DRS: IP 2007(18), Guide to Calculating Annualized Estimated Corporation Business Tax Installments and Worksheet CT-1120AE

 
IP 2007(18)
 
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. 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.


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 the corporation’s required annual payment? The corporation’s required annual payment is the lesser of:

  • 90% of the tax shown on the Connecticut corporation business tax return for the current income year, or if no return is filed, 90% of the tax for the year; or
  • 100% of the tax 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.

3. When should the corporation 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, and ESD, Estimated Corporation Business Tax, or Forms CT-990T ESA, ESB, ESC, and 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 does the corporation calculate the amount of each installment using the annualized estimated corporation business tax installment method?

Complete Worksheet CT-1120AE on Page 4 of this publication. The corporation 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, and ESD or Forms CT-990T ESA, ESB, ESC, and ESD.

6. How does the corporation pay its estimated corporation business tax? For a fast, easy, and free way to remit the estimated corporation business tax, the DRS website at www.ct.gov/DRS allows the corporation to use the Taxpayer Service Center (TSC) to file Forms CT-1120 ESA, ESB, ESC, and ESD and pay the tax due. Visit the DRS website and select the File/Register OnLine option.

DRS requires those taxpayers who paid tax in excess of $10,000 the prior year to pay the current year liability electronically. Visit the DRS website for more information on making electronic payments, select the FAQ’s - Taxpayer Answer Center option, and search "Electronic Funds Transfer."

A corporation that does not otherwise choose to use the TSC must use the preprinted coupons received from DRS. A corporation that does not receive preprinted estimated coupons should use the TSC or the estimated coupons available on the DRS website.

7. What if the corporation underestimates its 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 the corporation uses 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, and ESD or Forms CT-990T ESA, ESB, ESC, and ESD) on or before the due dates.

9. May the corporation 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 following 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, or if the return was electronically filed through the TSC, the date the return was successfully transmitted.


Effect on Other Documents: This Informational Publication 2007(18) supersedes Informational Publication 2006(19) which may no longer be relied upon on or after the issuance date of this publication.


Effect of This Document: An Informational Publication issued by DRS 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 (Connecticut calls outside the Greater Hartford calling area only), 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: Visit the DRS website at www.ct.gov/DRS to download and print Connecticut tax forms; or
  • Telephone: Call 1-800-382-9463 (Connecticut calls outside the Greater Hartford calling area only) and select Option 2 from a touch-tone phone, or call 860-297-4753 (from anywhere).

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

  • For business returns, tax payments, and electronic bill payments: Use the Taxpayer Service Center (TSC) to file a variety of tax returns and extensions, as well as to pay taxes or bills over the Internet. Visit the DRS website at www.ct.gov/DRS and choose the TSC logo or File/Register OnLine for a complete list of taxes that can be electronically filed and paid.
  • For income tax returns, extensions, estimated payments, and electronic bill payments: Use the Taxpayer Service Center (TSC) to file personal income tax returns and extension, or to make estimated payments and electronic bill payments over the Internet. Visit the DRS website at www.ct.gov/DRS and choose the TSC logo or File/Register OnLine.

DRS E-News Service: Get connected to the latest news from DRS. Receive notification by e-mail of changes to legislation, policies, and procedures. DRS E-News is easy to sign up for – visit www.ct.gov/DRS and follow the directions. Subscription services are available for employer’s withholding tax, TSC-BUS Online Filing Alerts, News - Press Releases, and Top 100 Delinquency List.


IP 2007(18)
Corporation Business Tax
Estimated Taxes
Issued: 10/29/2007