Estimated Tax Payments

Generally, the following rules apply to the RIC’s payments of estimated tax.

RIC can show that the failure to file on time was due to reasonable cause.

Late payment of tax. A RIC that does not pay the tax when due may generally be penalized ¹ /2 of 1% of the unpaid tax for each month or part of a month the tax is not paid, up to a maximum of 25% of the unpaid tax. The penalty will not be imposed if the RIC can show that the failure to pay on time was due to reasonable cause.

Reasonable cause determinations. If the RIC receives a notice about a penalty after it files its return, send the IRS an explanation and we will determine if the RIC meets the reasonable cause criteria. Do not attach an explanation when the RIC’s return is filed.

• Form 944, Employer’s ANNUAL Federal Tax Return; or

• Form 945, Annual Return of Withheld Federal Income Tax.

Trust fund recovery penalty. This penalty may apply if certain excise, income, social security, and Medicare taxes that must be collected or withheld are not collected or withheld, or these taxes are not paid. These taxes are generally reported on:

• Form 720, Quarterly Federal Excise Tax Return;

• Form 941, Employer’s QUARTERLY Federal Tax Return;

• The RIC must make installment payments of estimated tax if it expects its total tax for the year (less applicable credits) to be $500 or more.

• The installments are due by the 15th day of the 4th, 6th, 9th, and 12th months of the tax year. If any date falls on a Saturday, Sunday, or legal holiday, the installment is due on the next regular business day.

The trust fund recovery penalty may be imposed on all persons who are determined by the IRS to be responsible for collecting, accounting for, or paying over these taxes, and who acted willfully in not doing so. The penalty is equal to the full amount of the unpaid trust fund tax. See the Instructions for Form 720 or Pub. 15 (Circular E), Employer’s Tax Guide, for details, including the definition of responsible persons.

• The RIC must use electronic funds transfer to make installment payments of estimated tax.

• If, after the RIC figures and deposits estimated tax, it finds that its tax liability for the year will be more or less than originally estimated, it may have to refigure its required installments. If earlier installments were underpaid, the RIC may owe a penalty. See the instructions for line 30, later.

• If the RIC overpaid its estimated tax, it may be able to get a quick refund by filing Form 4466, Corporation Application for Quick Refund of Overpayment of Estimated Tax. The overpayment must be at least 10% of the RIC’s expected income tax liability and at least $500.

See section 6655 and Pub. 542, Corporations, for more information on how to figure estimated taxes.