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10256: 1120 - 2220 - Penalty


1120 Corporate

How is the late payment penalty on Form 2220 figured?

 

The IRS uses different interest rates to figure the penalty for each quarter. Drake Tax retains the quarterly underpayment and penalty rates as of 12/31 of the calendar year.

A note at the bottom of Part IV of Form 2220, Underpayment of Estimated Tax by Corporations, explains

"Use the penalty interest rate for each calendar quarter, which the IRS will determine during the first month in the preceding quarter.  These rates are published quarterly in an IRS News Release and in a revenue ruling in the Internal Revenue Bulletin. To obtain this information on the Internet, access the IRS website at www.irs.gov. You can also call 1-800-829-4933 to get interest rate information."


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