DRS: IP 2004(19), Guide to Calculating Annualized Estimated Corporation Business Tax Installments and Worksheet CT-1120AE

 

STATE OF CONNECTICUT
DEPARTMENT OF REVENUE SERVICES

450 Columbus Blvd
Hartford CT 06103
 
 
 
 
 
 

 
 
 
This Informational Publication has been superseded by IP 2005(14)
 
IP 2004(19)
 

Guide to Calculating Annualized Estimated Corporation Business Tax Installments and Worksheet CT-1120AE


Purpose: To explain an alternate method for calculating installments of estimated Connecticut corporation business tax for corporations that do not receive income evenly throughout the year (because more income was earned later in the year than in the early part of the year, or for any other reason). Under the annualized estimated corporation business tax installment method, the required installment for one or more periods may be less than the amount of the installment calculated using the regular installment method.


Effective Date: Upon issuance.


Statutory Authority: Conn. Gen. Stat. §12-242d, as amended.


1. Who should pay estimated corporation business tax? Every corporation carrying on business or having the right to carry on business in Connecticut, whose current year tax exceeds $1,000 after applying corporation business tax credits, must pay estimated tax in four installments, or be subject to interest on the underpayment of estimated tax.

A corporation that made an estimated tax payment in the prior income year or whose corporation business tax liability exceeded $1,000 for the prior income year will receive four preprinted estimated tax payment coupons with instructions, from the Department of Revenue Services (DRS).

2. What is my required annual payment? Your required annual payment is the lesser of:

  • 90% of the tax (including surtax and after tax credits) shown on the Connecticut corporation business tax return for the current income year, or if no return is filed, 90% of the tax for such year; or
  • 100% of the tax (including surtax) shown on the Connecticut corporation business tax return for the previous income year without regard to tax credits, if the previous income year was an income year of 12 months and if the company filed a return for the previous income year showing a liability for tax.

Surtax: For income years beginning on or after January 1, 2004, and prior to January 1, 2005, any company subject to the corporation business tax must pay a surtax equal to 25% (.25) of the tax due without regard to credits. The surtax does not apply to the minimum tax of $250. (Conn. Gen. Stat. §12-214(b), as amended by 2003 Conn. Pub. Acts 2, §32, as further amended by 2003 Conn. Pub. Acts 1, §87 (June Spec. Sess.); §12-219, as amended by 2003 Conn. Pub. Acts 2, §34, as further amended by 2003 Conn. Pub. Acts 1, §88 (June Spec. Sess.))

3. When should I file? For calendar year filers, the estimated corporation business tax installments are due March 15, June 15, September 15, and December 15. Fiscal year filers should file estimated payments on or before the fifteenth day of the third, sixth, ninth, and twelfth months of the income year. If the due date falls on a Saturday, Sunday, or legal holiday, the next business day is the due date.

4. How much is due with each installment? Generally, a company must pay the required annual payment in four installments as computed on Forms CT-1120 ESA, ESB, ESC, ESD, Estimated Corporation Business Tax, or Forms CT-990T ESA, ESB, ESC, or ESD, Estimated Unrelated Business Income Tax. However, a company that does not receive income evenly throughout the year, because more income was earned later in the year than in the early part of the year, or for any other reason, may benefit from using the annualized income installment method. The amount due with each payment may vary depending upon the amount of income earned during the period preceding the due date of each installment. One or more payments may be reduced or eliminated for periods in which a company’s income is low and larger payments may be required during the remaining periods when its income is higher.

5. How do I calculate the amount of each installment using the annualized estimated corporation business tax installment method? Complete Worksheet CT-1120AE shown below. You must complete one entire column before continuing to the next column. Enter the amount from Line 19 of the appropriate column of the worksheet on Line 5 of Forms CT-1120 ESA, ESB, ESC, ESD or Forms CT-990T ESA, ESB, ESC, or ESD.

6. How do I pay my estimated corporation business tax? Corporations can use Fast-File to electronically file Forms CT-1120 ESA, ESB, ESC, and ESD and pay the tax due. Fast-File is a quick, easy, and secure way to fulfill Connecticut tax responsibilities without paper or postage. Visit the DRS Web site at www.ct.gov/DRS and click on File/Register OnLine.

DRS recommends using Fast-File to electronically file, however, a corporation that does not otherwise choose to use Fast-File, must use the preprinted coupons received from DRS. A corporation that does not receive preprinted estimated coupons should use the estimated coupons available on the DRS Web site.

DRS is phasing in new electronic filing requirements for all business taxes. Additional information will be available in IP 2004(28), Paying Connecticut Taxes by Electronic Funds Transfer.

7. What happens if I underestimate my corporation business tax? If the current year tax is more than $1,000 and the corporation does not make timely installments of its required annual payment, it will be charged interest on the underpayment. Interest will accrue on the amount of the underpayment until the earlier of the first day of the fourth month following the end of the income year, or the date on which the underpayment is paid.

8. Will interest apply if I use the annualized estimated corporation business tax method? Interest will not apply if the required installments are calculated correctly. Complete Worksheet CT-1120AE, and make the required installment payments (using Forms CT-1120 ESA, ESB, ESC, ESD or Forms CT-990T ESA, ESB, ESC, or ESD) on or before the due dates.

9. May I apply overpayments in the current year to the next year’s estimated corporation business tax? When the corporation’s current year return is filed, the corporation may apply overpayments of Connecticut corporation business tax to the estimated tax for the next succeeding income year. The request to apply overpayments to the next year's estimated tax is irrevocable, and the credit is established as of the date of the U.S. Postal Service cancellation mark on the completed return.


Effect on Other Documents: This Informational Publication 2004(19) supersedes Informational Publication 2003(37) which may no longer be relied upon on or after the issuance date of this publication.


Effect of This Document: An Informational Publication addresses frequently asked questions about a current position, policy, or practice, usually in a less technical question and answer format.


For Further Information: Call DRS during business hours, Monday through Friday:

  • 1-800-382-9463 (in-state), or
  • 860-297-5962 (from anywhere)

TTY, TDD, and Text Telephone users only may transmit inquiries anytime by calling 860-297-4911.


Forms and Publications: Forms and publications are available anytime by:

  • Internet: Preview and download forms and publications from the DRS Web site at www.ct.gov/DRS
  • Telephone: Call 860-297-4753 (from anywhere), or 1-800-382-9463 (in-state) and select Option 2 from a touch-tone phone.

Paperless Filing Methods (fast, easy, free, and confidential):

  • For business returns: Use Fast-File to file sales and use taxes, business use tax, room occupancy tax, estimated corporation business tax, business entity tax, or withholding tax returns over the Internet. Visit the DRS Web site at www.ct.gov/DRS and click on File/Register OnLine or call 860-947-1988.
  • For resident income tax returns: Use WebFile to file personal income tax returns over the Internet. Visit the DRS Web site at www.ct.gov/DRS and click on File/Register OnLine.

IP 2004(19)
Corporation Business Tax
Estimated Taxes
Issued: 10/12/2004

Worksheet CT-1120AE, Connecticut Corporation Business Tax Annualized Estimated Worksheet