Form Nyc-221 - Underpayment Of Estimated Unincorporated Business Tax

Instructions for Form NYC-221 - 2017

Page 3

PURPOSE OF FORM

Exception 1

Form NYC-221 will enable taxpayers subject to the

Prior Year’s Tax

Unincorporated Business Tax to determine if they paid

This exception applies if a taxpayer paid estimated

the correct amount of estimated tax by the proper due

taxes equal to the tax reported on its prior year’s re-

date. If the minimum amount was not paid timely, an

turn. To qualify for this exception, the taxpayer must

underpayment penalty may be imposed for the period

have filed an income tax return showing a tax liabil-

underpaid. This form helps you to determine whether

ity for the prior taxable year, and that taxable year

or not you are subject to this penalty.

consisted of 12 months.

Exception 2

ESTIMATED TAX

Tax Based On Prior Year’s Facts and Law

Every taxpayer subject to the Unincorporated Business

Using Current Year’s Rates

Tax must file a Declaration of Estimated Tax (Form

This exception applies if a taxpayer paid an amount

NYC-5UB for partnerships and Form NYC-5UBTI for

of estimated tax computed by applying the current

all other taxpayers) if its estimated tax can reasonably be

year’s rates to facts shown on the return for, and

expected to exceed $3,400. The due date for the decla-

under the law applicable to, the prior taxable year.

ration and the dates for paying the installments of esti-

mated tax depend upon when the requirements for

Exception 3

making a declaration are first met. (Refer to Form NYC-

Tax On Annualized Income

5UB or Form NYC-5UBTI for details.)

This exception applies if a taxpayer made an esti-

mated tax payment of at least 90% of the amount it

NOTE

would owe if its estimated tax were a tax computed

If any date falls on a Saturday, Sunday or legal holi-

on annualized taxable income for the months preced-

day, substitute the next regular workday.

ing an installment date.

EXCEPTIONS THAT AVOID THE

A taxpayer may annualize its income:

UNDERPAYMENT PENALTY

for the first 3 months if the installment was re-

You will not have to pay a penalty if you made all tax

quired to be paid in the 4th month;

payments on time and they equal or exceed the

amount that would have been required to be paid by

for the first 5 months if the installment was re-

each installment date if the estimated tax were an

quired to be paid in the 6th month; and

amount determined under any of the exceptions listed

for the first 8 months if the installment was re-

below.

quired to be paid in the 9th month.

A different exception may be applied to each under-

To annualize, multiply taxable income for the period

payment. If no exception applies, complete lines 11

by 12 and divide the resulting amount by the number

through 31 to determine the amount of the penalty.

of months in the period (3, 5, or 8, as the case may

be). (Refer to Section 11-525(d)(1)(C)).

NOTE

Large unincorporated businesses (those which had un-

Exception 4

incorporated business taxable income allocated to the

Tax on 2017 Income Over Periods of less

City of $1 million or more in any of the three years im-

than 12 Months

mediately preceding the current year) may not use ex-

This exception applies if a taxpayer's estimated tax

ceptions 1 or 2. Such unincorporated businesses may

payments equal or exceed 90% of the tax on its tax-

only use exceptions 3, 4 and 5.

able income for the periods starting from the begin-

ning of the taxable year to the end of the month

Form Nyc-221 - Underpayment Of Estimated Unincorporated Business Tax - 2017 Page 3

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