Instructions For Form 1120-Pc - 2005 (Page 4 of 21) in pdf

Make the check or money order payable

figure the amount of any penalty and bill

responsible for collecting, accounting for,

to: “Financial Agent.”

the corporation for it. However, even if the

and paying over these taxes, and who

corporation does not owe the penalty,

acted willfully in not doing so. The penalty

To help ensure proper crediting, enter

complete and attach Form 2220 if:

is equal to the unpaid trust fund tax. See

the corporation’s EIN, the tax period to

•

The annualized income or adjusted

the Instructions for Form 720 or Pub. 15

which the deposit applies, and “Form

seasonal installment method is used, or

(Circular E), Employer’s Tax Guide, for

1120-PC” on the check or money order.

•

The corporation is a large corporation

details, including the definition of

Darken the “1120” box under “Type of

computing its first required installment

responsible persons.

Tax” and the appropriate “Quarter” box

based on the prior year’s tax. See the

under “Tax Period” on the coupon.

Other penalties. Other penalties can be

Instructions for Form 2220 for the

Records of these deposits will be sent to

imposed for negligence, substantial

definition of a large corporation.

the IRS. For more information, see

understatement of tax, reportable

Also, see the instructions for line 15,

“Marking the Proper Tax Period” in the

transaction understatements, and fraud.

Form 1120-PC.

instructions for Form 8109.

See sections 6662, 6662A, and 6663.

For more information on deposits, see

Foreign insurance companies, see

Accounting Methods

the instructions in the coupon booklet

Notice 90-13, 1990-1 C.B. 321,

(Form 8109) and Pub. 583, Starting a

before computing estimated tax.

Figure taxable income using the method

CAUTION

Business and Keeping Records.

of accounting regularly used in keeping

Interest and Penalties

the corporation’s books and records. In all

If the corporation owes tax when it

cases, the method used must clearly

files Form 1120-PC, do not

Interest. Interest is charged on taxes

show taxable income. Permissible

include the payment with the tax

CAUTION

paid late even if an extension of time to

methods include cash, accrual, or any

return. Instead, mail or deliver the

file is granted. Interest is also charged on

other method authorized by the Internal

payment with Form 8109 to an authorized

penalties imposed for failure to file,

Revenue Code.

depositary, or use EFTPS, if applicable.

negligence, fraud, substantial valuation

The gross amounts of underwriting

misstatements, substantial

Estimated Tax Payments

and investment income should be

understatements of tax, and reportable

computed on the basis of the underwriting

Generally, the following rules apply to the

transaction understatements from the due

and investment exhibit of the NAIC

corporation’s payments of estimated tax.

date (including extensions) to the date of

•

annual statement to the extent not

The corporation must make installment

payment. The interest charge is figured at

inconsistent with the Internal Revenue

payments of estimated tax if it expects its

a rate determined under section 6621.

Code and its Regulations. In all cases,

total tax for the year (less applicable

Late filing of return. A corporation that

the method used must clearly show

credits) to be $500 or more.

•

does not file its tax return by the due date,

taxable income.

The installments are due by the 15th

including extensions, may be penalized

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

Change in accounting method. To

5% of the unpaid tax for each month or

of the tax year. If any date falls on a

change its method of accounting used to

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

Saturday, Sunday, or legal holiday, the

report taxable income (for income as a

maximum of 25% of the unpaid tax. The

installment is due on the next regular

whole or for the treatment of any material

minimum penalty for a return that is over

business day.

item), the corporation must file Form

•

60 days late is the smaller of the tax due

Use Form 1120-W, Estimated Tax for

3115, Application for Change in

or $100. The penalty will not be imposed

Corporations, as a worksheet to compute

Accounting Method.

if the corporation can show that the failure

estimated tax.

•

to file on time was due to reasonable

See Form 3115 and Pub. 538,

If the corporation does not use EFTPS,

cause. Corporations that file late should

Accounting Periods and Methods, for

use the deposit coupons (Forms 8109) to

attach a statement explaining the

more information on accounting methods.

make deposits of estimated tax.

•

reasonable cause.

If the corporation overpaid estimated

Safe harbor method of accounting for

tax, it may be able to get a quick refund

Late payment of tax. A corporation that

premium acquisition expenses.

by filing Form 4466, Corporation

does not pay the tax when due generally

Insurance companies subject to tax under

Application for Quick Refund of

may be penalized

of 1% of the unpaid

section 831 are provided with a safe

harbor method of accounting for premium

Overpayment of Estimated Tax.

tax for each month or part of a month the

acquisition expenses. Form 3115 must be

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

See the instructions for lines 14c and

filed in order to change to the safe harbor

of the unpaid tax. The penalty will not be

14e, Form 1120-PC.

method. For more information, see the

imposed if the corporation can show that

Estimated tax penalty. A corporation

the failure to pay on time was due to

Instructions for Form 3115 and item 67 in

that does not make estimated tax

reasonable cause.

the List of Automatic Accounting Method

payments when due may be subject to an

Changes.

Trust fund recovery penalty. This

underpayment penalty for the period of

penalty may apply if certain excise,

underpayment. Generally, a corporation is

Accounting Period

income, social security, and Medicare

subject to the penalty if its tax liability is

taxes that must be collected or withheld

An insurance company must figure its

$500 or more and it did not timely pay the

are not collected or withheld, or these

taxable income on the basis of a tax year.

smaller of:

•

taxes are not paid. These taxes are

A tax year is the annual accounting period

Its tax liability for 2005 or

•

generally reported on:

an insurance company uses to keep its

Its prior year’s tax.

•

Form 720, Quarterly Federal Excise

records and report its income and

See section 6655 for details and

Tax Return;

expenses.

exceptions, including special rules for

•

Form 941, Employer’s Quarterly

large corporations.

As a general rule under section 843,

Federal Tax Return; or

Use Form 2220, Underpayment of

the tax year for every insurance company

•

Form 945, Annual Return of Withheld

Estimated Tax by Corporations, to see if

is the calendar year. However, if an

Federal Income Tax.

the corporation owes a penalty and to

insurance company joins in the filing of a

figure the amount of the penalty.

The trust fund recovery penalty may

consolidated return, it may adopt the tax

Generally, the corporation does not have

be imposed on all persons who are

year of the common parent corporation

to file this form because the IRS can

determined by the IRS to have been

even if that year is not a calendar year.

-4-

Instructions for Form 1120-PC

Instructions For Form 1120-Pc - 2005 Page 4

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