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“Type of Tax” and the appropriate

The cooperative is a large

Pub. 15 (Circular E), Employer’s Tax

“Quarter” box under “Tax Period” on the

corporation computing its first required

Guide, or Pub. 51 (Circular A),

coupon. Records of these deposits will

installment based on the prior year’s

Agricultural Employer’s Tax Guide, for

be sent to the IRS. For more

tax. See the Instructions for Form 2220

details, including the definition of

information, see “Marking the Proper

for the definition of a large corporation.

responsible persons.

Tax Period” in the instructions for Form

Also, see the instructions for line 33,

Other penalties. Other penalties can

8109.

Form 990-C.

be imposed for negligence, substantial

understatement of tax, reportable

If the cooperative owes tax

Interest and Penalties

transaction understatements, and fraud.

when it files Form 990-C, do not

See sections 6662, 6662A, and 6663.

include the payment with the tax

Interest. Interest is charged on taxes

CAUTION

paid late even if an extension of time to

return. Instead, mail or deliver the

Other Forms and

payment with Form 8109 to an

file is granted. Interest is also charged

authorized depositary or use EFTPS, if

on penalties imposed for failure to file,

Statements That May Be

applicable.

negligence, fraud, substantial valuation

Required

misstatements, substantial

Estimated Tax Payments

understatements of tax, and reportable

Reportable transaction disclosure

transaction understatements from the

Generally, the following rules apply to

statement. Disclose information for

due date (including extensions) to the

each reportable transaction in which the

the cooperative’s payments of

date of payment. The interest charge is

estimated tax.

cooperative participated. Form 8886,

figured at a rate determined under

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The cooperative must make

Reportable Transaction Disclosure

section 6621.

installment payments of estimated tax if

Statement, must be filed for each tax

Penalty for late filing of return. A

year that the federal income tax liability

it expects its total tax for the year (less

cooperative that does not file its tax

applicable credits) to be $500 or more.

of the cooperative is affected by its

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return by the due date, including

The installments are due by the 15th

participation in the transaction. The

extensions, may be penalized 5% of

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

cooperative may have to pay a penalty

the unpaid tax for each month or part of

if it is required to file Form 8886 and

months of the tax year. If any date falls

a month the return is late, up to a

on a Saturday, Sunday, or legal

does not do so. The following are

maximum of 25% of the unpaid tax.

holiday, the installment is due on the

reportable transactions.

The minimum penalty for a return that

next regular business day.

1. Any listed transaction, which is a

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is over 60 days late is the smaller of the

Use Form 1120-W, Estimated Tax for

transaction that is the same as or

tax due or $100. The penalty will not be

Corporations, as a worksheet to

substantially similar to tax avoidance

imposed if the cooperative can show

compute estimated tax.

transactions identified by the IRS.

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that the failure to file on time was due

If the cooperative does not use

2. Any transaction offered under

to reasonable cause. Cooperatives that

EFTPS, use the deposit coupons

conditions of confidentiality for which

file late should attach a statement

(Forms 8109) to make deposits of

the cooperative paid an advisor a fee of

explaining the reasonable cause.

estimated tax.

at least $250,000.

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If the cooperative overpaid estimated

Penalty for late payment of tax. A

3. Certain transactions for which the

tax, it may be able to get a quick refund

cooperative that does not pay the tax

cooperative has contractual protection

when due generally may be penalized

by filing Form 4466, Corporation

against disallowance of the tax benefits.

of 1% of the unpaid tax for each

Application for Quick Refund of

4. Certain transactions resulting in a

Overpayment of Estimated Tax.

month or part of a month the tax is not

loss of at least $10 million in any single

paid, up to a maximum of 25% of the

year or $20 million in any combination

See the instructions for lines 32b

unpaid tax. The penalty will not be

of years.

and 32c, Form 990-C.

imposed if the cooperative can show

5. Certain transactions resulting in a

Estimated tax penalty. A cooperative

that the failure to pay on time was due

book-tax difference of more than $10

that does not make estimated tax

to reasonable cause.

million on a gross basis.

payments when due may be subject to

Trust fund recovery penalty. This

6. Certain transactions resulting in a

an underpayment penalty for the period

penalty may apply if certain excise,

tax credit of more than $250,000, if the

of underpayment. Generally, a

income, social security, and Medicare

cooperative held the asset generating

corporation is subject to the penalty if

taxes that must be collected or withheld

the credit for 45 days or less.

its tax liability is $500 or more and it did

are not collected or withheld, or these

not timely pay the smaller of:

Penalties. The cooperative may

taxes are not paid. These taxes are

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Its tax liability for 2005, or

have to pay a penalty if it is required to

generally reported on:

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Its prior year’s tax.

disclose a reportable transaction under

Form 720, Quarterly Federal Excise

See section 6655 for details and

section 6011 and fails to properly

Tax Return;

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exceptions, including special rules for

complete and file Form 8886. The

Form 941, Employer’s Quarterly

large corporations.

penalty is $50,000 ($200,000 if the

Federal Tax Return;

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reportable transaction is a listed

Use Form 2220, Underpayment of

Form 943, Employer’s Annual

transaction) for each failure to file Form

Estimated Tax by Corporations, to see

Federal Tax Return for Agricultural

8886 with its return or for failure to

if the cooperative owes a penalty and to

Employees; or

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provide a copy of Form 8886 to the

figure the amount of the penalty.

Form 945, Annual Return of Withheld

Office of Tax Shelter Analysis (OTSA).

Generally, the cooperative does not

Federal Income Tax.

Other penalties, such as an

have to file this form because the IRS

The trust fund recovery penalty may be

accuracy-related penalty under section

can figure the amount of any penalty

imposed on all persons who are

6662A, may also apply. See the

and bill the cooperative for it. However,

determined by the IRS to have been

Instructions for Form 8886 for details.

even if the cooperative does not owe

responsible for collecting, accounting

the penalty, complete and attach Form

for, and paying over these taxes, and

Reportable transactions by material

2220 if:

who acted willfully in not doing so. The

advisors. Until further guidance is

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The annualized income or adjusted

penalty is equal to the unpaid trust fund

issued, material advisors who provide

seasonal installment method is used, or

tax. See the Instructions for Form 720,

material aid, assistance, or advice with

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Instructions For Form 990-C - Farmers' Cooperative Association Income Tax Return - Internal Revenue Service - 2005 Page 4

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