Alaska Underpayment of Estimated Tax by Corporations Instructions

Underpayment of Estimated Tax by Corporations Instructions
Form 6220i
Instructions for Form 6220 Alaska
Underpayment of Estimated Tax by Corporations
Purpose of the Form
A corporation uses Form 6220 to report the use of the annualized
income installment method or the adjusted seasonal installment
method of calculating any estimated tax penalty.

Who Must File
A corporation is required to complete and attach Form 6220 to
its return, only if the corporation pays its estimated tax based
on the annualized income installment method or the adjusted
seasonal installment method. If neither of these methods apply,
a corporation is not required to use the form, because the DOR
will calculate the amount of any penalty and notify the corporation
of any amount due.

Who Must Pay the Underpayment Penalty
If the corporation did not pay sufficient estimated tax by any due
date for paying estimated tax, it may be charged a penalty. This
is true even if the corporation is due a refund when its return is
filed. The penalty is computed separately for each installment due
date. Therefore, the corporation may owe a penalty for an earlier
installment due date, even if it paid enough tax later to make up
the underpayment.
Generally, a corporation is subject to the penalty if its tax liability,
net of all credits, is $500 or more and it did not pay on time the
lesser of: 100% of its tax liability for this tax year, or 100% of its tax
liability for the previous tax year, if a return was filed showing a tax
liability, and it covered a full 12 months. (A “large corporation” may
base only its first required installment on 100% of the prior year’s
tax liability.) A corporation may be able to reduce or eliminate the
penalty by using the annualized income or adjusted seasonal
installment method.
Check the applicable box, if the corporation uses the annualized
income installment method or the adjusted seasonal installment
method, or if the corporation is a “large corporation.” A “large
corporation” is a corporation (or its predecessor) that reported
$1 million or more of Alaska taxable income for any of the three
tax years immediately preceding the tax year involved. For this
purpose, taxable income does not include a net operating loss or
capital loss carryback. Members of a controlled group, as defined
in IRS Section 1563, must divide the $1 million among themselves
in accordance with IRC Section 1561.

Amended Returns
A penalty for underpayment of estimated tax is based on the
tax liability of the original return. The amendment of the return
does not change the penalty. However, an amended return is
considered the original return if the amended return is filed by the
filing due date (including extension) of the original return.

Specific Instructions
Attach Form 6220 to the income tax return (Form 6000, 6100,
or 6150) if the annualized income installment method or adjusted
seasonal installment method is used.
Line 1: Enter on line 1 the net income tax from Form 6000, 6100,
or 6150, Schedule A, line 9 less refundable credits on Schedule A,
line 11 and line 12. Do not enter an amount less than zero.
Line 3: Subtract line 2d from line 1. If the result is less than $500,
do not complete the rest of this form.
Line 4b: Compute your previous year’s tax in the same way that
the amount on line 3 of this form was determined, using the taxes
and credits from your previous year’s tax return. If you did not file
an Alaska return showing a tax liability for the previous tax year, or
if that tax year was for less than 12 months, do not complete this
line. Instead, enter the amount from line 4a on line 4c.
Line 4c: Enter the lesser of line 4a or line 4b.
Line 5: Enter in columns A through D the installment due dates
(the 15th day of the 4th, 6th, 9th and 12th months of the tax year).
Line 6: Annualized income installment method or adjusted
seasonal installment method: If the corporation’s income varied
during the year because, for example, it operated its business
on a seasonal basis, it may be able to lower the amount of
one or more required installments by using the annualized
income installment method or the adjusted seasonal installment
method. The annualized income installment or adjusted seasonal
installment may be less than the required installment under the
regular method for one or more due dates, thereby reducing or
eliminating the penalty for those due dates.
To use one or both of these methods to compute one or more
required installments, use the worksheet for federal Form 2220,
using Alaska figures, rates, and computations. Taxpayers must
calculate a cumulative quarterly Alaska apportionment factor for
each required installment payment. The taxpayer calculates the
estimated Alaska taxable income by multiplying the cumulative
quarterly consolidated taxable income by the cumulative quarterly
Alaska apportionment factor. If you use the worksheet for any
payment date, you must use it for all payment due dates. Do not
enter an amount less than zero in each column.
If you are not using the annualized income installment method or
adjusted seasonal installment method, and are completing Form
6220 to estimate the penalty for underpayment of estimated tax,
then follow the instructions below to compute the amount to enter
on line 6, and complete the Penalty Worksheet below.
If the corporation is not a Large Corporation, enter 25% of line 4c
in columns A through D.

