Instructions for IRS Form 1120-L "U.S. Life Insurance Company Income Tax Return"

This document contains official instructions for IRS Form 1120-L, U.S. Life Insurance Company Income Tax Return - a tax form released and collected by the Internal Revenue Service (IRS), a subdivision of the U.S. Department of the Treasury. An up-to-date fillable IRS Form 1120-L Schedule M-3 is available for download through this link.

Instruction Details:

  • This 26-page document is available for download in PDF;
  • Not applicable for the current tax year. Choose a more recent version to file this year's taxes;
  • Complete, printable, and free.

Download your copy of the instructions by clicking the link below or browse hundreds of other forms in our library of IRS-released tax documents.

ADVERTISEMENT
ADVERTISEMENT

Download Instructions for IRS Form 1120-L "U.S. Life Insurance Company Income Tax Return"

Download PDF

Fill PDF online

Rate (4.7 / 5) 121 votes
2019
Department of the Treasury
Internal Revenue Service
Instructions for Form 1120-L
U.S. Life Insurance Company Income Tax Return
Contents
Page
bring these children home by looking
Section references are to the Internal
Revenue Code unless otherwise noted.
at the photographs and calling
Schedule L . . . . . . . . . . . . . .
22
1-800-THE-LOST (1-800-843-5678) if
Contents
Page
Schedule M—Other
you recognize a child.
Information . . . . . . . . . . . .
22
Future Developments . . . . . . . . . . . .
1
Index . . . . . . . . . . . . . . . . . . . . .
26
What's New . . . . . . . . . . . . . . . . . .
1
The Taxpayer Advocate
Photographs of Missing Children . . . .
1
Future Developments
Service
The Taxpayer Advocate Service . . . . .
1
How To Get Forms and
The Taxpayer Advocate Service
For the latest information about
Publications . . . . . . . . . . . . . . .
2
(TAS) is an independent
developments related to Form 1120-L
General Instructions . . . . . . . . . . . . .
2
organization within the IRS that helps
and its instructions, such as
Purpose of Form . . . . . . . . . . . .
2
taxpayers and protects taxpayer
legislation enacted after they were
Who Must File . . . . . . . . . . . . .
2
rights. TAS's job is to ensure that
published, go to IRS.gov/Form1120L.
Definitions . . . . . . . . . . . . . . . .
2
every taxpayer is treated fairly and
Electronic Filing . . . . . . . . . . . .
3
Additional guidance may be issued
knows and understands their rights
When To File . . . . . . . . . . . . . .
3
under the
Taxpayer Bill of
Rights.
subsequent to the publication of these
Where To File . . . . . . . . . . . . . .
3
instructions. Please review any
As a taxpayer, the corporation has
Who Must Sign . . . . . . . . . . . . .
3
additional information on the website
rights that the IRS must abide by in its
Paid Preparer Authorization . . . . .
3
prior to the completion of the form.
dealings with the corporation. TAS
Statements . . . . . . . . . . . . . . .
4
can help the corporation if:
Assembling the Return . . . . . . . .
4
What's New
Tax Payments . . . . . . . . . . . . .
4
A problem is causing financial
Interest and Penalties . . . . . . . . .
5
New lines 3b and 11b. Lines 3b and
difficulty for the business.
Accounting Methods . . . . . . . . .
5
11b are new lines to address the
The business is facing an
Accounting Period . . . . . . . . . . .
5
income or deduction from the Reserve
immediate threat of adverse action.
Rounding Off to Whole
Transition Relief under section
The corporation has tried
Dollars . . . . . . . . . . . . . . . .
5
13517(c)(3) of Public Law 115-97.
repeatedly to contact the IRS but no
Recordkeeping . . . . . . . . . . . . .
5
Lines 6 and 28b reserved. Public
one has responded, or the IRS hasn't
Other Forms and
Statements That May Be
Law 115-97 repealed section 847. As
responded by the date promised.
Required . . . . . . . . . . . . . . .
6
a result, lines 6 and 28b are reserved
The TAS toolkit at
Specific Instructions . . . . . . . . . . . . .
6
for future use.
TaxpayerAdvocate.IRS.gov
can help
Period Covered
. . . . . . . . . . . .
6
Form 8997, Initial and Annual
the corporation understand these
Name and Address . . . . . . . . . .
7
Statement of Qualified Opportunity
rights.
