§ 105-163.41. Underpayment. - North Carolina Statutes

§ 105‑163.41. Underpayment.

(a)        Except as providedin subsection (d), if the amount of estimated tax paid by a corporation duringthe taxable year is less than the amount of tax imposed upon the corporationunder Article 4 of this Chapter for the taxable year, the corporation must beassessed interest in an amount determined by multiplying the amount of theunderpayment as determined under subsection (b), for the period of theunderpayment as determined under subsection (c), by the percentage establishedas the rate of interest on assessments under G.S. 105‑241.21 that is ineffect for the period of the underpayment. For the purpose of this section, theamount of tax imposed under Article 4 of this Chapter is the net amount aftersubtracting the credits against the tax allowed by this Chapter other than thecredit allowed by this Article.

(b)        The amount of theunderpayment shall be the difference between:

(1)        The amount of theinstallment the corporation would have been required to pay if thecorporation's estimated tax equalled ninety percent (90%) of the tax imposedunder Article 4 for the taxable year, assuming the same schedule ofinstallments, or ninety percent (90%) of the tax imposed for the taxable yearif the corporation made no installment payments; and

(2)        The amount, if any,of the corresponding installment timely paid by the corporation.

(c)        The period of theunderpayment shall run from the date the installment was required to be paid tothe earlier of:

(1)        The 15th day of the3rd month following the close of the taxable year, or

(2)        With respect to anyportion of the underpayment, the date on which the portion is paid. Aninstallment payment of estimated tax shall be considered a payment of anyprevious underpayment only to the extent the payment exceeds the amount of theinstallment determined under subdivision (1) of subsection (b) for thatinstallment date.

(d)        Except as providedin subdivision (5) of this subsection, the interest for underpayment imposed bythis section shall not be imposed if the total amount of all payments ofestimated tax made on or before the last date prescribed for the payment of theinstallments equals or exceeds the amount that would have been required to bepaid on or before that date if the estimated tax was equal to the least of:

(1)        The tax shown on thereturn of the corporation for the preceding taxable year, if the corporationfiled a return for the preceding taxable year and the preceding year was ataxable year of 12 months;

(2)        An amount equal tothe tax computed at the rates applicable to the taxable year but otherwise onthe basis of the facts shown on the return of the corporation for, and the lawapplicable to, the preceding taxable year; or

(3)        An amount equal toninety percent (90%) of the tax for the taxable year computed by placing on anannualized basis the taxable income:

a.         For the first threemonths of the taxable year, in the case of the installment required to be paidin the 4th month;

b.         For the first threemonths or for the first five months of the taxable year, in the case of theinstallment required to be paid in the 6th month;

c.         For the first sixmonths or for the first eight months of the taxable year, in the case of theinstallment required to be paid in the 9th month; and

d.         For the first ninemonths or for the first 11 months of the taxable year, in the case of theinstallment required to be paid in the 12th month of the taxable year.

(4)        For purposes of thissubdivision, the taxable income shall be placed on an annualized basis bymultiplying by 12 the taxable income referred to in the preceding sentence, anddividing the resulting amount by the number of months in the taxable year (3,5, 6, 8, 9, or 11 as the case may be) referred to in that sentence.

(5)        In the case of alarge corporation, as defined in section 6655 of the Code, subdivisions (1) and(2) of this subsection shall not apply. (1959, c. 1259, s. 1A; 1973, c. 476, s. 193; 1977, c.1114, s. 9; 1983, c. 713, s. 86; 1987 (Reg. Sess., 1988), c. 994, ss. 2, 3;2001‑414, s. 13; 2005‑276, s. 6.37(m); 2007‑491, s. 44(1)a.)