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Administrative Procedure

Administrative Procedure AP 331: Corporate Estimated Payments

Date: 01/31/2018
Organization: Massachusetts Department of Revenue
Referenced Sources: Massachusetts General Laws

Corporate Excise

331.1. Requirement to Make Corporate Estimated Payments

            Any corporation that reasonably estimates its corporate excise to be in excess of $1,000 is required to make estimated tax payments. See 830 CMR 63B.2.2. Corporations with any single or combined amount of gross receipts or sales or other income on the U.S. Corporate Income Tax Return that is over $100,000 must file and pay Massachusetts corporate estimated taxes electronically. Financial institutions and non-profit corporation that are subject to filing on their unrelated business taxable income may have different filing thresholds or electronic filing requirements. See TIR 16-9 for further information.

331.2. Payment of Corporate Estimated Tax

            Electronic filers should consult the Web site for current filing requirements. Corporate taxpayers filing the following forms should file Massachusetts Form 355-ES or Form UBIT-ES to make corporate estimated payments:

  • Form 63-20P, Premium Excise Return for Life Insurance Companies
  • Form 63-23P, Premium Excise Return for Insurance Companies
  • Form 63-29A, Ocean Marine Profits Tax Return
  • Form 63 F1, Financial Institution Excise Tax Return
  • Form 121A, Urban Redevelopment Excise Return
  • Form 355, Business or Manufacturing Corporation Excise Return
  • Form 355S, S Corporation Excise Return
  • Form 355SBC, Small Business Corporation Excise Return (domestic corporations only)
  • Form 355SC, Security Corporation Excise Return
  • Form 355U, Excise for Taxpayers Subject to Combined Filing
  • Form M-990T, Unrelated Business Income Tax Return

331.3. When Payments Are Due

            A corporation required to make estimated tax payments must make four estimated tax payments, except as otherwise provided in AP 331.4, AP 331.5, and AP 331.6, as follows:

 

            a. 1st Installment of 40% of the estimated tax must be paid on or before the 15th day of the third month of the taxable year.

 

            b. 2nd Installment of 25% of the estimated tax must be paid on or before the 15th day of the sixth month of the taxable year.

 

            c. 3rd Installment of 25% of the estimated tax must be paid on or before the 15th day of the ninth month of the taxable year.

 

            d. 4th Installment of 10% of the estimated tax must be paid on or before the 15th day of the twelfth month of the taxable year.

331.4. Exception to Requirement to Make Four Estimated Tax Payments

            Corporations are generally required to make four estimated tax payments, unless the taxpayer does not reasonably estimate that its tax will exceed one thousand dollars until after the last day of the second month of the taxable year.

 

            Corporations that estimate that their tax will exceed one thousand dollars after the last day of the second month of the taxable year should make one, two, or three estimated tax payments, depending on when the expectation that the tax will exceed one thousand dollars arises. See 830 CMR 63B.2.2(4)(c) for the schedule of payments.

331.5. Special Rules for Taxpayers with Fewer than Ten Employees in the First Taxable Year of Twelve Months

            A corporation that has fewer than ten employees for all of its first taxable year of twelve months and that is required to make estimated tax payments should make four estimated tax payments, except as otherwise provided in AP 331.4, as follows:

 

            a. 1st Installment of 30% of the estimated tax must be paid on or before the 15th day of the third month of the taxable year.

 

            b. 2nd Installment of 25% of the estimated tax must be paid on or before the 15th day of the sixth month of the taxable year.

 

            c. 3rd Installment of 25% of the estimated tax must be paid on or before the 15th day of the ninth month of the taxable year.

 

            d. 4th Installment of 20% of the estimated tax must be paid on or before the 15th day of the twelfth month of the taxable year.

 

            AP 331.4 above, Exception to Requirement to Make Four Estimated Tax Payments, also applies to corporations with fewer than ten employees in the first taxable year. See 830 CMR 63B.2.2(5)(c) for the schedule of payments.

331.6. Estimated Tax Payments for Short Taxable Year Taxpayers

            Any corporation with a taxable year of less than four calendar months is not required to make estimated tax payments; a corporation with a short taxable year of less than four calendar months must file its return and pay its tax as required under G.L. c. 62C, §§ 11, 12.

