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that such failure is due to reasonable cause and not due to
willful neglect. The amount of the addition is equal to 5
percent of the amount required to be shown as tax on the
delinquent return for each month or fraction thereof during which
the return remains delinquent, up to a maximum addition of 25
percent for returns more than 4 months delinquent.
B. Section 6654
Section 6654 provides for an addition to tax in the event of
an underpayment of a required installment of individual estimated
tax. Sec. 6654(a) and (b). Each required installment is equal
to 25 percent of the “required annual payment”, which, in turn,
is equal to the lesser of (1) 90 percent of the tax shown on the
individual’s return for that year or, if no return is filed, 90
percent of his or her tax for such year, or (2) if the individual
filed a return for the immediately preceding taxable year, 100
percent of the tax shown on that return. Sec. 6654(d)(1)(A) and
(B)(i) and (ii). The due dates of the required installments for
a calendar taxable year are April 15, June 15, and September 15
of that year and January 15 of the following year. Sec.
6654(c)(2). An individual’s tax, for purposes of section 6654,
consists of income and self-employment tax determined before the
application of any wage withholding credits which, under section
6654(g)(1), are treated as payment of estimated tax. See sec.
6654(f). Section 6654(e) provides certain specified exceptions
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Last modified: November 10, 2007