If the Secretary of the Treasury determines that a taxpayer was affected by a federally declared disaster area, IRC 7508A(d) provides for a mandatory and automatic 60 day period that shall be disregarded both in determining whether a required action was performed in a timely manner and in determining the amount of penalty or interest to be charged. In addition to the automatic 60 day period, IRC 7508A(a) provides that the Secretary may specify a period of up to one year that may be disregarded.

When the Secretary determines that taxpayers are affected by a federally declared disaster, the IRS publishes public guidance and/or news releases specifying both the taxpayers determined to be affected and the length of the period to be disregarded. The information can be found on the IRS website using search key "disaster tax relief." IRS employees can research this information on-line at http://www.icce.irs.gov/fema/, and at http://serp.enterprise.irs.gov/databases/irm-sup.dr/disaster/disaster.html.

IRS computer systems automatically identify taxpayers located in the covered disaster area and apply automatic filing and payment relief.

The following taxpayers also qualify for penalty relief due to federally declared disaster areas and may call the IRS disaster hotline at 1-866-562-5227 to request that relief:

If a taxpayer claims that a penalty should not have been charged due to the disaster, follow the instructions below.

For major disasters declared after November 15, 2021, for which individual assistance is being provided under section 408 of the Stafford Act, IRC 7508A(d) provides for a mandatory and automatic 60 day period that the IRS must disregard in determining whether "qualified taxpayers" performed certain required acts in a timely manner. The 60 day postponement applies to the filing and payment of any income, estate, gift, employment or excise tax. For a full list of acts to which the automatic postponement applies, see IRC 7508(a)(1)(A)-(F) .

In addition to the automatic 60 day period, the Secretary may, under IRC 7508A(a), specify a period of up to one year that may be disregarded in determining the timely performance of:

The repeal of IRC 958(b)(4) and amendment of IRC 965 effective 12/22/2017, has resulted in significant additional tax due.

Notice 2018-26 section 6.01 provides that "IRS will waive underpayment penalties under sections 6654 and 6655 with respect to a taxpayer’s net tax liability under section 965 for those taxpayers that make an election under section 965(h)" and "for those taxpayers who do not elect to pay their net tax liability under section 965 in installments." Accordingly, a taxpayer’s required installments of estimated tax need not include amounts attributable to its net tax liability under section 965 to prevent the imposition of penalties under sections 6654(a) or 6655(a).

At this time IRS computers have not been programmed to provide these waivers automatically, and the current and prior year ES tax base amounts (as displayed on IMFOLR or BMFOLR) will not exclude the net tax liability under section 965 in order to provide this waiver. This means that taxpayers may be charged an estimated tax penalty under IRC 6654 or IRC 6655 unless the taxpayer attaches Form 2210 or Form 2220 to their return with the waiver taken into account in the computation on the form.

If a taxpayer contacts IRS with respect to an assessed ES penalty, and a review of the account information shows that the penalty could be attributable at least in part to tax reportable because of IRC 965, then the ES penalty will need to be re-computed by calculating the required installment amounts without regard to the IRC 965 tax. During return processing the total IRC 965 tax reported on a return should have been recorded in the MISC field of Transaction Code (TC) 971 with Action Code (AC) 114. The portion of the tax for which payment has been deferred should be shown in the module as TC 766 with Credit Reference Number (CRN) 263. Both the amount in the MISC field of TC 971 AC 114 and any TC 766 CRN 263 amount must be excluded when calculating the required installment amounts.

Notice 2018-26 section 6.02 provides that the IRS has determined that, for 2017, "if the amendment to section 965 or the amendment to section 958(b) ... causes an underpayment related to a required installment of estimated tax due on or before January 15, 2018, the estimated tax penalty under section 6654 or section 6655 will not apply to that underpayment."

If a taxpayer contacts the IRS with respect to an assessed ES penalty for return for a tax period within the range 201712 through 201809, review the correspondence to determine if the taxpayer is claiming that the penalty is a result of amendments to IRC 965 or IRC 958(b). If so, review the taxpayer’s account and correspondence and abate the ES penalty for any installment that was underpaid as a result of an increase in tax because of the amendments to IRC 965 and IRC 958(b).

In the case where a taxpayer has made an election to have an overpayment applied to estimated tax for the next succeeding tax period, and IRS instead applies the overpayment to the next installment of IRC 965 tax due under an election under IRC 965(h), then for the purpose of computing any penalty for underpayment of estimated tax, IRS will consider the overpayment to have been applied to the estimated tax of the next succeeding year as elected by the taxpayer.

This waiver as modified by Notice 2019-25 supersedes the guidance in Notice 2019-11 and provides a waiver of the IRC 6654 Estimated Tax (ES) penalty to IMF taxpayers for taxable year 2018. This waiver is limited to individuals whose total withholding and estimated tax payments, made on or before January 15, 2019, equal or exceed 80% of the tax shown on the return for the 2018 taxable year.

