The Department of the Treasury and the Internal Revenue Service (IRS) observed that some small corporate taxpayers reported Corporate Alternative Minimum Tax (CAMT) for tax year 2023 when they may not be subject to the tax. CAMT applies to corporations based on their adjusted financial statement income (AFSI). Only “applicable corporations” pay CAMT. Generally, corporations with average annual AFSI exceeding $1 billion are classified as applicable corporations. The IRS suggests small corporate taxpayers who reported a tax year 2023 CAMT liability review their applicable corporation determination on Form 4626, Alternative Minimum Tax – Corporations. A taxpayer reported a CAMT liability if there is a positive value on Form 1120, U.S. Corporation Income Tax Return, Schedule J, line 3. CAMT Safe Harbor If a corporation meets the CAMT safe harbor and was not an applicable corporation in a prior year, it is not required to pay CAMT or file Form 4626. See “Simplified Method for Determining Applicable Corporation Status” in the 2023 Instructions for Form 4626. A corporation generally qualifies for the CAMT safe harbor if the corporation's average annual AFSI for the three preceding tax years is less than $500 million. Special rules apply to corporations that are part of a controlled group treated as a single employer with the corporation under section 52(a) or (b) or members of a foreign-parented multinational group. Form 4626 If a corporation does not meet the CAMT safe harbor or was an applicable corporation in a prior tax year, it is required to file Form 4626. Form 4626 is used to determine whether a corporation is an applicable corporation and, if so, to calculate any CAMT owed. Form 4626, Part I is used to determine if a corporation is an applicable corporation. Form 4626, Part II is used to calculate CAMT, but is only required if the corporation is classified as an applicable corporation in Part I or has otherwise been classified as an applicable corporation in the current year or a prior year. A corporation that is not an applicable corporation should not complete Form 4626, Part II or pay CAMT. How to Request a Refund for Incorrect CAMT If a corporation has incorrectly reported CAMT, the corporation can file Form 1120-X, Amended U.S. Corporation Income Tax Return, to correct the tax reported.
