| Instructions for Form 1120-L |
2003 Tax Year |
General Instructions
This is archived information that pertains only to the 2003 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.
Use Form 1120-L, U.S. Life Insurance Company Income Tax Return, to report the income, gains, losses, deductions, credits,
and to figure the income
tax liability of life insurance companies.
Every domestic life insurance company and every foreign corporation that would qualify as a life insurance company if it were
a U.S. corporation
must file Form 1120-L. This includes organizations described in section 501(m)(1) that provide commercial-type life insurance.
Mutual savings banks conducting life insurance business
Mutual savings banks conducting life insurance business and meeting the requirements of section 594 are subject to an alternative
tax consisting
of:
- A partial tax computed on Form 1120, U.S. Corporation Income Tax Return, on the taxable income of the bank excluding the life
insurance department and
- A partial tax on the taxable income computed on Form 1120-L of the life insurance department.
Enter the combined tax on line 3 of Schedule J, Form 1120. File Form 1120 and attach Form 1120-L as a schedule (and identify
it as such) or attach
a statement showing the computation of the taxable income of the life insurance department (including all relevant information
that would be reported
on Form 1120-L).
Foreign life insurance companies
A foreign life insurance company that sells a U.S. real property interest must file Form 1120-L and Schedule D (Form 1120)
to report the sale. Gain
or loss from the sale of a U.S. real property interest is considered effectively connected with the conduct of a U.S. business,
even though the
foreign life insurance company does not carry on any insurance business in the United States and is not otherwise required
to file a U.S. income tax
return. See sections 842 and 897, and the Schedule K, line 9, instructions on page 16 for additional information.
Other insurance companies
Insurance companies, other than life insurance companies, should file Form 1120-PC, U.S. Property and Casualty Insurance Company Income
Tax Return. A burial or funeral benefit insurance company that directly manufactures funeral supplies or performs funeral
services is taxable under
section 831 and should file Form 1120-PC.
An insurance company means any corporation if more than half of its business during the tax year is from the issuance of insurance or
annuity contracts or the reinsuring of risks underwritten by insurance companies.
A life insurance company is an insurance company in the business of issuing life insurance and annuity contracts either separately or
combined with health and accident insurance, or noncancelable contracts of health and accident insurance that meet the reserves
test in section
816(a). Guaranteed renewable life, health, and accident insurance that the corporation cannot cancel but reserves the right
to adjust premium rates by
classes, according to experience under the kind of policy involved, are treated as noncancelable.
The reserves test requires that life insurance reserves, as defined in section 816(b), plus unearned premiums and unpaid losses (whether
or not ascertained) on noncancelable life, health, or accident policies not included in life insurance reserves must make
up more than 50% of total
reserves as defined in section 816(c). When determining whether the reserves test has been met:
- Life insurance reserves and total reserves must each be reduced by an amount equal to the mean of the aggregates, at the beginning
and end
of the tax year, of the policy loans outstanding with respect to contracts for which life insurance reserves are maintained;
- Amounts set aside and held at interest to satisfy obligations under contracts which do not contain permanent guarantees with
respect to
life, accident, or health contingencies must not be included in either life insurance reserves (section 816(c)(1)) or other
reserves required by law
(section 816(c)(3)); and
- Deficiency reserves must not be included in either life insurance reserves or total reserves.
Generally, a corporation must file its income tax return by the 15th day of the 3rd month after the end of its tax year. A
new corporation filing a
short-period return must generally file by the 15th day of the 3rd month after the short period ends. A corporation that has
dissolved must generally
file by the 15th day of the 3rd month after the date it dissolved.
If the due date falls on a Saturday, Sunday, or legal holiday, the corporation may file on the next business day.
Extension.
File Form 7004, Application for Automatic Extension of Time To File Corporation Income Tax Return, to request a 6-month extension of
time to file.
Private delivery services.
Corporations can use certain private delivery services designated by the IRS to meet the “ timely mailing as timely filing/paying” rule for tax
returns and payments. The most recent list of designated private delivery services was published by the IRS in September 2002.
