Instructions For Form 1120-Fsc - 2016 (Page 6 of 14) in pdf

total tax for the year (less applicable credits)

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

If there are no assets at the end of the tax

to be $500 or more.

unpaid tax. The penalty will not be imposed if

year, enter -0-.

The installments are due by the 15th day

the FSC can show that the failure to pay on

Item F. Final return, name change, ad-

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

time was due to reasonable cause. However,

dress change, or amended return.

tax year. If any date falls on a Saturday,

see Caution above.

If this is the FSC's final return and it will no

Sunday, or legal holiday, the installment is

Trust fund recovery penalty. This penalty

longer exist, check the “Final return” box.

due on the next regular business day.

may apply if certain income, social security,

If the FSC changed its name since it last

Use Form 1120-W, Estimated Tax for

and Medicare taxes that must be collected or

filed a return, check the box for “Name

Corporations, as a worksheet to compute

withheld are not collected or withheld, or

change.” Generally, a FSC also must have

estimated tax.

these taxes are not paid. These taxes are

amended its articles of incorporation and

If the FSC maintains an office or place of

generally reported on Form 941, Employer's

filed the amendment with the jurisdiction in

business in the United States, it must use

QUARTERLY Federal Tax Return, or Form

which it was incorporated.

electronic funds transfers to make

945, Annual Return of Withheld Federal

If the FSC has changed its address since

installment payments of estimated tax.

Income Tax.

it last filed a return (including a change to an

If the FSC does not maintain an office or

“in care of” address), check the box for

The trust fund recovery penalty may be

place of business in the United States, it can

“Address change.”

imposed on all persons who are determined

pay the estimated tax by EFTPS providing it

by the IRS to have been responsible for

has a U.S. bank account. The FSC can also

Note. If a change of address or responsible

collecting, accounting for, or paying over

arrange for its financial institution to submit a

party occurs after the return is filed, use

these taxes, and who acted willfully in not

same-day wire payment on its behalf or can

Form 8822-B, Change of Address or

doing so. The penalty is equal to the full

arrange for its qualified intermediary, tax

Responsible Party - Business, to notify the

amount of the unpaid trust fund tax. See

professional, payroll service, or other trusted

IRS. See the instructions for Form 8822-B for

Pub. 15 (Circular E), Employer's Tax Guide,

third party to make a deposit on its behalf

details.

for details, including the definition of

using a master account. In addition, the FSC

If the FSC is amending its return, check

responsible persons.

still has the option to pay the estimated tax

the box for “Amended return.”

due by check or money order. See Form

Other penalties. Other penalties may be

1120-W for additional payment information.

FSC Information

imposed for negligence, substantial

If the FSC overpaid estimated tax, it may

understatement of tax, reportable transaction

be able to get a quick refund by filing Form

understatements, and fraud. See sections

Line 1. Principal shareholder. Complete

4466, Corporation Application for Quick

6662, 6662A, and 6663.

lines 1a through 1h for the shareholder

Refund of Overpayment of Estimated Tax.

(individual, corporation, partnership, trust, or

A FSC may also be subject to a penalty

estate) that was the principal shareholder at

(under section 6686) of:

For information on penalties that apply if

the beginning of the FSC's tax year. See the

$100 for each failure to supply

the FSC fails to make required payments,

Note on page 4 under Accounting Period.

information, up to $25,000 during the

see Line 3, Estimated tax penalty, later.

calendar year.

Foreign address. Enter the information

Interest and Penalties

$1,000 for not filing a return.

in the following order: city or town, state or

These penalties will not apply if the FSC

province, country, and foreign postal code.

Interest. Interest is charged on taxes paid

Follow the country's practice for entering the

can show that the failure to furnish the

late even if an extension of time to file is

required information was due to reasonable

name of the state or province and postal

granted. Interest is also charged on penalties

cause. However, see Caution above.

code. Do not abbreviate the country name.

imposed for failure to file, negligence, fraud,

Line 2. Parent-subsidiary controlled

substantial valuation misstatements,

Specific Instructions

group. If the FSC is a subsidiary in a

substantial understatements of tax, and

parent-subsidiary controlled group and the

reportable transaction understatements from

Period covered. Enter the FSC ‘s tax year

principal shareholder is not the common

the due date (including extensions) to the

in the space provided at the top of the form.

parent of the group, complete lines 2a

date of payment. The interest charge is

See Accounting Period, earlier.

through 2g for the common parent. Enter the

figured at a rate determined under section

consolidated total assets on line 2d for a

6621.

Name. Print or type the FSC's true name (as

group that files a consolidated return;

set forth in the charter or other legal

Penalty for late filing of return. A FSC

otherwise, enter only the common parent's

document creating it).

that does not file its tax return by the due

total assets.

date, including extensions, may be penalized

Address. Enter the U.S. address where the

5% of the unpaid tax for each month or part

FSC maintains the records required under

Note. Check the “Yes” box on line 2 if the

of a month the return is late, up to a

section 6001. Include the suite, room, or

FSC is a subsidiary in a parent-subsidiary

maximum of 25% of the unpaid tax. The

other unit number after the street address. If

controlled group. This applies even if the

minimum penalty for a return that is over 60

the post office does not deliver mail to the

FSC is a subsidiary member of one group

days late is the smaller of the tax due or

street address and the FSC has a P.O. box,

and the parent corporation of another.

$205. The penalty will not be imposed if the

show the box number instead.

The term “parent-subsidiary controlled

FSC can show that the failure to file on time

If the FSC receives its mail in care of a

group” means one or more chains of

was due to reasonable cause.

third party (such as an accountant or an

corporations connected through stock

attorney), enter on the street address line

ownership (sections 927(d)(4) and 1563(a)

If you believe that reasonable cause

“C/O” followed by the third party's name and

(1)). Both of the following requirements must

exists, do not attach an explanation

street address or P.O. box.

be met:

when you file Form 1120-FSC.

CAUTION

Instead, if the FSC receives a penalty notice

1. More than 50% of the total combined

Item A. Foreign country or U.S. posses-

after the return is filed, send the IRS an

voting power of all classes of stock entitled to

sion of incorporation. See Definition of a

explanation at that time and the IRS will

vote or more than 50% of the total value of all

Foreign Sales Corporation (FSC), earlier.

determine if the FSC meets reasonable

classes of stock of each corporation in the

cause criteria.

Item E. Total assets. Enter the FSC's total

group (except the parent) must be owned by

assets (as determined by the accounting

one or more of the other corporations in the

Penalty for late payment of tax. A FSC

method regularly used in keeping the FSC's

group.

that does not pay the tax when due generally

books and records) at the end of the tax year

2. The common parent must own more

may be penalized

of 1% of the unpaid tax

from page 6, Schedule L, column (d), line 15.

than 50% of the total combined voting power

for each month or part of a month the tax is

Instructions for Form 1120-FSC (Rev. 12-2016)

-6-

Instructions For Form 1120-Fsc - 2016 Page 6

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