To request this waiver of Estimated Tax (ES) penalty applicable under Notice 2019-25 an individual must file Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts with his or her 2018 income tax return. Taxpayers should complete Part I of Form 2210 and the worksheet included in the form instructions to determine if the waiver in this notice applies. If the waiver applies, the taxpayer should check the waiver box (Part II, Box A) and include the statement “80% Waiver” with the return.

If the taxpayer did not file a Form 2210 with the original return and subsequently requests relief from the ES penalty and meets waiver criteria, the penalty can be removed. The request does not need to be in writing.

In accordance with Notice 2019-25 Section 3, this waiver is applied pursuant to the authority of IRC 6654(e)(3)(a). If the waiver criteria are met, remove or suppress the penalty with Penalty Reason Code (PRC) 044 Reason Code (RC) 065.

Taxpayers who qualify for relief under Notice 2019-25 may have already paid additions to tax under IRC 6654 for tax year 2018. If the waiver under this notice applies to a taxpayer and the taxpayer has already paid additions to tax for the 2018 tax year, to claim a refund, the taxpayer should file Form 843, Claim for Refund and Request for Abatement. Taxpayers should complete the form and include the statement “80% Waiver of estimated tax penalty” on Line 7.

Notice 2020-23 provides relief under IRC 7508A(a) postponing federal estimated tax payments normally due on April 15, 2020, May 15, 2020, or June 15, 2020 until July 15, 2020. The relief is automatic; taxpayers do not have to call the IRS or file any extension forms or send letters or other documents to receive this relief.

If a taxpayer contacts the IRS with respect to an assessed ES penalty, and review of the account information shows that the penalty could be attributable at least in part to late payment that qualified for relief under Notice 2020-23, then the ES penalty will need to be re-computed by calculating the period of underpayment with regard to the postponed due date of July 15, 2020.

Coronavirus Aid, Relief and Economic Security Act (CARES Act), section 2302 Delay of Payment of Employer Payroll Taxes, defers payment of part of the employer’s portion of Social Security tax beyond the due date of the return. Under section 2302(b)(2) of the CARES Act, half of the IRC 1401(a) self-employment tax imposed on net earning from self-employment attributable to the period from March 27, 2020, through December 31, 2020, is disregarded in calculating the section 6654 estimated tax penalty. IRC 3510 generally treats Schedule H household employment taxes as self-employment taxes of the employer for purposes of IRC section 6654 estimated tax penalty. This means that the employer’s portion of Social Security tax imposed on wages paid during the period from March 27, 2020 through December 31, 2020, reportable on Schedule H is excludible from the ES tax base for the taxable year qualifying for the deferral. Returns subject to ES penalty generally do not report Social Security tax, with two exceptions: Form 1040 and 1041 (MFT 30, 31 & MFT 05) can include Social Security tax from Schedule H for household employees.

The ES tax base for tax periods ending December 31, 2020 through December 31, 2021 is reduced by the amount transcribed on the posted return (50% of Social Security tax, the sum of Schedule H or ES (Social Security tax is 12.4% of total reported Social Security wages.))

During processing IRS computer systems automatically identify taxpayers who qualify and automatically reduce the Estimated Tax base by the CARES Act 2302(b)(2) tax deferral amount.

If a taxpayer contacts the IRS with respect to an assessed ES penalty, and review of the account information shows that the penalty could be attributable at least in part to the deferred Social Security tax, then the penalty will need to be re-computed by calculating the required installment amounts with regard to the CARES Act 2302(b)(2) tax deferral amount.

Notice 2021-8 provides a waiver of the addition to tax under IRC 6654 for underpayment of estimated income tax by individual taxpayers, where the underpayment is attributable to the amendment to IRC 461(I)(1)(B) made by the CARES Act. The amendment eliminated the limit on an excess business loss for 2018, requiring the loss to be applied against non-business income in the year of the loss instead of being carried forward to the next taxable year.

The relief, which is not automatic, applies only for the purpose of calculating installments of estimated income tax of an affected individual taxpayer that were due on or before July 15, 2020, with respect to the taxable year that began during 2019.

To qualify for the waiver, an individual taxpayer must satisfy all of the following requirements:

To request this waiver of ES penalty applicable under Notice 2021-8 an individual must have timely filed an original tax year 2019 income tax return, correctly accounting for the CARES Act amendment to IRC 461(I)(1)(B) on the original return. The individual also must file Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts, or Form 2210-F, Underpayment of Estimated Tax by Farmers and Fishermen, as applicable, reflecting the revised estimated tax penalty computation utilizing the Taxable Income Reduction Amount (as defined in Section 4.03(1) of Notice 2021-8) for the affected taxable year that began during 2019. The taxpayer must include “Notice 2021-8” on the top of the Form 2210 or Form 2210-F and attach the following documentation:

If a taxpayer claims that they had an excess business loss that was to be carried forward, but that was now either used to offset non-business income in the year of the loss, or that was carried back, then verify the taxpayers computation as follows:

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Section 9042 of the American Rescue Plan Act (ARPA) authorizes qualified individuals who received unemployment compensation during calendar year 2020 to exclude up to $10,200 ($20,400 if filing MFJ) from their Adjusted Gross Income (AGI).

