Form 2220: The Corporate Estimated Tax Underpayment Penalty
Published November 8, 2026
Form 2220 helps a corporation figure whether it owes the penalty for underpaying estimated tax, and if so, how much. The instructions say the form is also used by S corporations, tax-exempt organizations subject to the unrelated business income tax, and private foundations.
This post is general information from the 2025 IRS form and instructions. It does not say whether a particular corporation owes a penalty.
When the penalty can apply
A corporation can owe the penalty if it did not pay on time at least the smaller of two amounts: the tax shown on its 2025 return, or the tax shown on its 2024 return. The 2024 amount applies only if that return was for a full 12 months and showed some tax. A large corporation can base only its first required installment on the prior year's tax.
If the amount on Part I, line 3, is less than $500, the corporation does not owe the penalty.
Installments
Estimated tax is paid in installments due on the 15th day of the 4th, 6th, 9th, and 12th months of the tax year. If no special method applies, each installment is 25 percent of the required annual payment. The penalty is figured separately for each due date. A corporation can owe a penalty for an early installment even if it paid enough later in the year.
Payments and the penalty date
Estimated tax paid or credited for each period is entered on Part III, line 11. Part IV then compares each installment with the date of payment. For that step, the form uses the date of payment or the 15th day of the 4th month after the close of the tax year, whichever is earlier. The penalty runs from each installment due date to that date.
Do you have to file Form 2220?
Generally, no. The IRS figures any penalty and notifies the corporation of any amount due. A corporation must still attach Form 2220 to its return if the Part I, line 3, amount is $500 or more and it uses the adjusted seasonal installment method, uses the annualized income installment method, or is a large corporation figuring its first installment on the prior year's tax.
A corporation that is not required to file may still use the form to figure the penalty. In that case it enters the penalty on its return and does not attach the form.
Special methods
The annualized income installment method and the adjusted seasonal installment method can reduce or remove the penalty for some due dates. The instructions use a ski shop, which earns most of its income in winter, as an example. Schedule A of the form is used for these methods. The adjusted seasonal method may be used only if the base period percentage for any 6 consecutive months is at least 70 percent.
Where the penalty goes
The total penalty goes on line 34 of Form 1120, or on the comparable line of another income tax return. The interest rate used in the penalty changes each quarter. The IRS publishes the rates in a news release and in a revenue ruling.
A 2025 note
The 2025 instructions say that the IRS will continue to waive the section 6655 penalty for estimated tax underpayments that come from corporate alternative minimum tax (CAMT) liability. Affected corporations must still file the 2025 Form 2220, and must enter the penalty amount on line 34 even if it is zero. The instructions refer to Notice 2025-27. Check the instructions for the year you file.
For the individual version of this penalty, see Form 2210: The Estimated Tax Penalty Explained.
Mistakes to avoid
- Testing only the final balance. Each installment date is tested separately.
- Checking a Part II box without attaching the form.
- Using the 2024 comparison on a return that covers less than 12 months.
Sources: Sources: IRS, Form 2220, Underpayment of Estimated Tax by Corporations (2025) (https://www.irs.gov/pub/irs-pdf/f2220.pdf); Instructions for Form 2220 (2025) (https://www.irs.gov/pub/irs-pdf/i2220.pdf) This is general information, not advice about your specific return.
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