Magazine article The CPA Journal

Connecticut Corporate Estimated Tax Relief

Magazine article The CPA Journal

Connecticut Corporate Estimated Tax Relief

Article excerpt

The Connecticut Corporate Business Tax estimated tax calculations have always had a built-in pitfall: that a corporation might have a loss (or low income) at the beginning of the year with a dynamite last quarter or twelfth month. The Department of Revenue Services would assess underpayment of estimated tax penalties based upon 30%, 40%, 10%, and 20% of the actual tax liability. Connecticut Superior Court has ruled the assessment policy as invalid; corporations may pay their estimated tax declarations based upon the information available to them at the time they file the declarations, without anticipating future events.

Fleet Credit vs. Miller and two similar cases were consolidated and decided by the Connecticut Superior Court, Tax Session Nos. 536970, 546573, 550637, Nov. 2, 1995. By affidavits and/or stipulation there were no (legal) questions of fact. The taxpayers established that, in the income years in question, their declarations of estimated tax and their estimated tax payments were made in good faith and on the basis of the information available at the time. The court ruled it was not necessary for the taxpayers to anticipate or predict the future income and pay estimated tax on that future income, and interest could not be imposed for underpayment of prior quarters' estimated tax on such future income.

The court specifically described the taxpayers' income as unanticipated or unpredictable. A cash basis corporation, for example, which had already invoiced the revenues in question could not claim that the customers generally paid late and collections were expected in the following year. …

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