 

            See 830 CMR 63B.2.2(6)(b) for the schedule of payments for corporations with short taxable years of four calendar months or more. For estimated tax payment due dates for such corporations, any part of a month is treated as a whole month.

331.7. Interest for Underpayment of Estimated Tax

            An addition to tax for underpayments of corporate estimated tax is imposed for the period of that underpayment at a rate based on the federal short term rate in effect for the taxable year plus four percentage points. Form M-2220 is used when filing the annual corporate excise return to determine if the correct amount of estimated tax was paid by the due date and if not, to determine the addition to tax due or if the corporation qualifies for an exception. No addition to tax will be imposed if the estimated payments made on or before an installment due date in the taxable year equal or exceed one of the following:

 

 Exception 1---90% of the tax shown on the return for the current taxable year or, if no return is filed, 90% of tax liability as finally determined for the current taxable year. Tax shown on the return is the tax liability shown on the return that is originally filed by the taxpayer.

 

 Exception 2---100% of the tax shown on the return for the preceding taxable year. A return must have been filed for the preceding taxable year which includes a full 12 month period. This exception, however, is not available for large corporations, as defined in I.R.C. § 6655(g)(2), or first year filers.

 

 Exception 3---90% of the tax for the current taxable year.

 

 Exception 4---90% of the tax for the current taxable year determined using the income apportionment percentage for the preceding taxable year.

 

            If an addition to tax for underpayment of estimated tax is imposed at the time of filing because the taxpayer did not qualify for Exception 1 or 2, but subsequently the final tax liability was reduced and the taxpayer’s estimated payments equal or exceed 90% of the revised tax liability for that year, the previously imposed addition to tax will be abated.

 

 For more detail, see 830 CMR 63B.2.2(8).

331.8. Payments of Estimated Tax by Business Corporations Participating in Combined Reporting under G.L. c. 63, § 32B

            Massachusetts has adopted combined reporting for corporations. See TIR 09-5 for a detailed description of the estimated tax payment rules that apply to business corporations participating in combined reporting.

 

            The adoption of combined reporting has not substantively changed either the statutory requirements for the payment of estimated tax under G.L. c. 63B or the regulatory provisions at 830 CMR 63B.2.2.

 

            Businesses whose entity classification has changed from a classification used during a prior taxable year should refer to regulation 830 CMR 63.30.3 for additional details concerning their corporate estimated tax payment requirements.

 

 For more information on corporate estimated tax payments, contact:

 

Massachusetts Department of Revenue

Contact Center

P.O. Box 7010

Boston, MA 02204

(617) 887-MDOR or, toll-free within Massachusetts, at 1-800-392-6089 or visit DOR’s website.

G.L. c. 62C, §§ 11, 12

G.L. c. 63, § 32B

G.L. c. 63B

I.R.C. § 6655(g)(2)

830 CMR 63.30.3

830 CMR 63B.2.2

830 CMR 63B.2.2(4)(c)

830 CMR 63B.2.2(5)(c)

830 CMR 63B.2.2(6)(b)

830 CMR 63B.2.2(8)

TIR 95-6

TIR 09-5

Form 63-20P, Premium Excise Return for Life Insurance Companies

Form 63-23P, Premium Excise Return for Insurance Companies

Form 63-29A, Ocean Marine Profits Tax Return

Form 63 F1, Financial Institution Excise Tax Return

Form 121A, Urban Redevelopment Excise Return

Form 355, Business or Manufacturing Corporation Excise Return

Form 355-ES, Corporate Estimated Tax Payment Vouchers

Form 355S, S Corporation Excise Return

Form 355SBC, Small Business Corporation Excise Return (domestic corporations only)

Form 355SC, Security Corporation Excise Return

Form 355U, Excise for Taxpayers Subject to Combined Filing

Form M-990T, Unrelated Business Income Tax Return

Form M-2220, Underpayment of Massachusetts Estimated Tax by Corporation

Form UBIT-ES, Unrelated Business Income Tax Vouchers

Referenced Sources:

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