Form 1120-W - Estimated Tax For Corporations

Form 1120-W (WORKSHEET) 1997

Page

Paperwork Reduction Act Notice

To apply for a quick refund, file Form 4466, Corporation

Application for Quick Refund of Overpayment of Estimated Tax,

Use of this form is optional. It is provided to aid the corporation

before the 16th day of the 3rd month after the end of the tax

in determining its tax liability.

year, but before the corporation files its income tax return. Do

You are not required to provide the information requested on

not file Form 4466 before the end of the corporation’s tax year.

a form that is subject to the Paperwork Reduction Act unless the

form displays a valid OMB control number. Books or records

Depository Method of Tax Payment

relating to a form or its instructions must be retained as long as

Some corporations (described below) are required to

their contents may become material in the administration of any

electronically deposit all depository taxes, including corporation

Internal Revenue law. Generally, tax returns and return

income tax and estimated tax payments.

information are confidential, as required by Code section 6103.

Electronic deposit requirement.—If the corporation’s total

The time needed to complete this form will vary depending on

deposits of social security, Medicare, and withheld income taxes

individual circumstances. The estimated average time is:

were more than $50,000 in 1995, it must make electronic

Learning about the

Preparing

deposits for all depository tax liabilities that occur after June 30,

Form

Recordkeeping

law or the form

the form

1997. If the corporation was required to deposit by electronic

1120-W

7 hr., 25 min.

1 hr., 35 min.

1 hr., 47 min.

funds transfer in prior years, it should continue to do so in 1997.

1120-W, Sch. A (Pt. I)

11 hr., 14 min.

12 min.

23 min.

The Electronic Federal Tax Payment System (EFTPS) must be

1120-W, Sch. A (Pt. II)

23 hr., 26 min.

23 min.

used to make electronic deposits. If the corporation is required

1120-W, Sch. A (Pt. III)

5 hr., 16 min.

5 min.

to make deposits by electronic funds transfer and fails to do so,

If you have comments concerning the accuracy of these time

it may be subject to a 10% penalty. Corporations that are not

estimates or suggestions for making this form simpler, we would

required to make electronic deposits may voluntarily participate

be happy to hear from you. You can write to the Tax Forms

in EFTPS. For information on EFTPS, call 1-800-945-8400 or

Committee, Western Area Distribution Center, Rancho Cordova,

1-800-555-4477. (These numbers are for EFTPS information

CA 95743-0001. DO NOT send the tax form to this office.

only.)

Instead, keep the form for your records.

Form 8109, Federal Tax Deposit Coupon.—If the corporation

does not use the EFTPS, deposit corporation income tax

Changes To Note

payments and estimated tax payments with Form 8109. Do not

The Small Business Job Protection Act of 1996 (Act) delayed

send deposits directly to an IRS office. Mail or deliver the

the date by which certain filers are required to electronically

completed Form 8109 with the payment to a qualified depositary

deposit all depository taxes. See Depository Method of Tax

for Federal taxes or to the Federal Reserve bank (FRB) servicing

Payment below.

the corporation’s geographic area. Make checks or money

The Act reinstated the research credit for qualified research

orders payable to that depositary or FRB.

expenses paid or incurred after June 30, 1996, and before June

To help ensure proper crediting, write the corporation’s

1, 1997. For tax years beginning in 1997, corporations may not

employer identification number, the tax period to which the

take into account research credit amounts earned as a result of

deposit applies, and “Form 1120” on the check or money order.

the change in law in figuring the amount of any installment of

Be sure to darken the “1120” box on the coupon. Records of

estimated tax.

these deposits will be sent to the IRS.

A penalty may be imposed if the deposits are mailed or

General Instructions

delivered to an IRS office rather than to an authorized depositary

or FRB.

Section references are to the Internal Revenue Code unless

For more information on deposits, see the instructions in the

otherwise noted.

coupon booklet (Form 8109) and Pub. 583, Starting a Business

Who Must Make Estimated Tax Payments

and Keeping Records.

Generally, a corporation must make installment payments of

Refiguring Estimated Tax

estimated tax if it expects its estimated tax (income tax less

credits) to be $500 or more. S corporations must also make

If after the corporation figures and deposits estimated tax, it

finds that its tax liability for the year will be much more or less

estimated tax payments for certain taxes. S corporations should

see the instructions for Form 1120S, U.S. Income Tax Return for

than originally estimated, it may have to refigure its required

installments. If earlier installments were underpaid, the

an S Corporation, to figure the estimated tax payments of an S

corporation may owe a penalty for underpayment of estimated

corporation.

tax.

Tax-exempt organizations subject to the unrelated business

An immediate catchup payment should be made to reduce the

income tax and private foundations use Form 990-W, Estimated

Tax on Unrelated Business Taxable Income for Tax-Exempt

amount of any penalty resulting from the underpayment of any

earlier installments, whether caused by a change in estimate,

Organizations, to figure the amount of their estimated tax

payments.

failure to make a deposit, or a mistake.

When To Make Estimated Tax Payments

Specific Instructions

The installments are due by the 15th day of the 4th, 6th, 9th,

Line 1—Qualified Personal Service Corporations

and 12th months of the tax year. If any date falls on a Saturday,

Sunday, or legal holiday, the installment is due on the next

A qualified personal service corporation is taxed at a flat rate of

regular business day.

35% on taxable income. A corporation is a qualified personal

service corporation if it meets both of the following tests:

Underpayment of Estimated Tax

Substantially all of the corporation’s activities involve the

A corporation that does not make estimated tax payments when

performance of services in the fields of health, law, engineering,

due may be subject to an underpayment penalty for the period

architecture, accounting, actuarial science, performing arts, or

of underpayment (section 6655), using the underpayment rate

consulting, and

determined under section 6621(a)(2).

At least 95% of the corporation’s stock, by value, is owned,

directly or indirectly, by (1) employees performing the services,

Overpayment of Estimated Tax

(2) retired employees who had performed the services listed

A corporation that has overpaid its estimated tax may apply for

above, (3) any estate of an employee or retiree described above,

a quick refund if the overpayment is at least 10% of its expected

or (4) any person who acquired the stock of the corporation as a

income tax liability and at least $500.

result of the death of an employee or retiree (but only for the

2-year period beginning on the date of the employee’s or

retiree’s death). See Temporary Regulations section 1.448-1T(e)

for details.

Form 1120-W - Estimated Tax For Corporations - 1997 Page 4

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