Administrative Procedure

Administrative Procedure AP 331: Corporate Estimated Tax Payments

Date: 02/07/2022
Organization: Massachusetts Department of Revenue
Referenced Sources: Massachusetts General Laws

Table of Contents

331.1. Requirement to Make Corporate Estimated Payments

All corporations that reasonably estimate their corporate excise to be in excess of $1,000 for the taxable year are required to make estimated tax payments to Massachusetts. See 830 CMR 63B.2. Effective for tax periods ending on or after December 31, 2021, the following corporations are required to submit their estimated payments electronically: 

  • all business corporations;
  • all S Corporations;
  • all financial institutions;
  • all insurance companies;
  • all entities that file Form 63-29A, Ocean Marine Profits Tax Return;
  • all taxpayer members of a combined group under G.L. c. 63, § 32B.

NOTE:  Certain corporations exempt from taxation under section 501 of the Internal Revenue Code reporting unrelated business taxable on Form M-990T may not be required to submit their estimated payments electronically, but may choose to do so.  If not making an electronic payment, corporations that file Form M-990T pay their estimated taxes with Form UBI-ES. 

All current electronic filing and payment requirements can be found on the Department’s website at: https://www.mass.gov/info-details/dor-e-filing-and-payment-requirements.  For further information on electronic filing and payment requirements, see Technical Information Releases 21-9 and 16-9.  All electronic estimated payments can be made through MassTaxConnect.

331.2. Installment Due Dates and Amounts

Estimated tax is payable in four installments, due by the 15th day of the 3rd, 6th, 9th and 12th month of the taxable year, except as otherwise provided in AP 331.3, according to the following schedule:

  • 40% for the first installment
  • 25% for the second installment
  • 25% for the third installment
  • 10% for the fourth installment

When the due date falls on a weekend or holiday, the deadline to file and pay without a penalty is extended to the next business day, except as otherwise provided in AP 331.3, AP 331.4, and AP 331.5.

Payments made with a return, including extension payments, estimated tax payments and withholding, are considered to be paid on the last day prescribed for the filing of the return and/or the payment of the tax, without regard to any extensions. See G.L. c. 62C, § 79. Therefore, any overpayment from a prior year return will be considered to be paid as of the prior year return due date. To avoid the imposition of underpayment penalties, the first estimated tax installment must be paid on or before the first installment due date, not the return due date.

331.3. 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 must 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 required in these circumstances.

331.4. 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 the entirety of its first taxable year of twelve months and that is required to make estimated tax payments is subject to special rules. Estimated tax is payable in four installments, due by the 15th day of the 3rd, 6th, 9th and 12th month of the taxable year, except as otherwise provided in AP 331.4, according to the following schedule:

  • 30% for the first installment
  • 25% for the second installment
  • 25% for the third installment
  • 20% for the fourth required installment

When the due date falls on a weekend or holiday, the deadline to file and pay without a penalty is extended to the next business day.

There are exceptions to these requirements for some small businesses.  To see whether these exceptions may apply to your business, see 830 CMR 63B.2.2(5)(c).

331.5. 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.

331.6. 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 a return is filed 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).

331.7. 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 at www.mass.gov/dor.

 

REFERENCES:
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 21-6

TIR 16-9
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 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 UBI-ES, Unrelated Business Income Tax Vouchers

Referenced Sources:

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