IRS gives another limited estimated corporate AMT underpayment waiver

The IRS provided another 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.

Notice 2024-47, issued Thursday, extends the relief provided in Notice 2024-33, which waived the estimated tax penalty imposed for a corporation’s failure to pay the part of the estimated income tax attributable to the revised corporate AMT under Sec. 55.

That earlier waiver applied to an installment of estimated tax due on April 15, 2024, or May 15, 2024, for a tax year beginning in 2024.

With the new waiver, the relief from addition to tax under Sec. 6655 is extended to any installment of estimated tax by a corporate taxpayer for a tax year beginning in 2024 that is due on or before Aug. 15, 2024. The penalty relief applies to the amount of underpayment in that installment attributable to the corporate AMT.

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 date of Aug. 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 Sec. 55(a).

As it did in previous notices, 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 IRS says 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.