The list includes only the following:
- Airborne Express (Airborne): Overnight Air Express Service, Next Afternoon Service, and Second Day Service.
- DHL Worldwide Express (DHL): DHL “Same Day” Service and DHL USA Overnight.
- Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and
FedEx
International First.
- United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A.M., UPS Worldwide
Express Plus,
and UPS Worldwide Express.
The private delivery service can tell you how to get written proof of the mailing date.
File the corporation's return at the applicable IRS address listed below.
| If the corporation's principal business, office, or agency is located in: |
And the total assets at the end of the tax year (Form 1120-L, Schedule L, Part I, line 6, column (b))
are:
|
Use the following Internal Revenue Service Center address: |
| Connecticut, Delaware, District of Columbia, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, New
Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia, West
Virginia, Wisconsin
|
Less than $10 million
$10 million or more
|
Cincinnati, OH 45999-0012
Ogden, UT 84201-0012
|
| Alabama, Alaska, Arizona, Arkansas, California, Colorado, Florida, Georgia, Hawaii, Idaho, Iowa, Kansas, Louisiana, Minnesota,
Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Tennessee, Texas,
Utah, Washington,
Wyoming
|
Any amount |
Ogden, UT 84201-0012 |
| A foreign country or U.S. possession (or the corporation is claiming the possessions corporation tax credit under sections
30A
and 936)
|
Any amount |
Philadelphia, PA 19255-0012 |
A group of corporations with members located in more than one service center area will often keep all the books and records
at the principal office
of the managing corporation. In this case, the tax returns of the corporations may be filed with the service center for the
area in which the
principal office of the managing corporation is located.
The return must be signed and dated by:
- The president, vice-president, treasurer, assistant treasurer, chief accounting officer or
- Any other corporate officer (such as tax officer) authorized to sign.
Receivers, trustees, or assignees must sign and date any return filed on behalf of a corporation.
If an employee of the corporation completes Form 1120-L, the paid preparer's space should remain blank. Anyone who prepares
Form 1120-L but does
not charge the corporation should not complete that section. Generally, anyone who is paid to prepare the return must sign
it and fill in the “Paid
Preparer's Use Only” area.
The paid preparer must complete the required preparer information and:
- Sign the return in the space provided for the preparer's signature.
- Give a copy of the return to the taxpayer.
Paid Preparer Authorization
If the corporation wants to allow the IRS to discuss its 2003 tax return with the paid preparer who signed it, check the “Yes” box in the
signature area of the return. This authorization applies only to the individual whose signature appears in the “Paid Preparer's Use Only” section
of the corporation's return. It does not apply to the firm, if any, shown in that section.
If the “Yes” box is checked, the corporation is authorizing the IRS to call the paid preparer to answer any questions that may arise
during
the processing of its return. The corporation is also authorizing the paid preparer to:
- Give the IRS any information that is missing from the return,
- Call the IRS for information about the processing of the return or the status of any related refund or payment(s), and
- Respond to certain IRS notices that the corporation has shared with the preparer about math errors, offsets, and return preparation.
The
notices will not be sent to the preparer.
The corporation is not authorizing the paid preparer to receive any refund check, bind the corporation to anything (including
any additional tax
liability), or otherwise represent the corporation before the IRS. If the corporation wants to expand the paid preparer's
authorization, see Pub.
947, Practice Before the IRS and Power of Attorney.
The authorization cannot be revoked. However, the authorization will automatically end no later than the due date (excluding
extensions) for filing
the corporation's 2004 tax return.
Other Forms and Statements That
May Be Required
The life insurance company may have to file some of the following forms. See the form for more information.
- Form W-2, Wage and Tax Statement, and Form W-3, Transmittal of Wage and Tax Statements. Use these forms to report
wages, tips, other compensation, withheld income, social security, and Medicare taxes for employees.
- Form 720, Quarterly Federal Excise Tax Return. Use this form to report and pay environmental taxes, communications and air
transportation taxes, fuel taxes, manufacturers taxes, ship passenger taxes, and certain other excise taxes.
