Large corporations must increase estimated tax installment

Large corporations must increase estimated tax installmentBecause of a change in law from 2012 that was designed to meet certain congressional budgetary scoring goals, corporations with assets of $1 billion or more must increase the required installment of estimated tax due in July, August or September of 2017 by 0.25% of the amount that otherwise would have been due for that installment. The amount of the next required installment would be decreased by an equal amount to reflect the increase in the previous installment.

For example, an applicable calendar-year corporation with an installment of estimated tax due in September that was otherwise $1 million, would make a timely payment of $1,002,500. If the corporation had the same amount of estimated tax otherwise due in December, the corporation would make a timely payment of $997,500. Required installments are generally due by the 15th day of the fourth, sixth, ninth, and 12th months of the tax year. If a due date falls on a Saturday, Sunday or legal holiday, the installment is due on the next regular business day.

The law is unclear as to how a corporation calculates its assets in order to determine whether it meets the $1 billion size threshold. To avoid potential penalties, taxpayers should consider taking a conservative approach in determining whether they meet these requirements, which are described in the instructions of Form 1120-W, Estimated Tax for Corporations.

Contact Dave Auclair
National Managing Principal, Washington National Tax Office
T +1 202 521 1515 

Shamik Trivedi
Manager, Washington National Tax Office
T +1 202 521 1511

Dustin Stamper
Director, Washington National Tax Office
T +1 202 861 4144

Tax professional standards statement
This content supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of tax and nontax factors not described herein. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. All references to “Section,” “Sec.,” or “§” refer to the Internal Revenue Code of 1986, as amended.