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Arizona Form

2014 Underpayment of Estimated Tax by Corporations

220

120: An Arizona affiliated group filing a

OTE FOR FORM

Obtain additional information or assistance by calling one of

consolidated return pursuant to Arizona Revised Statutes

the numbers listed below:

(A.R.S.) § 43-947 must make its estimated tax payments on a

Phoenix

(602) 255-3381

consolidated basis. Therefore, an Arizona affiliated group, as a

From area codes 520 and 928, toll-free

(800) 352-4090

single taxpayer, must compute the underpayment of estimated

Obtain tax rulings, tax procedures, tax forms and instructions,

tax penalty on a consolidated basis if its Arizona tax liability

and other tax information by accessing the department's

for the taxable year is $1,000 or more.

website at

B. Form 120S: Generally, the taxpayer is subject to the penalty

if the tax shown on the taxpayer’s 2014 Arizona tax return is

General Instructions

$1,000 or more and it did not timely pay at least the smaller

of:

Purpose of Form



Ninety percent of the tax (reduced by any refundable tax

Taxpayers filing Forms 99T, 120, 120A, and 120S use

credit, if applicable) shown on its 2014 return, OR

Form 220 to determine whether they are subject to a penalty



If the taxpayer’s 2013 return was filed for a period of

for underpayment of their Arizona estimated tax liability and,

twelve months, an amount of tax equal to the sum of:

if so, the amount of the penalty.

Ninety percent of the portion of the 2014 Arizona tax

The taxpayer's Arizona estimated tax liability is determined

liability that is attributable to built-in gains income or

as follows: [income tax plus tax from recapture of tax credits]

certain capital gains income; plus

less [nonrefundable tax credits and any refundable tax

credits].

One hundred percent of the portion of the 2013 Arizona tax

liability that is attributable to excess net passive income.

120

120A):

CLAIM OF RIGHT ADJUSTMENT

ORMS

AND

NOTE: In these instructions, “return” generally refers to the

A taxpayer that computes its tax liability under the claim of

corporation’s original return. However, an amended return is

right provisions should base its estimated tax liability on the

considered the original return if the amended return is filed by the

net tax liability computed under the claim of right provisions.

due date (including extensions) of the original return. Refer to

Who is Subject to the Underpayment Penalty

Arizona Corporate Tax Ruling CTR 02-1 for further information.

If the taxpayer's Arizona tax liability (reduced by any refundable

The penalty is calculated separately for each installment due

tax credit and the claim of right adjustments, if applicable) is

date. Therefore, the taxpayer may owe a penalty for an earlier

less than $1,000, the taxpayer is not subject to this penalty.

installment due date, even if later “catch-up” payments were

Arizona tax liability is from Form 99T, page 1, line 11 (reduced

made for the earlier installment due date underpayment. A

by any refundable tax credit, if applicable); or Form 120, page 1,

taxpayer may be subject to the underpayment penalty even if

line 21 (reduced by any refundable tax credit and the claim of

the taxpayer is due a refund when its return is filed.

right adjustments, if applicable); or Form 120A, page 1, line 13

(reduced by any refundable tax credit and claim of right

A taxpayer may be able to reduce or eliminate the penalty by

adjustments, if applicable); or Form 120S, page 1, line 17

using the annualized income installment method or the

(reduced by any refundable tax credit, if applicable).

adjusted seasonal installment method.

A. Forms 99T, 120, and 120A: Generally, the taxpayer is

Who Must Complete This Form

subject to the penalty if the tax shown on the taxpayer’s 2014

A taxpayer DOES NOT HAVE TO COMPLETE Form 220,

Arizona tax return is $1,000 or more and it did not timely pay

Underpayment of Estimated Tax by Corporations, if the

at least the smaller of:

taxpayer made estimated tax payments based on either of the



Ninety percent of the tax (reduced by any refundable tax

following methods:

credit and the claim of right adjustments, if applicable)



All taxpayers: An amount equal to 90 percent of the current

shown on its 2014 return, OR

taxable year’s tax liability (reduced by any refundable tax



The tax shown on its 2013 return (reduced by any refundable

credit and the claim of right adjustments, if applicable), paid

tax credit and the claim of right adjustments, if applicable).

in four equal installments; or

The taxpayer must have filed a 2013 return showing at least



Form 99T, 120, and 120A: An amount equal to 100 percent

some amount of tax and the return must have been filed for a

of the taxpayer’s tax liability (reduced by any refundable tax

period of 12 full months. However, a “large corporation” may

credit and the claim of right adjustments, if applicable) for the

base only its first required installment on the prior taxable

prior taxable year, paid in four equal installments. A “large

year's tax.

corporation” may not use this method.

120: A unitary group of corporations filing

OTE FOR FORM

The department will compute the estimated tax penalty based

a combined return must make its estimated tax payments on

on either of these methods and notify the taxpayer of any

a combined basis. Therefore, a unitary group, as a single

amount due.

taxpayer, must compute the underpayment of estimated tax

A taxpayer MUST COMPLETE Form 220, even though no

penalty on a combined basis if its Arizona tax liability for the

penalty is due, if it made its estimated tax payments based on

taxable year is $1,000 or more.

any of the following methods:

Instructions For Arizona Form 220 - Underpayment Of Estimated Tax By Corporations - 2014

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