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Tax Payments

Quick Refund of Overpayment of

understatement of tax, reportable

Estimated Tax. The overpayment must be

transaction understatements, and fraud.

The RIC must pay the tax due in full no

at least 10% of the RIC’s expected

See sections 6662, 6662A, and 6663.

later than the 15th day of the 3rd month

income tax liability and at least $500.

after the end of the tax year.

Accounting Methods

For more information, including

Electronic Deposit Requirement

penalties, see the instructions for line 29,

Figure taxable income using the method

RICs must use electronic funds transfers

Estimated tax penalty, later.

of accounting regularly used in keeping

to make all federal tax deposits (such as

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

Interest and Penalties

deposits of employment, excise, and

the method used must clearly reflect

corporate income tax). Generally,

taxable income.

Interest. Interest is charged on taxes

electronic funds transfers are made using

Generally, permissible methods

paid late even if an extension of time to

the Electronic Federal Tax Payment

include:

file is granted. Interest is also charged on

System (EFTPS). However, if the RIC

•

Cash,

penalties imposed for failure to file,

does not want to use EFTPS, it can

•

Accrual, or

negligence, fraud, substantial valuation

arrange for its tax professional, financial

•

Any other method authorized by the

misstatements, substantial

institution, payroll service, or other trusted

Internal Revenue Code.

understatements of tax, and reportable

third party to make deposits on its behalf.

transaction understatements from the due

Accrual method. Generally, a RIC must

Also, it may arrange for its financial

date (including extensions) to the date of

use the accrual method of accounting if

institution to initiate a same-day tax wire

payment. The interest charge is figured at

its average annual gross receipts exceed

payment (discussed below) on its behalf.

a rate determined under section 6621.

$5 million. See section 448(c).

EFTPS is a free service provided by the

Late filing of return. A RIC that does

Department of the Treasury. Services

Under the accrual method, an amount

not file its tax return by the due date,

provided by a tax professional, financial

is includible in income when:

including extensions, may be penalized

institution, payroll service, or other third

1. All the events have occurred that fix

5% of the unpaid tax for each month or

party may have a fee.

the right to receive the income, which is

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

To get more information about EFTPS

the earliest of the date:

maximum of 25% of the unpaid tax. The

or to enroll in EFTPS, visit ,

a. the required performance takes

minimum penalty for a return that is over

or call 1-800-555-4477. Additional

place,

60 days late is the smaller of the tax due

information about EFTPS is also available

b. payment is due, or

or $135. The penalty will not be imposed

in Pub. 966, The Secure Way to Pay Your

c. payment is received, and

if the RIC can show that the failure to file

Federal Taxes.

2. The amount can be determined

on time was due to reasonable cause.

Note. Forms 8109 and 8109-B, Federal

with reasonable accuracy.

Late payment of tax. A RIC that does

Tax Coupon, can no longer be used to

not pay the tax when due generally may

make federal tax deposits.

See Regulations section 1.451-1(a)

be penalized

of 1% of the unpaid tax

Depositing on time. For deposits made

and Pub. 538, Accounting Periods and

for each month or part of a month the tax

Methods, for details.

by EFTPS to be on time, the RIC must

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

initiate the deposit by 8 p.m. Eastern time

Mark-to-market accounting method.

the unpaid tax. The penalty will not be

the day before the date the deposit is

Generally, dealers in securities must use

imposed if the RIC can show that the

due. If the RIC uses a third party to make

the mark-to-market accounting method

failure to pay on time was due to

deposits on its behalf, they may have

described in section 475. Under this

reasonable cause.

different cutoff times.

method, any security that is inventory to

Reasonable cause determinations. If

Same-day wire payment option. If the

the dealer must be held at its fair market

the RIC receives a notice about interest

RIC fails to initiate a deposit transaction

value (FMV).

and penalties after it files its return, send

on EFTPS by 8 p.m. Eastern time on the

the IRS an explanation and we will

Any security held by a dealer that is

day before the date a deposit is due, it

determine if the RIC meets the

not inventory and held at the close of the

can still make the deposit on time by

reasonable cause criteria. Do not attach

tax year is treated as sold at its FMV on

using the Federal Tax Application (FTA).

an explanation when the RIC’s return is

the last business day of the tax year. Any

Before using the same-day wire payment

filed.

resulting gain or loss must be taken into

option, the RIC will need to make

account that year in determining gross

Trust fund recovery penalty. This

arrangements with its financial institution

income. The gain or loss taken into

penalty may apply if certain excise,

ahead of time. Please check with the

account is generally treated as ordinary

income, social security, and Medicare

financial institution regarding availability,

gain or loss.

taxes that must be collected or withheld

deadlines, and costs. To learn more

are not collected or withheld, or these

For details, including exceptions, see

about making a same-day wire payment

taxes are not paid. These taxes are

section 475, the related regulations, and

and download the Same-Day Payment

generally reported on:

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

Worksheet, visit

•

Form 720, Quarterly Federal Excise

Dealers in commodities and traders in

Estimated Tax Payments

Tax Return;

securities and commodities may elect,

•

Form 941, Employer’s QUARTERLY

Generally, the following rules apply to the

with some exceptions, to use the

Federal Tax Return;

RIC’s payments of estimated tax.

mark-to-market accounting method. To

•

Form 944, Employer’s ANNUAL

•

The RIC must make installment

make the election, the RIC must file a

Federal Tax Return; or

payments of estimated tax if it expects its

statement describing the election, the first

•

Form 945, Annual Return of Withheld

total tax for the year (less applicable

tax year the election is to be effective,

Federal Income Tax.

credits) to be $500 or more.

and in the case of an election for traders

•

The trust fund recovery penalty may

The installments are due by the 15th

in securities or commodities, the trade or

be imposed on all persons who are

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

business for which the election is made.

determined by the IRS to be responsible

of the tax year. If any date falls on a

Except for new taxpayers, the statement

for collecting, accounting for, and paying

Saturday, Sunday, or legal holiday, the

must be filed by the due date (not

over these taxes, and who acted willfully

installment is due on the next regular

including extensions) of the income tax

in not doing so. The penalty is equal to

business day.

return for the tax year immediately

•

the full amount of the unpaid trust fund

Use Form 1120-W, Estimated Tax for

preceding the election year and attached

tax. See the Instructions for Form 720 or

Corporations, as a worksheet to compute

to that return, or if applicable, to a request

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

estimated tax.

for an extension of time to file that return.

•

the definition of responsible persons.

If the RIC overpaid its estimated tax, it

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

Other penalties. Other penalties can be

may be able to get a quick refund by filing

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

Form 4466, Corporation Application for

imposed for negligence, substantial

(f).

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Instructions For Form 1120-Ric - U.s. Income Tax Return For Regulated Investment Companies - Internal Revenue Service - 2011 Page 4

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