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I have a recent C Corporation that has not been paying their…

I have a recent C...
I have a recent C Corporation that has not been paying their corporate taxes quarterly. What is the penalty for this?
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Answered in 6 minutes by:
6/22/2018
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,894
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Have you seen the 2220:

...

https://www.irs.gov/pub/irs-pdf/f2220.pdf

...

Rate's same as for everyone else (4% for 2017)

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Customer reply replied 1 month ago
No. Does this mean the corp will be paying an annual rate of 4% for not filing quarterly taxes? And that is it?

Interest as well

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Customer reply replied 1 month ago
OK. I am just trying to confirm my understanding that it is a nominal expense. I thought 4 percent WAS the interest. Can you tell what what the total % penalty for not filing. I realize I can reveiw the form and come up with the answer. But I was thinking all the penalty is is a small rate of interest on top of what quarterly payment should have been.

Let me back up and give you the details

...

Bear with me a sec

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Failure to pay: The failure to pay penalty is calculated at a rate of 0.5% per month for each month the failure continues. (IRC §6651(a)(2))

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Interest is computed to the nearest full percentage point of the Federal short term rate for that calendar quarter, plus 3%. (IRC §6621)

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Generally, a corporation is subject to the penalty if it did not timely pay at least the smaller of: 1. The tax shown on its 2017 return, or 2. The tax shown on its 2016 return (if it filed a 2016 return showing at least some amount of tax and the return was for a full 12 months). However, a large corporation can base only its first required installment on the prior year's tax

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There's also a specific exception for corporations:

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A corporation will not have to pay a penalty if the tax shown on the corporation's 2017 return (the Form 2220, Part I, line 3 amount) is less than $500

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The penalty is figured separately for each installment due date. Therefore, the corporation may owe a penalty for an earlier due date even if it paid enough tax later to make up the underpayment. This is true even if the corporation is due a refund when its return is filed. However, the corporation may be able to reduce or eliminate the penalty by using the annualized income installment method or the adjusted seasonal installment method. See the instructions for Part II for details.

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Lacerate should have the 2220 (If I remember correctly that you use Lacerate).

...

Your positive rating, using those stars on your screen, would be appreciated.

That’s the only way JustAnswer will compensate me for the time here.

Thank you!

Lane

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Other questions?

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Customer reply replied 1 month ago
Ok. Bot***** *****ne is corp could be required to pay a monthy penalty of .5 % monthly. The federal interest rate is 5% I believe. addon 3%= 8 %. divide by 12 =.67.So with penalty we are looking at 1.17% per month for each month late. This gives me the data I need. I was just concerned there might be some C corp penatly I was unaware of and wanted to double check with you. Let me know if I got it. I will give you 5 stars.

You got it!

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Your positive rating, using those stars on your screen, would be appreciated.

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Did you see my "You got it?"

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Hi Dave ... just checking back in ... doesn't look like you've rate me yet

Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,894
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified
Lane and 87 other Tax Specialists are ready to help you
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Thanks much!

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