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Large Corporation: A Large Corporation may not base its
estimated tax payments on the previous year’s tax, except for the
first quarter. Any reduction in that first installment must be added
to the second installment, so that the total of columns A–D is equal
to line 4a, as follows:

Payment due dates (months after the end of the tax year) are as
follows:

If line 4b is less than line 4a, in column A enter 25% of line 4b. In
column B, determine the amount to enter by:

• C Corporations, fiscal year ending June 30, 2018:

(i)	
(ii)	
(iii)	

• S Corporations (all tax year-ends):

subtracting line 4b from line 4a,
adding the result to the amount on line 4a, and
multiplying the total by 25%

In columns C and D, enter 25% of line 4a.

Penalty Worksheet and Instructions
Use the worksheet below to estimate the penalty for underpayment
of estimated tax payments. Use additional worksheets to account
for payments if more than four estimated payments were made for
the tax year.
Do not attach the Penalty Worksheet to the tax return. Keep the
Penalty Worksheet with your other tax records.
Line 1: Enter in column A through D the installment due dates
from Form 6220 line 5.
Line 2: Enter in columns A through D the requirement installment
from Form 6220, line 6
Line 3: In column A, enter the estimated tax payments deposited
by the 15th day of the 4th month of your tax year; in column B,
enter payments made after the 15th day of the 4th month through
the 15th day of the 6th month of your tax year; in column C, enter
payments made after the 15th day of the 6th month through the
15th day of the 9th month of your tax year; and in column D, enter
payments made after the 15th day of the 9th month through the
15th day of the 12th month of your tax year. For column A only,
enter the amount from line 3 on line 7.
Generally, a prior year’s overpayment will be applied against the
earliest installment, unless the taxpayer instructs the Department
otherwise.

•	 C Corporations, generally:
	

	

	

o 15th of the fourth month

o September 15, 2018

o 15th of the third month

• Exempt Organizations (all tax year-ends):
	

o 15th day of the fifth month

• Cooperatives (all tax year-ends):
	

o 15th day of the ninth month

A payment of estimated tax is applied against underpayment of
required installments in the order in which such installments are
required to be paid, regardless to which installment the payment
pertains. If the corporation has made more than one payment for
a required installment, compute the penalty separately for each
payment.
Line 12: Enter the number of days from the due date of the
installment on line 1 to the date shown on line 11.
Line 13: Enter the amount that is equal to the number of days on
line 12 divided by the number of days in the tax year times the
applicable rate times the amount on line 9. The applicable rate is
the Alaska interest rate in effect. For interest rates, refer to DOR’s
website at www.tax.alaska.gov.
Line 14: Add amounts on line 13 columns A–D. Enter on line 14
and on Schedule A, line 14 of Form 6000, 6100, or 6150.

Line 7: Subtract line 6 from line 5. If less than zero, enter zero (for
column A only, enter the amount from line 3)
Line 8: If the amount on line 7 is zero, subtract line 5 from line 6
and enter the result on line 8. Otherwise, enter zero.
Line 9: If line 7 is less than or equal to line 2, subtract line 7 from
line 2, enter the result, compute the penalty on line 13, and then go
to line 4 of the next column. Otherwise, go to line 10.
Line 10: If line 2 is less than line 7, subtract line 2 from line 7 and
enter the result on line 10. Then go to line 4 of the next column.
Line 11: Enter the date of payment or the final tax payment due
date (see below) after the close of the tax year, whichever is earlier.
The final payment due date depends on whether the taxpayer is
a C Corporation, an S Corporation, or a special entity such as an
Exempt Organization or Cooperative. There are also special rules
for tax years that end in June.

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Penalty Worksheet

A

B

C

D

1. Installment due dates from Form 6220, line 5
2. Requirement installment from Form 6220, line 6
3. Amount paid or credited for each period
Complete lines 4 through 10 for one column before completing the next column
4. Enter the amount, if any, from line 10 of the previous column
5. Add lines 3–4
6. Add amounts on lines 8–9 of the preceeding column
7. Subtract line 6 from line 5 (see instructions)
8. Remaining underpayment from previous period
9. Underpayment (see instructions)
10. Overpayment (see instructions)
11. Enter the date of payment (see instructions)
12.

Number of days from the due date of the installment on line 1
to the date shown on line 11

13. Penalty for each period
14. Total penalty for underpayment of estimated tax

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