To qualify for the exclusion of unemployment income, the taxpayer(s) must:

The Exclusion of Unemployment Compensation Recovery Effort (EUCRE) is a systemic relief process used to correct certain accounts for taxpayers who filed their tax year 2020 return prior to the enactment of ARPA. Accounts are identified by a TC 971 AC 123 with MISC "UCERECOVERY03112021" after being adjusted through the systemic recovery process. This indicator will be reversed with a TC 972 AC 123 when the systemic recovery process has been completed.

Any changes made to returns via the EUCRE are treated as changes made on a timely filed superseding return. See IRM 20.1.3.2.4, Superseding Returns.

At this time IRS computers have not been programmed to compute the ES penalty with the modified AGI as the prior year. Taxpayers should complete Form 2210, Underpayment of Estimated Tax by Individuals, Estates and Trusts, and use the amount as adjusted by any EUCRE changes to the 2020 return when completing Form 2210 for the 2021 tax year.

If a taxpayer contacts IRS with respect to an assessed ES penalty for tax year 2021 and a review of the account information shows the penalty could be attributable at least in part to a EUCRE adjustment in 2020, then the ES penalty will need to be re-computed using the amount as adjusted by any EUCRE.

Former IRC 6654(d)(1)(D) provided for a lower required annual payment for certain small business taxpayers with tax periods beginning in 2009. See 26 CFR 1.6654-2(a)(1)(ii). The Tax Technical Corrections Act of 2018, P.L. 115-141, repealed this provision effective March 23, 2018. However, the repeal does not affect the treatment of:

Under former IRC 6654(d)(1)(D), certain individuals with income from a small business were required to pay only 90% (in lieu of 100% or 110%) of the preceding taxable year's tax if the following qualifications are met:

The taxpayer certifies that the qualification under (2) above has been met by checking box F on Form 2210, or box C on Form 2210-F. Form 2210 or Form 2210-F with the appropriate box checked should be filed with the return. If Form 2210 or Form 2210-F is filed separately, it should be accompanied by a signed statement that the information on the form is true and correct.

This rule expired for tax periods beginning after December 31, 2009.

IRC 6013(b) provides that taxpayers may file a joint return even after either spouse (or both spouses) has already filed a separate return. When a joint return is filed after separate returns, the computer generally cannot compute the ES penalty.

This section explains the rules for computing the penalty. The procedures for processing a separate-to-joint amended return are found in IRM 21.6.1.5.3, "Processing Married Filing Separate to Married Filing Joint Adjustments" .

The tax shown on the joint return becomes the "tax shown on the return" for that tax period when determining the required annual payment for that year or the next succeeding year. Any previously filed separate returns are disregarded. Tax is computed using all amounts listed on lines 1 – 3 of Form 2210.

The payments, withholding credits, and credit elect amounts paid by either spouse must be used in determining the underpayment (if any) for any installment.

Any adjustment involving a joint return after separate returns will require a manual estimated tax penalty computation and adjustment, even if there is no change to the penalty (TC 170 for zero amount).

If either spouse previously filed a return for the next succeeding year, research the account to determine if the penalty (or lack thereof) was based on the tax shown on the return for the year being adjusted. If it was, recompute the penalty for the next succeeding year (if possible) based on the revised joint tax and adjust as necessary.

Whenever the IRS computed penalty differs from the taxpayer's computed penalty, an explanation of the penalty computation must be sent to the taxpayer with the appropriate letter.

Taxpayers may not use the preceding taxable year’s tax if either

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For the purpose of the estimated tax penalty, a nonresident alien is an individual taxpayer who meets both of the following requirements:

Nonresident aliens (as defined above) are required to make only three installments of estimated tax.

Nonresident aliens who do not meet the above criteria are required to pay estimated tax the same as U.S. residents and citizens.

Unless the nonresident alien taxpayer elects to annualize his income, the amount due with the first installment is 50% of the required annual payment. The amounts due each with the second and third installment is 25% of the required annual payment.

If the taxpayer annualizes his income, the amount due with each installment is to be based on his income and deductions as of the end of the month preceding the month containing the due date of the installment.

In general, in the case of a calendar year individual, the installment requirements are as follows:

Nonresident alien taxpayers are subject to the same rules governing the use of prior year tax (in determining their required annual payment) as outlined in IRM 20.1.3.3.1.1 and IRM 20.1.3.3.1.1.1.

