The Underpayment of Estimated Tax by Corporations Penalty applies to corporations that don't pay enough estimated tax payments or pay them late. The penalty may apply even if we owe you a refund.
Corporations generally pay quarterly estimated tax payments if they expect to owe $500 or more in estimated tax when they file their tax return.
We send you a notice or letter if you owe the Underpayment of Estimated Tax by Corporations Penalty. For more information, see Understanding Your IRS Notice or Letter.
We calculate the amount of the Underpayment of Estimated Tax by Corporations Penalty based on the tax shown on your original return or on a more recent return that you filed on or before the due date. The tax shown on the return is your total tax minus your total refundable credits.
We calculate the penalty based on:
We charge interest on penalties.
The date from which we begin to charge interest varies by the type of penalty. Interest increases the amount you owe until you pay your balance in full. For more information about the interest we charge on penalties, see Interest.
Send us a payment or pay your estimated taxes in full on time to stop future penalties and interest from adding up.
We may remove or reduce a penalty if any of the following apply:
If exceptions do apply and result in a lower penalty, you can ask us to adjust the amount of the penalty. Send Form 2220, Underpayment of Estimated Tax by Corporations or, if applicable, Form 2210, Underpayment of Estimated Tax by Individuals, Estates and Trusts to the address on the payment stub of your notice. Include a signed letter confirming the accuracy of the form and payments for all penalties you calculated.
While we can't adjust the Underpayment of Estimated Tax by Corporations Penalty for reasonable cause, we may consider making an adjustment if we imposed the penalty after you relied on incorrect written advice we gave you.
Check if you meet the following criteria:
If you believe you meet the criteria, mail a statement signed under penalty of perjury that describes how our erroneous written advice resulted in the penalty. Include a copy of both the written request for advice you sent us and our written response. Mail the original statement and copies of the supporting documents to the address on your penalty notice. Keep a copy of the documents you sent to us.
When you sign a statement under penalty of perjury, you may be found guilty of a crime if you knowingly lie in your statement.
To avoid a penalty, do the following:
If you can't pay the full amount of your taxes or penalty on time, pay what you can now and apply for a payment plan. You may reduce future penalties when you set up a payment plan.
For help with a penalty, call the phone number on your notice or letter. If you didn’t receive a letter or notice, use telephone assistance.