26 U.S.C. § 6655 — Failure by corporation to pay estimated income tax

(a) The basic penalty. If a corporation underpays its estimated income tax, an extra amount gets added to its tax bill. That amount is figured by applying the interest rate the IRS uses for underpayments (set under section 6621) to the underpaid amount, for however long it stayed unpaid. (b) Figuring the underpayment and how long it lasted. (1) The underpayment for any installment is the required installment amount minus whatever was actually paid by its due date. (2) The clock on an underpayment runs from the installment's due date until whichever comes first: the 15th day of the 4th month after the tax year ends, or the date that part of the underpayment actually gets paid. (3) When a corporation makes an estimated payment, it's applied to whichever unpaid installment came due first. (c) How many installments, and when they're due. (1) There are 4 required installments each year. (2) For a standard calendar-year corporation, they're due April 15, June 15, September 15, and December 15. (d) How big each installment must be. (1) Normally, each installment is 25% of the "required annual payment" (A). That required annual payment is the smaller of 100% of the tax shown on this year's return (or, if none is filed, 100% of the actual tax) or 100% of the tax shown on last year's return (B) — except the corporation can't use last year's tax if last year wasn't a full 12-month year, or if no return was filed for it showing a tax liability. (2) A "large corporation" (defined below) generally must use 100% of the current year's tax, not last year's, for every installment (A) — except it may still use last year's tax just for the first installment; if that produces a smaller first payment, the difference gets added back into the next installment (B). (e) Paying less if income is annualized or seasonal. (1) If a corporation can show that computing tax on its annualized income, or on a seasonal-adjustment basis, gives a lower amount than subsection (d) would require, it can pay that lower amount instead — but any resulting shortfall gets made up by increasing later installments (A)-(B). (2) The annualized-income installment is generally figured by projecting a stub period's income (the first 3 months for the 1st and 2nd installments, first 6 months for the 3rd, first 9 months for the 4th) out to a full year, computing the tax on that annualized figure, applying a set percentage (25% for the 1st installment, 50% for the 2nd, 75% for the 3rd, 100% for the 4th), and subtracting whatever's already been required in earlier installments. A corporation can instead elect slightly different stub periods (2/4/7/10 months, or a similar alternate set), but must make that choice by the first installment's due date. (3) The seasonal-adjustment method works similarly but only applies if the company's income is heavily concentrated in some 6-month stretch (at least 70% of its yearly total, based on a 3-year average) — the tax is figured on annualized income using that seasonal pattern instead of a flat calendar projection, minus installments already required. (4) Certain foreign-subsidiary income (subpart F) generally must be folded into the annualized calculation like partnership income — unless the corporation elects to instead assume it received that income evenly through the year at 115% of what it reported the prior year (100% for shareholders who don't hold a controlling stake). (5) Dividends from a "closely held" real estate investment trust (five or fewer people own half or more of it), received by a shareholder owning 10% or more, must also be folded into the annualized calculation like partnership income. (f) No penalty applies if the tax shown on the year's return (or the actual tax, if no return is filed) is under $500. (g) Definitions. (1) "Tax," for this section, means the corporate income tax plus the alternative and other listed taxes, minus certain tax credits — with a special rule folding a specific foreign-corporation tax into the regular corporate tax. (2) A "large corporation" is one that had $1,000,000 or more in taxable income in any one of the 3 years before the current year; among corporations in the same controlled group, that $1,000,000 threshold gets divided among them; and certain carried-back or carried-over losses don't count toward that test. (3) Certain tax-exempt organizations and private foundations are treated as ordinary taxable corporations for this section, with some adjusted deadlines and annualization periods. (4) S corporations have their own set of adjustments here — certain S-corporation-specific taxes are treated like regular corporate tax, the large-corporation carryover rule doesn't apply to them, their required-payment formula and due dates are adjusted, and the return requirement for using last year's numbers is waived. (h) If a quick refund a corporation got under section 6425 for overpaying estimated tax turns out to have been too large, the excess gets its own addition-to-tax charge, at the same underpayment interest rate, running from when the refund was paid to the standard 4th-month deadline. (i) For a corporation with a fiscal year instead of a calendar year, every month reference in this section shifts to match (1); tax years shorter than 12 months are handled under IRS regulations (2). (j) The IRS may issue whatever regulations are needed to carry out this section.

The source credit shows that this section was originally enacted as part of the Internal Revenue Code of 1954, ch. 736, 68A Stat. 825, dated August 16, 1954. It has since been amended repeatedly — the credit lists roughly thirty separate amending enactments spanning from 1964 through 2022, including major tax acts such as Pub. L. 97–34 (1981), Pub. L. 99–514 (1986), Pub. L. 105–34 (1997), and Pub. L. 115–97 (2017), among many others. This pattern indicates that the provision has been a recurring subject of legislative revision across nearly seven decades, reflecting continual adjustment of its mechanics rather than a single stable rule. Historical context: The 1954 Internal Revenue Code recodified and reorganized the federal tax laws, and provisions governing corporate estimated tax payments are generally understood to serve the purpose of ensuring that corporations pay their income tax liability in installments throughout the year rather than in a single lump sum at filing, so that tax revenue is collected on a schedule roughly matching income earned and government cash-flow needs. The addition-to-tax mechanism is commonly understood as an incentive for accurate and timely estimated payments. Beyond this general understanding of the estimated-tax framework's purpose, the record does not establish the specific legislative intent behind any particular amendment listed in the source credit. The reasons Congress made each individual change — such as adjusting installment percentages, defining "large corporations," or addressing REIT dividends — are not documented here, and no such intent should be inferred from the statutory text alone.