A penalty for underpayment of estimated tax by a decedent is charged only for installments due prior to the date of death. The penalty is computed on any underpayment from the installment due date to the earlier of the date paid, or the date of death.

A joint return is not considered to be the return of a decedent unless both spouses are deceased. If both spouses are deceased, the date of death for the purpose of computing the penalty is the later of the two dates of death.

All estates and most trusts are required to make estimated tax payments in the same manner as individuals.

Generally, an estate or trust is required to pay estimated tax if it expects to owe, after credit for withholding, $1,000 or more ($500 for tax years beginning before 1998). For details and exceptions, see Form 1041–ES, "Estimated Income Tax for Estates and Trusts" . Use Form 2210, "Underpayment of Estimated Tax by Individuals, Estates, and Trusts" , to figure any penalty.

The following are exempt from paying estimated tax for tax years that end earlier than two years after the date of death:

Fiduciaries may elect to treat any portion of estimated tax payments made by the trust or estate as payments made by a beneficiary. Such an amount is treated as a payment of the estimated tax made by the beneficiary on January 15 following the close of the taxable year. Fiduciaries must make these elections on Form 1041–T, "Transmittal of Estimated Taxes Credited to Beneficiaries" . These elections must be filed on or before the 65th day after the close of the trust's taxable year. See IRC 643(g).

Taxpayers who do not receive income evenly throughout the year (for example, taxpayers involved in seasonal businesses) may use the annualized income installment method for determining estimated tax payments. This method allows estimated payments that actually reflect the income earned in the period immediately before the installment due date.

Form 2210 includes Schedule AI, which is used to determine the required installments using the annualized income installment method. The amount due by each installment due date is computed by placing on an annualized basis the income for months in the taxable year ending on the last day of the month before the due date for the installment. For a calendar year taxpayer, this means the income will be annualized from the first of January for each installment period:

Estates and trusts electing to use the annualized income installment method have the same estimated tax payment due dates as individuals. However, the installment is computed by placing on an annualized basis the income for months in the taxable year ending the second month preceding the month that contains the due date for the installment. This means that for a calendar year taxpayer income is annualized as follows:

If the annualized income installment method is used for one installment and the regular method is used for the next installment, any reduced amount realized under the annualized installment versus the regular method installment, must be made up in the following regular method installment. (The annualized worksheet included in the "Instructions for Form 2210" package, as well as Schedule AI, Form 2210, recaptures any shortfall.)

For tax years 1992 and later, taxpayers must complete Form 2210, including Schedule AI, and attach them to their return if they used the annualized income installment method to compute their required installment amounts.

Taxpayers with at least two-thirds of their gross income derived from farming or fishing in the current or preceding taxable year are required to either:

See Publication 225, "Farmer's Tax Guide" , and Publication 595, "Capital Construction for Commercial Fishermen" , for the definition of gross income.

See Exhibit 20.1.3-4. This exhibit contains specific instructions for computing 2/3 of gross income, as well as a list of income items that qualify as income from farming or fishing.

For qualifying farmers and fishermen, the required annual payment is the smaller of the following:

For joint returns, the spouse's income must be considered in determining if the taxpayer meets the two-thirds of gross income from farming or fishing requirement.

If a taxpayer qualifies as a farmer or fisherman, an indicator is generally placed on the taxpayer's file. The indicator will be shown on IDRS response screens for command codes TXMOD, PIEST, and IMFOL. See IRM 2.3.11, "Command Codes TXMOD and SUMRY" , IRM 2.3.41, "Command Code PIEST" , and IRM 2.3.51, "Command Code IMFOL" .

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Individual taxpayers may file a short period return due to a change in accounting period or due to a change in accounting methods. Two short period returns may also be filed during a single taxable year if the taxpayer enters bankruptcy during the taxable year.

A return filed for an individual who was born during the taxable year and a return filed for an individual who died during the taxable year (an early filed decedent return) are not short taxable year returns. They are considered to be for a full taxable year of twelve months. However, special rules apply to decedent returns. See IRM 20.1.3.3.1.1.5.

Trusts and estates may file an initial short taxable year return or a final short termination year return. Prior to 1987 a trust might also have filed a short year return due to a change in accounting periods.

A bankruptcy estate may also elect to end its taxable year early in order to determine its tax liability prior to closing of the bankruptcy.

Taxpayers filing a short year return generally are required to make estimated tax payments.

The amount of each required installment may be determined using the annualized income installment method.

If the annualized income installment method is not used, the required annual payment generally must be paid in equal installments. The fraction due with each equal installment is determined by dividing the required annual payment by the number of installments due:

For the annualized income installment method, the multipliers for lines 2 and 5 of Schedule AI are determined by dividing the number of months in the tax period by the number of months that precede the due date of the given installment.

