Installment payment of estimated tax. Interest on underpayments

# (a)

As used in this section, “required annual payment” means the lesser of (1) ninety per cent of the tax under section 12-699 that is reported on the return filed for the taxable year or, if no return is filed, ninety per cent of the tax due under section 12-699, or (2) if the preceding taxable year was a taxable year of twelve months and the affected business entity filed a return for such taxable year, one hundred per cent of the tax under section 12-699 that is reported on such return.

# (b)

# (1)

Each affected business entity required to pay or, with respect to taxable years commencing on or after January 1, 2024, elects to pay, the tax imposed under section 12-699 and whose required annual payment for the taxable year is greater than or equal to one thousand dollars shall make the required annual payment each taxable year, in four required estimated tax installments on the following due dates:

(A) For the first required installment, the fifteenth day of the fourth month of the taxable year;

(B) for the second required installment, the fifteenth day of the sixth month of the taxable year;

(C) for the third required installment, the fifteenth day of the ninth month of the taxable year; and (D) for the fourth required installment, the fifteenth day of the first month of the next succeeding taxable year. An affected business entity may elect to pay any required installment prior to the specified due date. Except as provided in subdivision (2) of this subsection, the amount of each required installment shall be twenty-five per cent of the required annual payment.

# (2)

(A) For any required installment, if the affected business entity establishes that its annualized income installment calculated pursuant to subparagraph (B) of this subdivision is less than the amount determined under subsection (a) of this section, the amount of such required installment shall be the annualized income installment. Any reduction in a required installment resulting pursuant to this subdivision shall be recaptured by increasing the amount of the next required installment by the amount of such reduction and by increasing subsequent required installments to the extent such reduction has not previously been recaptured under this subdivision.

(B) The annualized income installment is the amount by which (i) the amount equal to the applicable percentage, as set forth in subparagraph (C) of this subdivision, multiplied by the tax imposed under section 12-699 for the taxable year that would be due if income subject to tax under said section for the months in the taxable year ending before the due date of the installment was annualized, (ii) exceeds the aggregate amount of any prior required installments for the taxable year.

(C) For the purposes of subparagraph (B) of this subdivision, the applicable percentages shall be as follows: (i) For the first required installment, twenty-two and one-half per cent; (ii) for the second required installment, forty-five per cent; (iii) for the third required installment, sixty-seven and one-half per cent; and (iv) for the fourth required installment, ninety per cent.

# (c)

# (1)

Except as otherwise provided in this section, in the case of any underpayment of estimated tax by an affected business entity, there shall be added to the tax imposed under section 12-699 an amount determined by applying interest (A) at the rate of one per cent per month or fraction thereof, (B) to the amount of the underpayment, (C) for the period of the underpayment.

# (2)

For the purposes of subdivision (1) of this subsection, (A) the amount of the underpayment is the amount by which the required installment exceeds the amount, if any, of the installment paid on or before the due date of the installment, and (B) the period of the underpayment runs from the due date of the installment to whichever date is earlier: (i) The fifteenth day of the third month of the next succeeding taxable year, or (ii) with respect to any portion of the underpayment, the date on which such portion is paid. Any payment of estimated tax under this section shall be credited against unpaid or underpaid required installments in the order in which such installments are required to be paid.

# (d)

Payment of the estimated tax under this section or any required installment thereof shall be considered payment on account of the tax imposed under section 12-699 for the taxable year. If an affected business entity makes payment of estimated tax pursuant to this section against the tax due under this chapter for a taxable year and (1) does not make the election under subsection (b) of section 12-699, or (2) such payments exceed the amount due under said subsection for such taxable year, such payments shall be deemed to be made against the tax liability of the affected business entity under section 12-719.

# (e)

For taxable years of less than twelve months, the provisions of this section shall apply in a manner consistent with the regulations adopted under chapter 229 pertaining to such taxable years. (P.A. 18-49, S. 2; P.A. 19-186, S. 2; P.A. 22-110, S. 31; P.A. 23-204, S. 361.) History: P.A. 18-49 effective May 31, 2018, and applicable to taxable years commencing on or after January 1, 2018; P.A. 19-186 amended Subsec. (b)(1) by adding provision making estimated tax installments requirement applicable to each affected business entity whose required annual payment for taxable year is greater than or equal to $1,000, effective July 1, 2019, and applicable to taxable years commencing on or after January 1, 2019; P.A. 22-110 made a technical change in Subsec. (b)(1); P.A. 23-204 amended Subsec. (b)(1) by adding reference to taxable years commencing on or after January 1, 2024, and election to pay tax, and amended Subsec. (d) by adding provision re payment by affected business entity of estimated tax against tax due under chapter, effective January 1, 2024, and applicable to taxable years commencing on or after January 1, 2024. (Return to ChapterTable of Contents) (Return toList of Chapters) (Return toList of Titles)