June 2, 1981

On or before March 15, 1981, ********** ("Corporation"), requested an automatic three-month extension of time for filing its 1980 corporation excise return for the year ended December 31, 1980. The Corporation will request an additional extension on or before June 15 and expects to file its 1980 corporate excise return between September 15 and October 15 of 1981. The Corporation anticipates that its final return will show an overpayment of its 1980 corporation excise.

You ask if the Corporation may request a refund of its 1980 overpayment or take the overpayment as a credit against its 1981 estimated tax liability. You also ask to which estimated tax installment a credit would be applied and what effect the credit would have on the addition to tax for underpayment of the first installment.

Corporations on a calendar year basis, which reasonably expect their estimated taxes to exceed one thousand dollars, must file a declaration of estimated tax by March 15 and must make four installments of their estimated taxes as follows: 30% on or before March 15, 25% on or before June 15, 25% on or before September 15 and 20% on or before December 15. (G.L. c. 63B, ss. 2 and 4(a).) Payments of estimated tax installments are treated as credits against the corporation's tax liability for the taxable year. (G.L. c. 63B, s. 5.)

Corporations which underpay their estimated taxes are subject to an addition to tax which is 12% per year of the underpayment from the due date of the installment to either the date the installment is paid or the due date of the return, whichever is earlier. (G.L. c. 63B, s. 6.)

A corporation may claim an overpayment of taxes as a credit against its tax liability for the following taxable year. Such an election bars the corporation from subsequently receiving the overpayment as a credit or refund for the taxable year in which the overpayment occurred. (G.L. c. 62C, s. 79(d).)

Based on the foregoing, it is ruled that:

1. The Corporation, on its 1980 corporation excise return, may either request a refund of its 1980 overpayment or elect to take the overpayment as a credit against its 1981 estimated tax.

2. If the corporation elects to take the overpayment as a credit, the Corporation should use the overpayment to reduce the next installment of estimated tax due on or after the date the Corporation files its final return for 1980 showing the actual amount of the overpayment. For purposes of computing the addition to tax for underpayment of estimated tax installments only, the overpayment will be treated as though paid on the due date of the first installment.

Very truly yours,

/s/L. Joyce Hampers

L. Joyce Hampers

Commissioner of Revenue

LJH:DHB:mf

LR 81-50