An exception applies to estates and trusts using the annualized method. The multipliers for lines 2 and 5 of Schedule AI are determined by dividing the number of months in the tax period by the number of months that precede the due date of the given installment by one month or more.

Registered domestic partners (RDP) in California, Nevada, and Washington must follow state community property laws and report half of the combined community income of the individual and his or her RDP.

These rules apply to RDPs in California, Nevada, and Washington because they have full community property rights in 2010. California RDPs attained these rights as of January 1, 2007. Nevada RDPs attained these rights as of October 1, 2009, and Washington RDPs attained these rights as of June 12, 2008. For years prior to 2010, RDPs who reported income without regard to the community property laws may file amended returns to report half of the community income for the applicable periods, but are not required to do so.

There is no specific waiver of the estimated tax penalty for RDPs. Please see IRM 20.1.3.3.2.1.2 (1). Determining whether imposing the penalty is against equity and good conscience must be done on a case by case basis. For amended returns, consider whether original returns received a penalty and whether a penalty would be assessed if the original returns were filed correctly. If there are sufficient facts to determine that imposing the penalty is against equity and good conscience, input TC 170 .00.

Taxpayers may file Form 2210 or Form 2210–F to compute their penalty, depending on which form they qualify to use. The forms may be filed with a return, or after the IRS has notified the taxpayer of a penalty assessment.

Taxpayers are required to file Form 2210 with their return if they—

Forms filed with the taxpayer's return will be processed in accordance with the applicable IRM.

Loose forms, and forms received with an amended or superseding return, must be manually verified before the taxpayer's figures are accepted. See IRM 20.1.3.3.1.7 for specific instructions.

When verifying Form 2210–F, care should be taken to ensure that the taxpayer is a qualifying farmer of fisherman. See IRM 20.1.3.3.1.1.8.

When verifying either Form 2210 or Form 2210–F, compare the tax shown on the original returns (or superseding return(s), if applicable) with the amounts used in the taxpayer's computation. Remember, the penalty is computed based on original tax.

Tax (for the purpose of computing the estimated tax penalty) is figured using the tax and credits as outlined in the Form 2210 instructions.

Special rules apply for figuring "tax shown on prior return" if the taxpayer filed jointly in one year but not both. See IRM 20.1.3.3.1.1.3.1, Changes in Filing Status.

If the taxpayer provides Form 2210 with his return in response to an SFR assessment (or proposed assessment), verify the taxpayer's computation. If the figures on the taxpayer's Form 2210 indicate that he had a tax liability for the previous year but failed to file a return (see Form 2210 line 8 instructions), accept the taxpayer's figures even if IRS otherwise presumed no tax liability for the prior year. See IRM 20.1.3.3.1 (4).

IRS employees may use Form 2210 or Form 2210–F as a worksheet when computing the penalty for underpayment of estimated tax. Accounts Management Services (AMS) includes Form 2210 worksheets for calendar years beginning with 2009.

When a taxpayer fails to file a return for any year for which he is required to file, the Secretary is authorized to file a substitute for return (SFR) on the taxpayer's behalf under IRC 6020(b). For income tax returns, the assessment of tax determined to be due on such a substitute return is made after the Service has issued a notice of deficiency which explains the taxpayer's appeal rights.

When a taxpayer has not filed a return, then the estimated tax penalty to be included in such notice of deficiency is based on the lesser of the following:

Taxpayers who disagree with an SFR assessment often will file their own return showing a lesser amount of tax. The IRS is not obligated to consider such a return unless that taxpayer has previously paid the SFR assessment. However, in the interest of customer service and burden reduction, the IRS will generally consider on its merit any return filed by the taxpayer.

When an SFR assessment is adjusted (increase or decrease) after an SFR assessment (including if based on the taxpayer's own return), the estimated tax penalty may be required to be manually adjusted based on the revised tax for the year.

Household employment taxes, Schedule H, are includible in tax shown on the return unless both of the following apply:

IRC 3510(b)(2) provides that household employers who are not subject to income tax withholding, and who are not otherwise required to make estimated tax payments, will not be subject to the estimated tax penalty solely by reason of having to include household employment tax on their return.

Occasionally a law is enacted that has retroactive tax consequences. When this happens, the law often includes a provision under which the estimated tax penalty may be waived to the extent that the penalty is a direct result of the change in the law.

To claim a waiver based on a change to the tax law, the affected taxpayers should do the following:

IRC 6654(e)(3)(A) provides that the estimated tax penalty may be waived if the failure to make the estimated tax payment is due to casualty, disaster, or other unusual circumstances such that the imposition of the penalty would be against equity and good conscience.

