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Instructions for Form 4899, Corporate Income Tax (CIT)
Penalty and Interest Computation for Underpaid Estimated Tax
less than $350,000. In addition, if the taxpayer’s business was
Purpose
not in existence in the preceding year, no safe harbor exists. In
To compute penalty and interest for underpayment, late payment such a case, estimates must be based on the CIT liability for the
or filing, or failure to pay or file quarterly estimates. If acurrent year.
taxpayer prefers not to file this form, the Department of Treasury
(Treasury) will compute any applicable penalty and interest and NOTE: For a taxpayer that calculates and pays estimated
bill the taxpayer. Part 4 of this form is used to determine and payments for federal income tax purposes pursuant to section
report the amount of estimates due when income is not evenly 6655(e) of the Internal Revenue Code, that taxpayer may use
distributed throughout the tax year. the same methodology as used to calculate the annualized
income installment or the adjusted seasonal installment,
NOTE: Penalty and interest for late filing or late payment on whichever is used as the basis for the federal estimated
the annual return is computed separately. See the “Computing payment, to calculate the estimated payments required each
Penalty and Interest” section of the “General Information for quarter under this section. Retain the calculation for your
Standard Taxpayers” in the CIT Forms and Instructions for records.
Standard Taxpayers (Form 4890).
Estimated returns and payments are required from any Line-by-Line Instructions
taxpayer that reasonably expects an annual CIT liability of Lines not listed are explained on the form.
more than $800. Exceptions are listed below. If a taxpayer owes not enter data boxesin filled with Xs.
Do
estimated tax and the estimated return with full payment is not
filed or is filed late, penalty is added at 5 percent of tax due, Dates must beentered in MM-DD-YYYY format.
for the first two months. Penalty increases by an additional 5 name and
Taxpayer Name and Account Number: Enter
percent per month, or fraction thereof, after the second month, number as reported on page 1 of the applicable CIT
account
annual
to a maximum of 25 percent. If the taxpayer made no estimated return (CIT Annual Return (Form 4891), the Insurance
tax payments and none of the exceptions below apply, compute
Company Annual Return for Corporate Income and Retaliatory
the interest due (Part 2) and the penalty for non-filing (Part 3). (Form 4905), or the Corporate Income Tax Annual
Taxes
Return for Financial Institutions (Form 4908)). Also, the
Exceptions
taxpayer FEIN from page 1 must be repeated in the proper
Estimated returns and payments are not required, and therefore location on page 2.
penalty and interest on this form not is required, if:
PART 1: ESTIMATED TAX REQUIRED
• The return isfor a taxable period less of than four calendar Line 2: Enter 85percent of the annual tax amount from line 1.
months.
• The annual tax on the current annual return is$800 or less. Line
3: Enter the due date for each quarterly return. For
calendar year filers these dates are April 15, July 15, October
If any the of conditions listed below apply, do not pay penalty 15, and January 15. For fiscal year filers, these dates are 4th ,
and interest. 7th, 10th and 13th months after the start of the fiscal year.
• The estimated quarterly payments reasonably approximate Payment
is due on the 15th day of the month. For any tax year
the tax liability incurred for each quarter and the total of all that
includes an estimated tax payment period of less than three
payments equals at least 85 percent of the annual liability. months,
the quarterly return for that period is due on the 15th
Complete the Annualization Worksheet (Part the 4) if liability day of
the month immediately following the final month of the
is not evenly distributed throughout the tax year. estimated
tax payment period.
• The sum of estimated payments equals the annual tax on Line 4: Divide the amount of the estimated tax required for
the preceding year’s CIT return, provided these payments the year on line 2 by four and enter this as estimated tax for
were made in four timely equal payments (“four timely equal each quarter. If the business operated less than 12 months,
payments” describes the minimum pace payments of that will divide by the number of quarterly returns required and enter
satisfy this safe harbor) and the preceding year’s tax under this theas estimated tax for each quarter.
the Income Tax Act is $20,000 or less. If the prior year’s tax Actual Quarterly Tax . Ifa taxpayer computes quarterly tax
liability was reported for a period less than 12 months, the due based on the actual tax base for each quarter, complete
prior year’s liability must be annualized for purposes of both Part 4 first, then bring the tax from line 59 theof Annualization
the $20,000 ceiling and calculating the quarterly payments due Worksheet toline 4. See Part instructions4 for taxpayers filing
under this method. See “Filing if Tax Year Is Less Than 12 a return other than Form 4891. The total theof four computed
Months” the in “General Information” section Form of 4890 for amounts cannot lessbe than line 2.
more information. Reliance on the prior year’s tax liability as
a means to avoid interest and penalty charges is only allowed Line 5: Complete column A only. Enter the amount of prior
if a taxpayer had business activity in Michigan in that prior year overpayment credited theto current tax year estimates.
year. A return must have been filed establish to the tax liability Line 6: Amount Paid. On this line enter estimated payments
for that prior year, even gross if receipts the in prior year were made by the taxpayer directedas below:
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