Drake Tax - 1120: 2220 Penalty

Data entry and calculation of the 2220 penalty

Estimated tax penalties are calculated on Form 2220, Underpayment of Estimated Tax by Corporations. Use the 2220 screen to make adjustments. Any penalty calculated flows to Form 1120, line 34.

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 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."

For more information, review the Form 2220 Instructions.