- Form 851, Affiliations Schedule. The parent corporation of an affiliated group of corporations must attach this form
to its consolidated return. If this is the first year one or more subsidiaries are being included in a consolidated return,
also see Form
1122, Authorization and Consent of Subsidiary Corporation To Be Included in a Consolidated Income Tax Return, below.
- Form 926, Return by a U.S. Transferor of Property to a Foreign Corporation. Domestic life insurance companies use this form to
report certain transfers to foreign corporations under section 6038B.
- Form 940 or Form 940-EZ, Employer's Annual Federal Unemployment (FUTA) Tax Return. The corporation may be liable for
FUTA tax and may have to file Form 940 or Form 940-EZ if either:
- Paid wages of $1,500 or more in any calendar quarter in 2002 or 2003 or
- Had one or more employees who worked for the corporation for at least some part of a day in any 20 or more different weeks
in 2002 or 20 or
more different weeks in 2003.
- Form 941, Employer's Quarterly Federal Tax Return. Employers must file this form to report income tax withheld, and employer and
employee social security and Medicare taxes. Also, see Trust fund recovery penalty on page 6.
- Form 945, Annual Return of Withheld Federal Income Tax. File Form 945 to report income tax withheld from nonpayroll distributions
or payments, including pensions, annuities, IRAs, gambling winnings, and backup withholding. Also, see Trust fund recovery penalty on page
6.
- Form 966, Corporate Dissolution or Liquidation. Use this form to report the adoption of a resolution or plan to dissolve the
corporation or liquidate any of its stock.
- Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons;
- Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding; and
- Form 1042-T, Annual Summary and Transmittal of Forms 1042-S. Use these forms to report and send withheld tax on payments or
distributions made to nonresident alien individuals, foreign partnerships, or foreign corporations to the extent these payments
constitute gross
income from sources within the United States (see sections 861 through 865).
Also, see Pub. 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, and sections 1441 and 1442.
- Form 1096, Annual Summary and Transmittal of U.S. Information Returns.
- Forms 1099. Use these information returns to report the following.
- Form 1099-A, Acquisition or Abandonment of Secured Property.
- Form 1099-B, Proceeds From Broker and Barter Exchange Transactions.
- Form 1099-C, Cancellation of Debt.
- Form 1099-CAP, Changes in Corporate Control and Capital Structure.
- Form 1099-DIV, Dividends and Distributions.
- Form 1099-INT, Interest Income.
- Form 1099-LTC, Long-Term Care and Accelerated Death Benefits.
- Form 1099-MISC, Miscellaneous Income. Use this form to report payments: to providers of health and medical services, of rent or
royalties, nonemployee compensation, etc.
Note.
Every corporation must file Form 1099-MISC if it makes payments of rents, commissions, or other fixed or determinable income
(see section 6041)
totaling $600 or more to any one person in the course of its trade or business during the calendar year.
- Form 1099-OID, Original Issue Discount.
- Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts,
etc.
Also use these returns to report amounts received as a nominee for another person.
- Form 1122, Authorization and Consent of Subsidiary Corporation To Be Included in a Consolidated Income Tax Return. File this form
if this is the first year a consolidated return is being filed.
- Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts. A domestic life
insurance company uses this form to report a distribution received from a foreign trust; or, if the corporation was the grantor
of, transferor of, or
transferor to, a foreign trust that existed during the tax year. See Question 5 of Schedule N (Form 1120).
- Form 5452, Corporate Report of Nondividend Distributions. Use this form to report nondividend distributions.
- Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations. This form is filed by a domestic life
insurance company that controls a foreign corporation; acquires, disposes of, or owns 10% or more in value or vote of the
outstanding stock of a
foreign corporation; or had control of a foreign corporation for an uninterrupted period of at least 30 days during the annual
accounting period of
the foreign corporation. See Question 4 of Schedule N (Form 1120).
- Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or
Business. This form is filed by a domestic life insurance company that is 25% or more foreign-owned. See Question 8 on page
17.
- Form 5713, International Boycott Report. Domestic life insurance companies that had operations in, or related to, certain
“boycotting” countries file Form 5713.
- Form 8023, Elections Under Section 338 for Corporations Making Qualified Stock Purchases. Corporations file this form to make
elections under section 338 for a “target” corporation if the purchasing corporation has made a qualified stock purchase of the target
corporation.
- Form 8264, Application for Registration of a Tax Shelter. Tax shelter organizers use this form to receive a tax shelter
registration number from the IRS.
- Form 8271, Investor Reporting of Tax Shelter Registration Number. Corporations, which have acquired an interest in a tax shelter
that is required to be registered, use this form to report the tax shelter's registration number. Attach Form 8271 to any
tax return (including an
application for tentative refund (Form 1139) and an amended return) on which a deduction, credit, loss, or other tax benefit
attributable to a tax
shelter is taken or any income attributable to a tax shelter is reported.
- Form 8275, Disclosure Statement, and Form 8275-R, Regulation Disclosure Statement. Disclose items or positions taken
on a tax return that are not otherwise adequately disclosed on a tax return or that are contrary to Treasury regulations (to
avoid parts of the
accuracy-related penalty or certain preparer penalties).
- Form 8281, Information Return for Publicly Offered Original Issue Discount Instruments. Use this form to report the issuance of
public offerings of debt instruments (obligations).
- Form 8288, U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real Property Interests, and Form 8288-A,
Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests. Use these forms to report and
transmit withheld tax
on the purchase of a U.S. real property interest from a foreign person. See section 1445 and the related regulations for more
information.
- Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business. Use this form to report the receipt of more than
$10,000 in cash or foreign currency in one transaction or a series of related transactions.
- Form 8302, Electronic Deposit of Tax Refund of $1 Million or More. This form must be filed to request an electronic deposit of a
tax refund of $1 million or more.
- Form 8594, Asset Acquisition Statement Under Section 1060. Corporations file this form to report the purchase or sale of a group
of assets that constitute a trade or business if goodwill or going concern value attaches or could attach to the assets and
if the buyer's basis is
determined only by the amount paid for the assets.
- Form 8621, Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund. A domestic life insurance
company uses this form to make certain elections by shareholders in a passive foreign investment company and to figure certain
deferred
taxes.
- Form 8810, Corporate Passive Activity Loss and Credit Limitations. Closely held corporations must use this form to compute the
passive activity loss and credit allowed under section 469.
- Form 8816, Special Loss Discount Account and Special Estimated Tax Payments for Insurance Companies. This form must be filed by
any insurance company that elects to take an additional deduction under section 847.
- Form 8842, Election To Use Different Annualization Periods for Corporate Estimated Tax. Corporations use Form 8842 for each year
they want to elect one of the annualization periods in section 6655(e)(2) to figure estimated tax payments under the annualized
income installment
method.
- Form 8849, Claim for Refund of Excise Taxes. Corporations use this form to claim a refund of certain excise taxes.
- Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships. A domestic life insurance company may have to
file Form 8865 if it:
- Controlled a foreign partnership (i.e., owned more than a 50% direct or indirect interest in the partnership).
- Owned at least a 10% direct or indirect interest in a foreign partnership while U.S. persons controlled that partnership.
- Had an acquisition, disposition, or change in proportional interest in a foreign partnership that:
- Increased its direct interest to at least 10% or reduced its direct interest of at least 10% to less than 10%.
- Changed its direct interest by at least a 10% interest.
- Contributed property to a foreign partnership in exchange for a partnership interest if:
- Immediately after the contribution, the domestic life insurance company owned, directly or indirectly, at least a 10% interest
in the
foreign partnership or
- The fair market value of the property the domestic life insurance company contributed to the foreign partnership, when added
to other
contributions of property made to the foreign partnership during the preceding 12-month period, exceeds $100,000.
