AR2220-CT: Underpayment of Estimated Tax (Revision)

Who files this form

AR2220-CT is for corporations figuring an Arkansas estimated tax underpayment penalty for tax year 2024.

• If your tax liability on Part 1, line 1 is $1,000 or less, you are not subject to an underestimate penalty.
• If your total estimated tax paid, including a prior-year carryforward, is at least the amount on Part 1, line 3, no underestimate penalty applies, provided the required quarterly payments were timely filed and paid.

The form also lists exceptions that may remove the penalty.

When it's due

The 2024 form lists these special timing rules for tax year 2024:

• Farming income exception: If farming income can reasonably be expected to be at least two-thirds of total gross income, you may file the declaration and pay estimated tax by the 15th day of the second month after the tax year closes. Instead, you may file an income tax return and pay the tax by the 15th day of the fourth month after the tax year closes.
• Alternative to the fourth-quarter installment: You may file an income tax return and pay the tax by January 31 or the last day of the first month after the tax year closes. The printed January 31 date does not include a calendar year.

The supplied text does not give specific quarterly due dates.

What you'll need

Have these items available to complete the form:

• Your Arkansas corporation income tax return, Form AR1100CT, for the current year's tax liability.
• Your prior-year Arkansas return for the prior-year tax liability.
• Estimated tax payment amounts and dates, including any estimated tax credit carried forward from the prior year.
• Your corporation's name and FEIN.
• The income tax return due date and, if already filed with full payment, the filing date.

If you compute the penalty on an annualized basis, complete Form AR2220A-CT.

How to file

If you compute the penalty on an annualized basis, the form directs you to attach completed Form AR2220A-CT and submit it with Form AR1100CT.

If you claim a listed exception, Part 3 directs you to check the corresponding numbered box and enter that number in the box on line 45 of Form AR1100CT.

The supplied text does not provide a mailing address or e-file instructions.

Common mistakes

• Not rounding entries: Parts 1 and 2 direct you to round all entries to whole dollars.
• Completing the columns out of order: Complete Columns A and B first, then C, then D, and finally E.
• Assuming the annual payment total is enough: The no-penalty rule based on total estimated payments also requires the correct quarterly amounts to have been timely filed and paid.
• Leaving out the annualized calculation form: Attach completed Form AR2220A-CT if you compute the penalty on an annualized basis.
• Missing the extension checkbox: Check the box if you filed a state or automatic federal extension.

Questions people ask

How is the required estimated tax amount figured?

Part 1 compares 90% of the current-year tax liability with the prior-year tax liability. Enter the smaller amount on line 3, then divide it by four for the required quarterly payments in Part 2.

Does a prior year with no tax liability qualify for an exception?

No penalty applies if the preceding tax year lasted 12 months, you had no tax liability for that year, and you were an Arkansas resident throughout that year. All three conditions must be met.

Can a casualty or disaster qualify for penalty relief?

Yes. No penalty is imposed to the extent the Commissioner of Revenue determines that a casualty, disaster, or other unusual circumstances would make the penalty against equity and good conscience.

What if income varied during the year?

The form says taxpayers with varied income may benefit from computing the 10% penalty on an annualized basis using Form AR2220A-CT. That form must be submitted with Form AR1100CT.

Official sources

• https://www.dfa.arkansas.gov/wp-content/uploads/AR2220_CT_UnderpaymentofEstimatedTax_2024.pdf