, and 6663.

Quick Refund of Overpayment of

Change in accounting method.

Estimated Tax. The overpayment must be

Generally, the RIC must get IRS consent

Accounting Methods

at least 10% of the RIC’s expected

to change the method of accounting used

income tax liability and at least $500.

Figure taxable income using the method

to report taxable income (for income as a

of accounting regularly used in keeping

whole or for the treatment of any material

For more information, including

the RIC’s books and records. In all cases,

item). To do so, the RIC must file Form

penalties, see the instructions for line 29,

the method used must clearly reflect

3115, Application for Change in

Estimated tax penalty, on page 10.

taxable income.

Accounting Method. See Form 3115 and

Interest and Penalties

Pub. 538, Accounting Periods and

Generally, permissible methods

Methods, for more information.

include:

Interest. Interest is charged on taxes

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Cash,

There are some instances when the

paid late even if an extension of time to

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Accrual, or

RIC can obtain automatic consent from

file is granted. Interest is also charged on

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Any other method authorized by the

the IRS to change to certain accounting

penalties imposed for failure to file,

Internal Revenue Code.

methods. See Rev. Proc. 2008-52,

negligence, fraud, substantial valuation

2008-36 I.R.B. 587, and Rev. Proc.

misstatements, substantial

Accrual method. Generally, a RIC must

2009-39, 2009-38 I.R.B. 371.

understatements of tax, and reportable

use the accrual method of accounting if

Note. If the RIC is filing an application

transaction understatements from the due

its average annual gross receipts exceed

for a change in accounting method filed

date (including extensions) to the date of

$5 million. See section 448(c).

on or after January 10, 2011, for a year of

payment. The interest charge is figured at

Under the accrual method, an amount

change ending on or after April 30, 2010,

a rate determined under section 6621.

is includible in income when:

see Rev. Proc. 2011-14, 2011-4 I.R.B.

Late filing of return. A RIC that does

1. All the events have occurred that fix

330.

not file its tax return by the due date,

the right to receive the income, which is

including extensions, may be penalized

Accounting Periods

the earliest of the date:

5% of the unpaid tax for each month or

a. the required performance takes

part of a month the return is late, up to a

A RIC must figure its taxable income on

place,

maximum of 25% of the unpaid tax. The

the basis of a tax year. A tax year is the

b. payment is due, or

minimum penalty for a return that is over

annual accounting period a RIC uses to

c. payment is received, and

60 days late is the smaller of the tax due

keep its records and report its income and

2. The amount can be determined

or $135. The penalty will not be imposed

expenses. RICs can use a calendar year

with reasonable accuracy.

if the RIC can show that the failure to file

or a fiscal year. For more information

on time was due to reasonable cause.

about accounting periods, see

See Regulations section 1.451-1(a)

RICs that file late should attach a

Regulations sections 1.441-1 and

and Pub. 538, Accounting Periods and

statement explaining the reasonable

1.441-2.

Methods, for details.

cause.

Change of tax year. Generally, a RIC

Mark-to-market accounting method.

Late payment of tax. A RIC that does

must receive consent from the IRS before

Generally, dealers in securities must use

not pay the tax when due generally may

changing its tax year. To obtain the

the mark-to-market accounting method

be penalized

of 1% of the unpaid tax

consent, file Form 1128, Application To

described in section 475. Under this

for each month or part of a month the tax

Adopt, Change, or Retain a Tax Year.

method, any security that is inventory to

is not paid, up to a maximum of 25% of

However, under certain conditions, a RIC

the dealer must be held at its fair market

the unpaid tax. The penalty will not be

may change its tax year without obtaining

value (FMV).

imposed if the RIC can show that the

the consent.

failure to pay on time was due to

Any security held by a dealer that is

See the Instructions for Form 1128

reasonable cause.

not inventory and held at the close of the

and Pub. 538 for more information on

Trust fund recovery penalty. This

tax year is treated as sold at its FMV on

accounting periods and tax years.

penalty may apply if certain excise,

the last business day of the tax year. Any

Rounding Off to

income, social security, and Medicare

resulting gain or loss must be taken into

taxes that must be collected or withheld

account that year in determining gross

Whole Dollars

are not collected or withheld, or these

income. The gain or loss taken into

taxes are not paid. These taxes are

account is generally treated as ordinary

A RIC can round off cents to whole

generally reported on:

gain or loss.

dollars on its return and schedules. If the

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Instructions For Form 1120-Ric - U.s. Income Tax Return For Regulated Investment Companies - Internal Revenue Service - 2010 Page 4

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