Also, the domestic life insurance company may have to file Form 8865 to report certain dispositions by a foreign partnership
of property it
previously contributed to that partnership if it was a partner at the time of the disposition.
For more details, including penalties for failing to file Form 8865, see Form 8865 and its separate instructions.
- Form 8883, Asset Allocation Statement Under Section 338. Corporations file this form to report information about transactions
involving the deemed sale of corporate assets under section 338.
- Form 8886, Reportable Transaction Disclosure Statement. Use this form to disclose information for each reportable transaction in
which the corporation participated. Form 8886 must be filed for each tax year that the Federal income tax liability of the
corporation is affected by
its participation in the transaction. The following are reportable transactions.
- Any transaction that is the same as or substantially similar to tax avoidance transactions identified by the IRS.
- Any transaction offered under conditions of confidentiality.
- Any transaction for which the corporation has contractual protection against disallowance of the tax benefits.
- Any transaction resulting in a loss of at least $10 million in any single year or $20 million in any combination of years.
- Any transaction resulting in a book-tax difference of more than $10 million on a gross basis.
- Any transaction resulting in a tax credit of more than $250,000, if the corporation held the asset generating the credit for
45 days or
less.
If an affiliated group of corporations includes one or more domestic life insurance companies taxed under section 801, the
common parent may elect
to treat those life insurance companies as includible corporations. The life insurance companies must have been members of
the group for the 5 tax
years immediately preceding the tax year for which the election is made. See section 1504(c)(2) and Regulations section 1.1502-47(d)(12).
Note.
If an election under section 1504(c)(2) is in effect for an affiliated group for the tax year, all items of members of the
group that are not life
insurance companies must not be taken into account in figuring the tentative life insurance company taxable income (LICTI)
of members that are life
insurance companies.
File supporting statements for each corporation included in the consolidated return. Do not use Form 1120-L as a supporting
statement. On the
supporting statement, use columns to show the following, both before and after adjustments.
Note.
If a nonlife insurance company is a member of an affiliated group, file Form 1120-PC as an attachment to the consolidated
return in lieu of filing
supporting statements. Across the top of page 1 of Form 1120-PC, write “Supporting Statement to Consolidated Returns.”
NAIC Annual Statement.
Regulations section 1.6012-2(c) requires that the NAIC Annual Statement be filed with Form 1120-L. A penalty for the
late filing of a return may be
imposed for not including the annual statement when the return is filed.
Reconciliation.
A schedule must be attached that reconciles the NAIC Annual Statement to Form 1120-L.
Stock ownership in foreign corporations.
A domestic life insurance company must attach the statement required by section 551(c) if it:
- Owned 5% or more in value of the outstanding stock of a foreign personal holding company and
- Was required to include in its gross income any undistributed foreign personal holding company income from a foreign personal
holding
company.
Transfers to a corporation controlled by the transferor.
If a person receives stock of a corporation in exchange for property and no gain or loss is recognized under section
351, the person (transferor)
and the transferee must attach to their tax returns the information required by Regulations section 1.351-3.
To ensure that the corporation's tax return is correctly processed, attach all schedules and other forms after page 8, Form
1120-L, and in the
following order:
- Schedule N (Form 1120).
- Form 8302.
- Form 4136.
- Form 4626.
- Form 851.
- Additional schedules in alphabetical order.
- Additional forms in numerical order.
Complete every applicable entry space on Form 1120-L. Do not write “See Attached” instead of completing the entry spaces. If more space is
needed on the forms or schedules, attach separate sheets using the same size and format as on the printed forms. If there
are supporting statements
and attachments, arrange them in the same order as the schedules or forms they support and attach them last. Show the totals
on the printed forms.
Also, be sure to enter the corporation's name and EIN on each supporting statement or attachment.
The return of a life insurance company must be filed using the accrual method of accounting or, to the extent permitted under
regulations, a
combination of the accrual method with any other method, except the cash receipts and disbursements method. In all cases,
the method used must clearly
show LICTI.
Accrual method.
