Form D-2220 - Underpayment Of Estimated Franchise Tax By Businesses

Instructions for Underpayment of Estimated Tax by D-20 or D-30 Filers

Completing this form

Estimated Tax Penalty

Line 1

DC law requires any business that expects its DC franchise tax liability to

exceed $1000 for the tax year to file a declaration of estimated franchise

Enter the amount from your 2011 D-20 or D-30 (Line 37).

Line 2

tax using the payment vouchers in:

• D-20ES – Declaration of Estimated Franchise Tax for Corporations;

Multiply the amount on Line 1 by 90% (.90). Your estimated franchise

tax payments must be equal to or greater than this amount.

Line 3

• D-30ES – Declaration of Estimated Franchise Tax for Unincorporated

Enter the amount from your 2010 DC Forms D-20 or D-30, Line 37.

Businesses.

The law states that any business required to file and pay estimated tax

If your 2010 return was amended or corrected, be sure to show the

corrected amount.

that fails to pay the amount required by the due date is subject to an

Line 4

underpayment of estimated franchise tax penalty and interest.

Enter the lesser of the amounts on Line 2 and Line 3. If you did not file a

When is a penalty assessed for Underpayment of Estimated

DC franchise tax return for 2010, you may only use Line 2. This is your

Franchise Tax?

minimum estimated franchise tax payment for 2011.

A 10% penalty, compounded daily, is assessed if your total DC estimated

Line 5

franchise tax payments compared to your DC franchise tax liability do

Multiply the amount on Line 4 by 25% (.25). This gives you an even

not equal at least the smaller of:

distribution of your tax liability over the four periods of the tax year.

• 90% of the tax due (Line 37) on your 2011 DC franchise tax return;

Line 6

Enter the amount required from Line 5 under each of the payment

• 100% of the tax due (Line 37) on your 2010 DC franchise tax return

columns. For example, if Line 5 is $2000, you would enter $2000 for

(consisting of 12 months).

the 1

period, $4000 for the 2

period, $6,000 for the 3

period and

You must have filed a 2010 DC franchise tax return to use the 100%

$8,000 for the 4

period.

exception.

Annualized income method: If your income was different for each

period, determine the percentage for each period (divide the period income

A penalty will be assessed if any statement made on an estimated tax

by the full year’s income). Multiply Line 4 by each period’s percentage

payment voucher is not true and accurate to the best of the signatory’s

and enter the amounts earned by period on Line 6. Accumulate the

knowledge.

periodic amounts as shown above. Check the “Annualized Income” box.

Line 7

Are there any exceptions?

Enter the amount of estimated franchise tax payments made in each

You are not subject to the penalty for underpayment of estimated

period. Include the amounts from the previous period with the 2

, 3

and

franchise tax if:

periods. For example, if your estimated payment amount is $1,000

• You had no DC franchise tax liability for the tax year 2010 and in that

in each period, you would enter $1,000 in the 1

period, $2,000 in

year, you did business in DC for the entire 12 months;

the 2

period, $3,000 in the 3

period and $4,000 in the 4

period.

• The franchise tax due for 2011, minus any estimated tax payments,

Line 8 Underpayment each period

is less than $1001;

For each column, subtract Line 7 from Line 6. If Line 7 exceeds Line 6,

• Your total DC estimated franchise tax payments are equal to or greater

you have no penalty. If there is an amount remaining, this is your periodic

than your 2010 DC franchise tax liability for the entire year; or

underpayment amount.

• Your remaining tax due after totaling all credits and estimated tax

Line 9 Penalty Factors

payments is less than 10% of your total DC franchise tax liability (Line

These are the penalty factors by period.

42 of the D-20 and D-30) for the year.

Line 10

For each period, multiply the amount on Line 8 by the factor on Line 9.

When do you use this form?

This is your penalty by period.

Line 11 Penalty

• You may use this form to calculate your penalty. If you do, attach it

Add the amounts on Line 10 for each period. This is your total

to your tax return and add any penalty and interest you calculate to

underpayment of estimated franchise tax penalty.

the amount on Line 42 of Forms D-20 or D-30. If you do not wish to

• If you are filing the D-2220 with your D-20 or D-30 return, include

calculate the penalty and interest, OTR will do it when your return is

the penalty and any interest on the penalty in the amount you owe

processed and will notify you of the amount due.

and pay the total amount with the return.

• You may also complete this form if you believe the penalty amount

• If you are filing the D-2220 form separately, pay the amount you owe

assessed by OTR for underpayment of estimated franchise tax is

and attach to the D-2030P Payment Voucher.

incorrect.

Make the check or money order payable to the DC Treasurer.

How do you file this form?

Attach it to your return if you complete the form before filing your tax

return. If you complete the D-2220 after filing and receiving a notice of

penalty assessment, send it to:

Office of Tax and Revenue

1101 4th St SW, 2nd Floor

Washington DC 20024

D-2220 page 2

Revised 02/12

Form D-2220 - Underpayment Of Estimated Franchise Tax By Businesses - 2011 Page 2

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