Instructions For Form 1120-Sf - (Rev. Sept. 1996) Page 2
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4amount less than 50 cents and increase
more. The installments are due by the
can show that the failure to pay on time
any amount from 50 cents through 99
15th day of the 4th, 6th, 9th, and 12th
was due to reasonable cause.
cents to the next higher dollar.
months of the tax year. If any date falls
Trust fund recovery penalty.—This
on a Saturday, Sunday, or legal holiday,
penalty may apply if certain excise,
the installment is due on the next regular
Depository Method of Tax
income, social security, and Medicare
business day.
taxes that must be collected or withheld
Payment
Use Form 1120-W, Estimated Tax for
are not collected or withheld, or these
The fund must pay the tax due in full no
Corporations, as a worksheet to
taxes are not paid to the IRS. These
later than the 15th day of the 3rd month
compute estimated tax. The following
taxes are generally reported on Forms
after the end of the tax year. Some
instructions refer to the 1996 Form
720, 941, 943, or 945. (See Other
funds (described below) are required to
1120-W. Enter expected modified gross
Forms That May Be Required below.)
electronically deposit all depository
income on line 1 of Form 1120-W. Skip
The trust fund recovery penalty may be
taxes, including fund income tax
lines 2 through 20 and enter 39.6% of
imposed on all persons who are
payments.
the estimated modified gross income for
determined by the IRS to have been
Electronic deposit requirement.—If the
the tax year on line 21. Complete the
responsible for collecting, accounting
fund’s total deposits of social security,
rest of Form 1120-W in accordance with
for, and paying over these taxes, and
Medicare, and withheld income taxes
its instructions. Use deposit coupons
who acted willfully in not doing so. The
were more than $50,000 in 1995, it must
(Form 8109) to make deposits of
penalty is equal to the unpaid trust fund
make electronic deposits for all
estimated tax or use the EFTPS, if
tax. See the instructions for Form 720 or
depository tax liabilities that occur after
applicable.
Pub. 15 (Circular E), Employer’s Tax
June 30, 1997. If the fund was required
Guide, for details, including the definition
For information on penalties that apply
to deposit by electronic funds transfer in
of responsible persons.
if the fund fails to make required
prior years, it must continue to do so in
payments, see the instructions for line
Other penalties.—Other penalties can
1997. The Electronic Federal Tax
18 on page 4.
be imposed for negligence, substantial
Payment System (EFTPS) must be used
understatement of tax, and fraud. See
If the fund overpaid estimated tax, it
to make electronic deposits. If the fund
sections 6662 and 6663.
may be able to get a “quick refund” by
is required to make deposits by
filing Form 4466, Corporation
electronic funds transfer and fails to do
Other Forms That May Be
Application for Quick Refund of
so, it may be subject to a 10% penalty.
Overpayment of Estimated Tax. The
Required
Funds that are not required to make
overpayment must be at least 10% of
electronic deposits may voluntarily
The fund may have to file any of the
expected income tax liability and at least
participate in EFTPS. For information on
following:
$500. To apply for a quick refund, file
EFTPS, call 1-800-945-8400 or
Form W-2, Wage and Tax Statement.
Form 4466 before the 16th day of the
1-800-555-4477. (These numbers are for
3rd month after the end of the fund’s tax
Form W-3, Transmittal of Wage and Tax
EFTPS information only.)
year but before the fund files its income
Statements.
Form 8109, Federal Tax Deposit
tax return. Do not file Form 4466 before
Form 940 or Form 940-EZ, Employer’s
Coupon.—If the fund does not use
the end of the fund’s tax year.
Annual Federal Unemployment (FUTA)
EFTPS, deposit fund income tax
Tax Return. The fund may be liable for
payments (and estimated tax payments)
Interest and Penalties
FUTA tax and may have to file Form 940
with Form 8109. Do not send deposits
or 940-EZ if it paid wages of $1,500 or
Interest.—Interest is charged on taxes
directly to an IRS office. Mail or deliver
more in any calendar quarter during the
not paid by the due date even if an
the completed Form 8109 with the
calendar year (or during the preceding
extension of time to file is granted.
payment to a qualified depositary for
calendar year) or one or more
Interest is also charged on penalties
Federal taxes or to the Federal Reserve
employees worked for the fund for some
imposed for failure to file, negligence,
bank (FRB) servicing the fund’s
part of a day in any 20 different weeks
fraud, gross valuation overstatements,
geographic area. Make checks or money
during the calendar year (or the
and substantial understatements of tax
orders payable to that depositary or
preceding calendar year).
from the due date (including extensions)
FRB. To help ensure proper crediting,
Form 941, Employer’s Quarterly Federal
to the date of payment. The interest
write the fund’s EIN, the tax period to
Tax Return. Employers must file this
charge is figured at a rate determined
which the deposit applies, and “Form
form quarterly to report income tax
under section 6621.
1120-SF” on the check or money order.
withheld and employer and employee
Penalty for late filing of return.—A
Records of these deposits will be sent to
social security and Medicare taxes. Also
fund that does not file its tax return by
the IRS.
see Trust fund recovery penalty above.
the due date, including extensions, may
A penalty may be imposed if the
Form 945, Annual Return of Withheld
have to pay a penalty of 5% of the
deposits are mailed or delivered to an
Federal Income Tax. File Form 945 to
unpaid tax for each month or part of a
IRS office rather than to an authorized
report withholding from nonpayroll
month the return is late, up to a
depositary or FRB. For more information
distributions or payments. Nonpayroll
maximum of 25% of the unpaid tax. The
on deposits, see the instructions in the
payments include pensions, annuities,
minimum penalty for a return that is
coupon booklet (Form 8109) and Pub.
IRAs, military retirement, gambling
more than 60 days late is the smaller of
583, Starting a Business and Keeping
winnings, Indian gaming profits, and
the tax due or $100. The penalty will not
Records.
backup withholding. Also see Trust fund
be imposed if the fund can show that
Caution: If the fund owes tax when it
recovery penalty above.
the failure to file on time was due to
files Form 1120-SF, do not include the
Form 1096, Annual Summary and
reasonable cause. Funds that file late
payment with the tax return. Instead,
Transmittal of U.S. Information Returns.
must attach a statement explaining the
mail or deliver the payment with Form
Forms 1099-DIV, INT, and MISC. These
reasonable cause.
8109 to a qualified depositary or FRB, or
information returns are for reporting
Penalty for late payment of tax.—A
use EFTPS, if applicable.
certain dividends and distributions,
fund that does not pay the tax when due
interest payments, and miscellaneous
may have to pay a penalty of
1
⁄
of 1%
Estimated Tax Payments
2
income.
of the unpaid tax for each month or part
Generally, a fund must make
When reporting taxable distributions to
of a month the tax is not paid, up to a
installments of estimated tax if it
maximum of 25% of the unpaid tax. The
claimants, use the appropriate
expects its estimated tax to be $500 or
information return to report the
penalty will not be imposed if the fund
Page 2
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