Under the accrual method, an amount is includable in income when:
- All the events have occurred that fix the right to receive the income, which is the earliest of the date: (a) the required
performance takes place, (b) payment is due, or (c) payment is received and
- The amount can be determined with reasonable accuracy.
See Regulations section 1.451-1(a) for details.
Generally, an accrual basis taxpayer can deduct accrued expenses in the tax year when:
- All events that determine the liability have occurred,
- The amount of the liability can be figured with reasonable accuracy, and
- Economic performance takes place with respect to the expense.
There are exceptions to the economic performance rule for certain items, including recurring expenses. See section 461(h)
and the related
regulations for the rules for determining when economic performance takes place.
Change in Accounting Method
To change its method of accounting used to report taxable income (for income as a whole or for any material item), the corporation
must file
Form 3115, Application for Change in Accounting Method. For more information, see Form 3115 and Pub. 538, Accounting Periods and
Methods.
Section 481(a) adjustment.
The corporation may have to make an adjustment under section 481(a) to prevent amounts of income or expense from being
duplicated or omitted. The
section 481(a) adjustment period is generally 1 year for a negative adjustment and 4 years for a net positive adjustment.
However, a corporation may
elect to use a 1-year adjustment period if the net section 481(a) adjustment for the change is less than $25,000. The corporation
must complete the
appropriate lines of Form 3115 to make the election.
Include any net positive section 481(a) adjustment on page 1, line 7. If the net section 481(a) adjustment is negative,
report it on page 1, line
18.
An insurance company must figure its taxable income on the basis of a tax year. A tax year is the annual accounting period
an insurance company
uses to keep its records and report its income and expenses.
As a general rule under section 843, the tax year for every insurance company is the calendar year. However, if an insurance
company joins in the
filing of a consolidated return, it may adopt the tax year of the common parent corporation even if that year is not a calendar
year.
Rounding Off to Whole Dollars
The corporation may round off cents to whole dollars on its return and schedules. If the corporation does round to whole dollars,
it must round all
amounts. To round, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar (for example, $1.39
becomes $1 and $2.50
becomes $3).
If two or more amounts must be added to figure the amount to enter on a line, include cents when adding the amounts and round
off only the total.
Keep the corporation's records for as long as they may be needed for the administration of any provision of the Internal Revenue
Code. Usually,
records that support an item of income, deduction, or credit on the return must be kept for 3 years from the date the return
is due or filed,
whichever is later. Keep records that verify the corporation's basis in property for as long as they are needed to figure
the basis of the original or
replacement property.
The corporation should keep copies of any returns filed. They help in preparing future and amended returns.
Depository Method of Tax Payment
The corporation must pay the tax due in full no later than the 15th day of the 3rd month after the end of the tax year. The
two methods of
depositing corporate income taxes are discussed below.
Electronic Deposit Requirement
The corporation must make electronic deposits of all depository taxes (such as employment tax, excise tax, and corporate income tax)
using the Electronic Federal Tax Payment System (EFTPS) in 2004 if:
- The total deposits of such taxes in 2002 were more than $200,000 or
- The corporation was required to use EFTPS in 2003.
If the corporation is required to use EFTPS and fails to do so, it may be subject to a 10% penalty. If the corporation is
not required to use
EFTPS, it may participate voluntarily. To enroll in or get more information about EFTPS, call 1-800-555-4477 or 1-800-945-8400.
To enroll online,
visit www.eftps.gov.
Depositing on time.
For EFTPS deposits to be made timely, the corporation must initiate the transaction at least 1 business day before
the date the deposit is due.
If the corporation does not use EFTPS, deposit corporation income tax payments (and estimated tax payments) with Form 8109, Federal Tax
Deposit Coupon. If you do not have a preprinted Form 8109, use Form 8109-B to make deposits. You can get this form by calling
1-800-829-4933. Be sure
to have your EIN ready when you call.
Do not send deposits directly to an IRS office; otherwise, the corporation may have to pay a penalty. Mail or deliver the
completed Form 8109 with
the payment to an authorized depositary (i.e., a commercial bank or other financial institution authorized to accept Federal
tax deposits). Make
checks or money orders payable to that depositary.