The waiver provisions of IRC 6654(e)(3)(A) are not equivalent to reasonable cause. For example, reliance on the advice of a competent tax advisor may constitute reasonable cause that would warrant relief from other penalties, but it does not provide a basis for a waiver of the estimated tax penalty under IRC 6654(e)(3)(A).

In order for the waiver to be available, both of the following conditions must be met:

The following are examples of situations where the waiver may be granted if it is determined that imposition of the penalty would be against equity and good conscience:

The waiver may not be granted if the failure is due to any of the following:

The waiver also may not be granted if (based on the facts of the case) it would not be against equity and good conscience to assess the penalty. Generally speaking, it would not be against equity and good conscience to impose the penalty if either of the following apply:

Requests for a waiver of the estimated tax penalty under IRC 6654(e)(3)(A) must be submitted in writing and signed by the taxpayer. Waivers may not be granted based on an oral request from the taxpayer. Waiver of the penalty must be specifically approved by a manager or designee with delegated authority.

A taxpayer may be eligible for a waiver of the penalty under IRC 6654(e)(3)(B) if both of the following apply:

If an individual qualifies for this statutory waiver, the estimated tax penalty should be abated using Reason Code 065, with Penalty Reason Code 044 to identify the abatement.

If the individual does not meet the waiver conditions in both a) and b) above, send an 854C letter using the appropriate paragraph(s) informing the taxpayer of the reason for denial and explaining his or her appeal rights. Input TC 290 for zero with Blocking Series 98 (without return) or 99 (with return) and Reason Code 065.

A taxpayer may convert a traditional IRA into a Roth IRA. If a taxpayer converts a traditional IRA to a Roth IRA the amount converted into a Roth IRA should be divided equally between all four quarters.

A corporation is not required to make estimated tax payments if the tax shown on the return (or, if no return is filed, the tax) is less than $500.

Corporations (and other taxpayers subject to IRC 6655) file short period returns for various reasons. Estimated tax payments are still required unless they are otherwise exempt:

In the case of a short taxable year, the installment due dates are determined by the number of months in the taxable year and by the type of taxable year the taxpayer has chosen. For the purpose of determining the due date of any required installment for a short taxable year, a partial month is treated as a full month.

If a taxpayer filing a short period return wishes to use tax from the prior year to determine the required annual payment, the tax for the prior period must be adjusted by dividing the tax by 12 and multiplying the result by the number of months in the short period.

Taxpayers may elect to use the annualized income or the adjusted seasonal income installment method for computing the amount required to be paid with each installment. If neither of these methods is used, the corporation must pay a percentage of the required annual payment with each installment, with the percentage determined by the number of required installments:

Domestic corporations shall be required to make estimated tax payments based on the excess of the sum of the following tax(es) over any credit(s) allowed under IRC 27 through IRC 54:

A foreign corporation must make estimated tax payments in the same manner, and on the same taxes, as a domestic corporation described in IRM 20.1.3.4.1.1.3 above with certain modifications.

A foreign corporation subject to tax under IRC 11, 1201(a), or subchapter L of Chapter 1 must treat the tax imposed under IRC 881, Tax on Income of Foreign Corporations not Connected with United States Business, as a tax imposed by IRC 11 on which estimated tax payments also must be made. A foreign corporation not subject to tax under IRC 11, 1201(a), or subchapter L of Chapter 1 is not required to make estimated tax payments on taxes imposed under IRC 881.

For taxable years beginning after December 31, 1994, taxpayers using the annualization method to compute estimated tax payments must take into account income under IRC 951(a) in a manner specified in IRC 6655(e)(4). For more information, see Rev. Proc. 95-23.

Only tax listed above is includible in total tax for the purpose of determining the required annual payment amount for a foreign corporation. For example, branch profits tax is not includible. See 26 CFR 1.884-1(a) and IRM 21.8.2.9.3 (3), Payment of Tax Due-Form 1120-F.

IRC 6655(g)(3) requires the payment of estimated tax for tax on unrelated business income of tax exempt organizations and private foundations. Private foundations are also required to pay estimated tax for all tax on their other taxable income and for any excise tax based on investment income.

Effective for taxable years beginning after December 31, 1989, IRC 6655(g)(4) requires that certain taxes shall be treated as taxes imposed by IRC 11. Estimated tax payments are required by S-corporations based on the following taxes:

The required annual payment for S-corporations is the lesser of the following:

Large corporations, for tax years beginning after December 31, 1993, are required to pay 100 percent of the current year's tax.

A large corporation is defined as a corporation (or its predecessor) having taxable income of $1,000,000 or more during any of the 3 years preceding the taxable year.

If any of the three preceding years of a corporation were less than a full year, the corporation must multiply the taxable income for the short year by 12 and divide the resulting amount by the number of months in the short year to determine if it meets the $1,000,000 criterion for a large corporation.

