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figure the basis of the original or

authorized depositary (i.e., a commercial

Interest and Penalties

replacement property.

bank or other financial institution authorized

to accept Federal tax deposits). Make

Interest. Interest is charged on taxes paid

The FSC should keep copies of all filed

checks or money orders payable to the

late even if an extension of time to file is

returns. They help in preparing future and

depositary.

granted. Interest is also charged on

amended returns.

penalties imposed for failure to file,

If the FSC prefers, it may mail the

negligence, fraud, substantial valuation

Payment of Tax Due

coupon and payment to: Financial Agent,

misstatements, gross valuation

Federal Tax Deposit Processing, P.O. Box

The FSC must pay the tax due in full no

misstatements, and substantial

970030, St. Louis, MO 63197. Make the

later than the 15th day of the 3rd month

understatements of tax from the due date

check or money order payable to “Financial

after the end of the tax year. The method for

(including extensions) to the date of

Agent.”

payment of the tax due depends upon

payment. The interest charge is figured at a

whether the FSC has an office or place of

To help ensure proper crediting, write the

rate determined under section 6621.

business in the United States.

FSC’s EIN, the tax period to which the

Penalty for late filing of return. A FSC

1. FSCs that do not maintain an office or

deposit applies, and “Form 1120-FSC” on

that does not file its tax return by the due

place of business in the United States must

the check or money order. Be sure to

date, including extensions, may be

pay the tax due directly to the IRS (i.e., do

darken the “1120” box under “Type of Tax”

penalized 5% of the unpaid tax for each

not use either of the depository methods of

and the appropriate “Quarter” box under

month or part of a month the return is late,

tax payment described below). The tax may

“Tax Period” on the coupon. Records of

up to a maximum of 25% of the unpaid tax.

be paid by check or money order, payable to

these deposits will be sent to the IRS.

The minimum penalty for a return that is

the “United States Treasury.” To help

over 60 days late is the smaller of the tax

For more information on deposits, see

ensure proper crediting, write the FSC’s

due or $100. The penalty will not be

the instructions in the coupon booklet (Form

employer identification number (EIN), “Form

imposed if the FSC can show that the failure

8109) and Pub. 583, Starting a Business

1120-FSC,” and the tax period to which the

and Keeping Records.

to file on time was due to reasonable cause.

payment applies on the check or money

FSCs that file late should attach a statement

order. Enclose the payment when Form

explaining the reasonable cause.

1120-FSC is filed with the Internal Revenue

If the FSC maintains an office or

Service Center, Philadelphia, PA 19255.

Penalty for late payment of tax. A FSC

2. FSCs that maintain an office or place

place of business in the United

that does not pay the tax when due

of business in the United States must pay

States and it owes tax when it files

generally may be penalized

of 1% of the

CAUTION

Form 1120-FSC, do not include the payment

the tax due using a qualified depositary. The

unpaid tax for each month or part of a month

with the tax return. Instead, mail or deliver

two methods of depositing corporate taxes

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

the payment with Form 8109 to an

are discussed below.

of the unpaid tax. The penalty will not be

authorized depositary, or use EFTPS, if

imposed if the FSC can show that the failure

applicable.

to pay on time was due to reasonable

Depository Methods of Tax

cause.

Payment

Estimated Tax Payments

Trust fund recovery penalty. This penalty

FSCs that maintain an office or place of

may apply if certain income, social security,

Generally, the following rules apply to the

business in the United States may use

and Medicare taxes that must be collected

FSC’s payments of estimated tax.

either of the two methods of depositing

or withheld are not collected or withheld, or

•

corporate income taxes discussed below.

The FSC must make installment

these taxes are not paid. These taxes are

payments of estimated tax if it expects its

Electronic Deposit Requirement

generally reported on Form 941, Employer’s

total tax for the year (less applicable credits)

Quarterly Federal Tax Return, or Form 945,

The FSC must make electronic deposits

to be $500 or more.

Annual Return of Withheld Federal Income

•

of all depository taxes (such as employment

The installments are due by the 15th day

Tax. The trust fund recovery penalty may be

tax, excise tax, and corporate income tax)

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

imposed on all persons who are determined

using the Electronic Federal Tax Payment

tax year. If any date falls on a Saturday,

by the IRS to have been responsible for

System (EFTPS) in 2005 if:

Sunday, or legal holiday, the installment is

collecting, accounting for, and paying over

•

The total deposits of such taxes in 2003

due on the next regular business day.

these taxes, and who acted willfully in not

•

were more than $200,000 or

Use Form 1120-W, Estimated Tax for

doing so. The penalty is equal to the unpaid

•

The FSC was required to use EFTPS in

Corporations, as a worksheet to compute

trust fund tax. See Pub. 15 (Circular E),

2004.

estimated tax.

Employer’s Tax Guide, for details, including

•

If the FSC maintains an office or place of

the definition of responsible persons.

If the FSC is required to use EFTPS and

business in the United States and it does

fails to do so, it may be subject to a 10%

Other penalties. Other penalties can be

not use EFTPS, use the deposit coupons

penalty. If the FSC is not required to use

imposed for negligence, substantial

(Forms 8109) to make deposits of estimated

EFTPS, it may participate voluntarily. To

understatement of tax, and fraud. See

tax.

enroll in or get more information about

•

sections 6662 and 6663.

If the FSC does not maintain an office or

EFTPS, call 1-800-555-4477 or

place of business in the United States, it

A FSC may also be subject to a penalty

1-800-945-8400. To enroll online, visit

must pay the estimated tax due directly to

(under section 6686) of:

•

the IRS.

$100 for each failure to supply

Depositing on time. For EFTPS deposits

information, up to $25,000 during the

For more information on estimated tax

to be made timely, the FSC must initiate the

calendar year.

payments, including penalties that apply if

•

transaction at least 1 business day before

$1,000 for not filing a return.

the FSC fails to make required payments,

the date the deposit is due.

see Line 3, Estimated tax penalty, on page

These penalties will not apply if the FSC

Deposits With Form 8109

can show that the failure to furnish the

If the FSC does not use EFTPS, deposit

required information was due to reasonable

Overpaid estimated tax. If the FSC

cause.

FSC income tax payments (and estimated

overpaid estimated tax, it may be able to get

tax payments) with Form 8109, Federal Tax

a quick refund by filing Form 4466,

Deposit Coupon. If you do not have a

Corporation Application for Quick Refund of

preprinted Form 8109, use Form 8109-B to

Overpayment of Estimated Tax. The

Specific Instructions

make deposits. You can get this form by

overpayment must be at least 10% of the

calling 1-800-829-4933. Be sure to have

FSC’s expected income tax liability and at

your EIN ready when you call.

least $500. File Form 4466 after the end of

Period covered. File the 2004 return for

Do not send deposits directly to an IRS

the FSC’s tax year, and no later than the

calendar year 2004 and fiscal years that

office; otherwise, the FSC may have to pay

15th day of the third month after the end of

begin in 2004 and end in 2005. For a fiscal

a penalty. Mail or deliver the completed

the tax year. Form 4466 must be filed before

year return, fill in the tax year space at the

Form 8109 with the payment to an

the FSC files its tax return.

top of the form.

-6-

Instructions For Form 1120-Fsc - U.s. Income Tax Return Of A Foreign Sales Corporation - 2004 Page 6

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