If the corporation prefers, it may mail the coupon and payment to: Financial Agent, Federal Tax Deposit Processing, P.O. Box
970030, St. Louis, MO
63197. Make the check or money order payable to “Financial Agent.”
To help ensure proper crediting, write the corporation's employer identification number, the tax period to which the deposit
applies, and “Form
1120-L” on the check or money order. Be sure to darken the “1120” box on the coupon. Records of these deposits will be sent to the IRS.
For more information on deposits, see the instructions in the coupon booklet (Form 8109) and Pub. 583, Starting a Business and Keeping
Records.
If the corporation owes tax when it files Form 1120-L, do not include the payment with the tax return. Instead, mail or deliver
the payment with
Form 8109 to an authorized depositary, or use EFTPS, if applicable.
Generally, the following rules apply to the corporation's payments of estimated tax.
- The corporation must make installment payments of estimated tax if it expects its total tax for the year (less applicable
credits) to be
$500 or more.
- The installments are due by the 15th day of the 4th, 6th, 9th, and 12th months of the tax year. If any date falls on a Saturday,
Sunday, or
legal holiday, the installment is due on the next regular business day.
- Use Form 1120-W, Estimated Tax for Corporations, as a worksheet to compute estimated tax.
- If the corporation does not use EFTPS, use the deposit coupons (Forms 8109) to make deposits of estimated tax.
For more information on estimated tax payments, including penalties that apply if the corporation fails to make required
payments, see the
instructions for line 30 on page 10.
If the corporation overpaid estimated tax, it may be able to get a quick refund by filing Form 4466, Corporation Application for Quick
Refund of Overpayment of Estimated Tax. The overpayment must be at least 10% of the corporation's expected income tax liability
and at least $500.
File Form 4466 after the end of the corporation's tax year, and no later than the 15th day of the third month after the end
of the tax year. Form 4466
must be filed before the corporation files its income tax return.
Foreign insurance companies, see Notice 90-13, 1990-1 C.B. 321, before computing estimated tax.
Interest.
Interest is charged on taxes paid late even if an extension of time to file is granted. Interest is also charged on
penalties imposed for failure
to file, negligence, fraud, substantial valuation misstatements, and substantial understatements of tax from the due date
(including extensions) to
the date of payment. The interest charge is figured at a rate determined under section 6621.
Penalty for late filing of return.
A corporation that does not file its tax return by the due date, including extensions, may have to pay a penalty of
5% of the unpaid tax for each
month or part of a month the return is late, up to a maximum of 25% of the unpaid tax. The minimum penalty for a return that
is over 60 days late is
the smaller of the tax due or $100. The penalty will not be imposed if the corporation can show that the failure to file on
time was due to reasonable
cause. Corporations that file late must attach a statement explaining the reasonable cause.
Penalty for late payment of tax.
A corporation that does not pay the tax when due generally may have to pay a penalty of ½ of 1% of the unpaid tax
for each month or
part of a month the tax is not paid, up to a maximum of 25% of the unpaid tax. The penalty will not be imposed if the corporation
can show that the
failure to pay on time was due to reasonable cause.
Trust fund recovery penalty.
This penalty may apply if certain excise, income, social security, and Medicare taxes that must be collected or withheld
are not collected or
withheld, or these taxes are not paid. These taxes are generally reported on Forms 720, 941, or 945 (see Other Forms and Statements That May Be
Required on page 3). The trust fund recovery penalty may be imposed on all persons determined by the IRS to have been responsible
for
collecting, accounting for, and paying over these taxes, and who acted willfully in not doing so. The penalty is equal to
the unpaid trust fund tax.
See the instructions for Form 720 or Pub. 15 (Circular E), Employer's Tax Guide, for details, including the definition of responsible
persons.
Other penalties.
Other penalties can be imposed for negligence, substantial understatement of tax, and fraud. See sections 6662 and
6663.
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