The IRS has issued guidance (Notice 2024-33) with limited relief waiving estimated tax penalties arising from a liability under the new corporate alternative minimum tax (CAMT). The relief in the notice only applies for determining the installment of estimated income tax of a corporate taxpayer that is due on or before April 15, 2024, or May 15, 2024, for fiscal-year taxpayers with respect to a taxable year that began in February 2024. Previous estimated tax liability relief was issued in Notice 2023-42.
The CAMT was enacted as part of the Inflation Reduction Act and generally imposes a 15% tax on “adjusted financial statement income” (AFSI) for corporations with $1 billion or more in AFSI. The tax is effective for tax years beginning after Dec. 31, 2022, but the IRS has released only limited guidance on the CAMT in the form of notices (e.g., Notice 2023-7, Notice 2023-20, Notice 2023-64, and Notice 2024-10). The IRS has said proposed regulations with more substantial guidance is imminent.
Given the lack of guidance, the IRS has previously provided estimated tax liability relief in Notice 2023-42, which waives underpayments of estimated taxes under Section 6655 attributable to a corporation’s CAMT liability. Specifically, while some corporate taxpayers may have already made an installment of estimated tax, the notice provided that the required installment of estimated tax due on or before April 15, 2024, or on or before May 15, 2024, for fiscal years beginning in February, need not include amounts attributable to its CAMT liability. The waiver was in light of the continuing challenges associated with determining whether a corporation is an applicable corporation and the amount of a corporation’s CAMT liability “in the interest of sound tax administration.”
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