IRS grants limited waiver for underpayment of estimated corporate AMT

The IRS has provided a limited waiver of the addition to tax under Sec. 6655 for a corporate taxpayer’s failure to pay estimated income tax with respect to its Sec. 55 corporate alternative minimum tax (AMT) liability.

The relief provided Monday in Notice 2024-33 applies only for the purpose of calculating a corporation’s estimated income tax installment that was due on or before April 15, 2024. In the case of a fiscal-year taxpayer with a tax year beginning in February 2024, the date is May 15, 2024, with respect to a tax year that began during 2024.

It does not apply when calculating the amounts of installments of estimated income tax of a corporate taxpayer or consolidated group due after the applicable dates of April 15, 2024, or May 15, 2024. It also does not waive the addition to tax under Sec. 6655 if the amount of any underpayment is attributable to Code provisions other than Secs. 55(a) and (b)(2), Sec. 56A, and Secs. 59(k) and (l).

As it did in Notice 2023-42, in which it granted a waiver of the addition to tax under Sec. 6655, the IRS cited as reasons for the waiver the “challenges associated with determining whether a corporation is an Applicable Corporation and the amount” of corporate AMT liability, as well as its being in “the interest of sound tax administration.”

The Inflation Reduction Act of 2022, P.L. 117-169, imposed a 15% minimum tax based on book income on corporations with adjusted financial statement income over $1 billion (and foreign-parented companies must meet an additional $100 million income threshold) beginning after Dec. 31, 2022. The Sec. 6655 requirement to pay estimated tax applies to taxpayers that owe the Sec. 55 corporate AMT.

Affected taxpayers must still file Form 2220, Underpayment of Estimated Tax by Corporations, with their federal income tax return, even if they owe no estimated tax penalty, to avoid a penalty notice. The instructions to Form 2220 will be modified to provide specific instructions on how to avoid a penalty notice.

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.