What this notice is about
We reduced or removed the penalty for underpayment of estimated tax reported on your tax return because the penalty entered on your return exceeds the maximum amount we can legally charge.
What you need to do
- Review the account information shown in your notice.
- Compare your records with ours, and if we removed or reduced your penalty in error, please return the refund with your explanation.
Frequently asked questions
Why did you reduce or remove the penalty?
Our calculation, which we based on your account information when we received your return, shows the penalty you reported is more than the penalty due. If your address is within a federally declared disaster area, the adjusted penalty may be the result of an automatic waiver we applied.
What should I do if I disagree with the correction?
Call the toll-free number listed on your notice to explain why you disagree with our correction. If we agree with your explanation, we’ll tell you what to do next.
The notice says I’ll receive a refund, but I haven’t received it yet. When will I receive the refund?
Before we can issue a refund, we must use it to pay any other taxes you may owe. Additionally, we may use your refund to pay child support, state taxes owed, or any other debts you legally owe that we’re required to collect. We also might hold your refund if you haven’t filed all required returns. To check the refund status, call the toll-free number shown on the top right corner of your notice.
Tips for next year
To avoid a similar penalty next year, the following rules generally apply:
- Corporations must make installment estimated tax payments when the total tax (minus applicable credits) is expected to be $500 or more for the tax year.
- Installment payments 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.
- Corporations must use electronic funds transfer to make instalment payments of estimated tax.
- Use Form 1120-W, Estimated Tax for Corporations, as a worksheet to compute estimated tax. See the Instructions for Form 1120-W.
- If a corporation overpays 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. See the Instructions for Form 1120 – Schedule J, Part III, line 15.
Helpful information
Need help?
- You can authorize someone to represent you before the IRS or inspect and/or receive confidential tax information.
- You may be eligible for free help from the Taxpayer Advocate Service (TAS).
- See if you qualify for help from a Low Income Taxpayer Clinic.
- You can request a copy of your notice or letter in Braille or large print.
- If you can’t find what you need online, call the telephone number on your notice or letter.