For corporations that are members of a controlled group, the $1,000,000 amount specified shall be equally divided among the members of the controlled group, unless all members agree to an unequal allocation of the amount. Schedule O (Form 1120), Consent Plan and Apportionment Schedule for a Controlled Group, Part IV, column (e), is used to report the allocation of the amount.

Large corporation taxable income is determined without regard to any net operating loss or capital loss carried forward or back to the taxable year under IRC 172 or IRC 1212(a).

Partnerships with foreign partners are required to withhold income tax on all effectively connected taxable income (ECTI) allocable to its foreign partner(s) under IRC 704. The partnership reports the total tax due on Form 8804, Annual Return for Partnership Withholding Tax (Section 1446).

Tax due on Form 8804 is required to be paid as estimated tax following essentially the same rules as those existing for corporations, except as modified by 26 CFR 1.1446-3(b).

For specifics regarding the estimated tax requirements, and regarding the computation of the penalty, see the instructions for Schedule A (Form 8804).

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The following are the requirements a partnership must have met in order to qualify for the prior year safe harbor:

The partnership may elect to use the annualized income installment method or the adjusted seasonal method, in lieu of the safe harbor method. If the taxpayer elects to use the safe harbor method, that method must be used for all installments, with one exception: If, in an installment period following the first installment, the partnership determines that current year ECTI will exceed twice prior year ECTI, then the partnership may elect to change the installment method at that time to the annualized income installment method. The election to make this change must be disclosed in a statement attached to the Form 8804 the partnership files for the taxable year and must include information to allow the IRS to determine whether the change was appropriate.

A partnership may claim credit on its return for the following:

Tax withheld is credited with TC 766 and removed with TC 767, using the appropriate credit reference number:

Unless the taxpayer elects to use the annualized or adjusted seasonal method to determine its required installment amounts, the taxpayer is required to pay the total required annual payment in equal installments paid on each installment due date. The amount of each installment is determined by dividing the required annual payment by the number of installments due.

Exceptions to the equal installment rule:

A corporation may be able to lower one or more of its required deposits if its income is expected to vary during the year. In general, if a corporation establishes that either the annualized or adjusted seasonal method can reduce its required installment from what it would be if the regular method were used, the corporation may pay the lesser amount.

The corporation must attach a completed Form 2220 to its return if the annualized or adjusted seasonal method of determining the payment is used.

A corporation that reduces any required installment by annualizing its income, then switches to another method to determine a required deposit, must recapture 100 percent of any prior reduction in the next installment using the other method.

The annualized income installment for a corporation is the excess of—
an amount equal to the applicable percentage of the tax for the taxable year computed by placing on an annualized basis the taxable income and modified taxable income,

A corporation may elect to use different annualization periods. To make this election, the corporation must complete Form 8842, Election to use Different Annualization Periods for Corporate Estimated Tax, and file it by the due date of the first installment (by the 15th day of the 4th month of the year for which the election is being made).

It should be noted that the required annual payment under the annualized method does not take into consideration any tax liability incurred in the final 1 to 3 months. This means that when a disproportionately large fraction of a taxpayer's tax liability is incurred after the final annualization period, the required annual payment can be less than it would be if the annualized income installment method is not used.

The amount of a required installment under the adjusted seasonal method is based on the average rate income is received during the preceding three taxable years. For the specific computation, see Form 2220 Schedule A Part I.

Form 2220 Schedule A must be completed and attached to the return if the taxpayer chooses to compute the required installment amount using the adjusted seasonal installment method or using the annualized income installment method.

The Economic Growth and Tax Relief Act postponed the due date of any estimated tax installment normally due on September 15, 2001, until October 1, 2001.

The Jobs and Growth Tax Relief Reconciliation Act postponed the due date of 25% of the estimated tax installment normally due on September 15, 2003, until October 1, 2003.

The Tax Increase Prevention and Reconciliation Act of 2005 increased the amount of the installment due in July, August, or September of 2006 to 105% of the amount that would otherwise be due, with the required amount of the succeeding installment being reduced accordingly. This special provision applies to corporations with assets of not less than one billion dollars.

The Amendment to African Growth & Opportunity Act of 2012 increased the amount of the installment due in July, August, or September of 2017 to 100.25% of the amount that would otherwise be due, with the required amount of the succeeding installment being reduced accordingly. This special provision applies to corporations with assets of not less than one billion dollars.

In general, the term “tax shown on the return for the preceding year” in IRM 20.1.3.4.1.1 refers to the tax shown on the original return, or on a superseding return filed before the original return due date without regard to extensions. However, for periods beginning after 09/06/2007 there is an exception.

26 CFR 1.6655-1(g)(2)(iv) provides that if an amended return has been filed before the due date of an installment, then, with respect to installments due after that date, the return for the preceding year is the amended return.

Because only the first installment may be based on prior year tax for a large corporation, large C corporations are not impacted by this provision for tax years beginning after 12/31/2015, unless the corporation’s taxable year ends in June. (The prior year amended return would be a superseding return if it was filed on or before the due date of the first installment.)

Before IRC 6072 was amended by the 2015 Surface Transportation and Veterans Health Care Improvement Act of 2015, P.L. 114-41, tax returns of corporations on a calendar year had to be filed on or before March 15 of the year following the close of the taxable year; fiscal-year returns had to be filed by the 15th day of the third month following the close of the taxable year.

P.L. 114-41 amended section 6072 by making the due date for calendar-year C corporate returns April 15 following the close of the calendar year, and the due date for fiscal-year C corporate returns the 15th day of the fourth month following the close of the taxable year, effective for taxable years beginning after 12/31/2015. Under these amendments, the April 15th due date for a large C corporation’s original calendar-year return is also the due date of the first required installment. IRC 6655(c). Thus, it is not possible for a calendar-year C corporation to file an amended return for the prior taxable year before the due date of its first required installment, as required by section 1.6655-1(g)(2)(iv).

P.L. 114-41 was effective for tax periods beginning after 12/31/2015 with respect to all corporations except those with a tax period that ends in June. For taxable years ending in June, the changes are not effective until the first taxable year that begins after 12/31/2025. This means that a large corporation with a taxable year ending in June could file an amended return before the due date of the first installment without that amended return being a superseding return.

The following examples show how to apply the rules in paragraphs (1) through (2) above for amended returns filed for the previous taxable year:

For certain tax exempt organizations with unrelated business income, the underpayment period shall be from the date the payment is due to the earlier of either:

For private foundations and private foundations organized as a trust or corporation, the underpayment period is determined by the number of days from the payment due date to the earlier of either:

IRC 6425 allows for an adjustment to an overpayment of corporate estimated income tax. Form 4466, Corporation Application for Quick Refund of Overpayment of Estimated Tax, shall be filed after the last day of the taxable year, and

In the event of an excessive adjustment, IRC 6655(h) imposes a penalty. An excessive adjustment exists if the tax liability shown on the return for the taxable year is greater than the estimated tax paid after the reduction for the adjustment. The amount subject to penalty is the lesser of the following:

The penalty rate is the rate that applies during the underpayment period. See IRM 20.1.3.4.1.6.

The underpayment period, as it relates to an excessive adjustment under IRC 6425 is as follows:

Corporations may complete Form 2220 to compute, reduce or eliminate an estimated tax penalty. A corporation is required to file Form 2220 with its return if any of the following apply:

Since the 2005 version, Form 2220 has been broken down as follows:

If a corporation's income varies during the tax year, it may use the Annualized Income Installment Worksheet or the Adjusted Seasonal Installment Worksheet included as Schedule A with the Form 2220.

Partnerships that are required to withhold income tax on effectively connected income from their foreign partners use Schedule A (Form 8804), Penalty for Underpayment of Estimated Section 1446 Tax by Partnerships, to compute their estimated tax penalty, a partnership is required to file Schedule A (Form 8804) if Part II line 1, total section 1446 tax shown on Form 8804, line 5f, is $500 or more and either of the following applies:

Since the 2006 version, Schedule A (Form 8804) has been broken down as follows:

Credits claimed by a taxpayer on Form 2220 or on Schedule A (Form 8804) should be verified. This can be done by checking the appropriate CFOL or IDRS command codes.

Compare both the dollar amounts and the received dates of payments posted in the module against payments claimed on Form 2220 or on Schedule A (Form 8804).

TC 710 or TC 716 credit is a "credit elect" of an overpayment received from a prior tax period. The transaction date of the credit elect reflects the credit availability date. This date may differ from the date the taxpayer used in its computation on Form 2220. If the dates differ, verify the accuracy of our date, and explain the difference to the taxpayer if it results in a different penalty on the account.

TC 660 transactions generally reflect federal tax deposits made either using a deposit coupon, or via electronic funds transfer (EFT).

Deposits are posted by IRS as estimated tax payments using the effective date reported by the Federal Depository, generally the taxpayer's bank.

Discrepancies between dates recorded by the taxpayer and dates reflected on the taxpayer's account frequently arise from the taxpayer's failure to comply with the depository's rules for tax deposits:

TC 670 subsequent payments will be credited to a tax period as of the received date of that payment. Subsequent payments may be received via mail or via electronic funds transfer

TC 610 is a payment that is received with the return payment voucher or via electronic funds transfer. This payment will post to the tax module with the date the payment was received by IRS.

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The taxpayer's annualized income installment method for computing required installment amounts may be addressed/examined as part of an examination of the taxpayer's return and, if appropriate, an adjustment to the penalty proposed. Such an adjustment does not require deficiency procedures. See IRC 6665(b).

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