Item A. Identifying
Fund (QOF) Investments. Use
Information . . . . . . . . . . . . .
7
TAS has offices in every state, the
Form 8997 to identify qualified
Item B. Employer
District of Columbia, and Puerto Rico.
Identification Number
investments held in a QOF at any time
Local advocates' numbers are in their
(EIN) . . . . . . . . . . . . . . . . .
8
during the year. See Form 8997 and
Item D. Section 953
local directories and at
its instructions.
Elections . . . . . . . . . . . . . . .
8
TaxpayerAdvocate.IRS.gov. The
Item E. Final Return, Name
Increase in penalty for failure to
corporation can also call TAS at
Change, Address
file. For returns due after 2019, the
1-877-777-4778.
Change, or Amended
minimum penalty for failure to file a
Return . . . . . . . . . . . . . . . .
8
TAS also works to resolve
return that is more than 60 days late
Life Insurance Company
large-scale or systemic problems that
has increased to the smaller of the tax
Taxable Income . . . . . . . . . .
8
affect many taxpayers. If the
due or $435. See
Late filing of
return,
Schedule A—Dividends,
corporation knows of one of these
Inclusions,
later.
broad issues, please report it to TAS
Dividends-Received
Deduction, and Other
Photographs of Missing
through the Systemic Advocacy
Special Deductions . . . . . . .
16
Management System at
IRS.gov/
Children
Schedule B—Investment
SAMS.
Income . . . . . . . . . . . . . . .
18
The IRS is a proud partner with the
Schedule F—Increase
For more information, go to
National Center for Missing &
(Decrease) in Reserves
IRS.gov/Advocate.
Exploited Children®
(NCMEC).
(Section 807) . . . . . . . . . . .
19
Photographs of missing children
Schedule G—Policy
selected by the Center may appear in
Acquisition Expenses . . . . . .
20
instructions on pages that would
Schedule K—Tax
Computation . . . . . . . . . . .
20
otherwise be blank. You can help
Mar 13, 2020
Cat. No. 11485H
2019
Department of the Treasury
Internal Revenue Service
Instructions for Form 1120-L
U.S. Life Insurance Company Income Tax Return
Contents
Page
bring these children home by looking
Section references are to the Internal
Revenue Code unless otherwise noted.
at the photographs and calling
Schedule L . . . . . . . . . . . . . .
22
1-800-THE-LOST (1-800-843-5678) if
Contents
Page
Schedule M—Other
you recognize a child.
Information . . . . . . . . . . . .
22
Future Developments . . . . . . . . . . . .
1
Index . . . . . . . . . . . . . . . . . . . . .
26
What's New . . . . . . . . . . . . . . . . . .
1
The Taxpayer Advocate
Photographs of Missing Children . . . .
1
Future Developments
Service
The Taxpayer Advocate Service . . . . .
1
How To Get Forms and
The Taxpayer Advocate Service
For the latest information about
Publications . . . . . . . . . . . . . . .
2
(TAS) is an independent
developments related to Form 1120-L
General Instructions . . . . . . . . . . . . .
2
organization within the IRS that helps
and its instructions, such as
Purpose of Form . . . . . . . . . . . .
2
taxpayers and protects taxpayer
legislation enacted after they were
Who Must File . . . . . . . . . . . . .
2
rights. TAS's job is to ensure that
published, go to IRS.gov/Form1120L.
Definitions . . . . . . . . . . . . . . . .
2
every taxpayer is treated fairly and
Electronic Filing . . . . . . . . . . . .
3
Additional guidance may be issued
knows and understands their rights
When To File . . . . . . . . . . . . . .
3
under the
Taxpayer Bill of
Rights.
subsequent to the publication of these
Where To File . . . . . . . . . . . . . .
3
instructions. Please review any
As a taxpayer, the corporation has
Who Must Sign . . . . . . . . . . . . .
3
additional information on the website
rights that the IRS must abide by in its
Paid Preparer Authorization . . . . .
3
prior to the completion of the form.
dealings with the corporation. TAS
Statements . . . . . . . . . . . . . . .
4
can help the corporation if:
Assembling the Return . . . . . . . .
4
What's New
Tax Payments . . . . . . . . . . . . .
4
A problem is causing financial
Interest and Penalties . . . . . . . . .
5
New lines 3b and 11b. Lines 3b and
difficulty for the business.
Accounting Methods . . . . . . . . .
5
11b are new lines to address the
The business is facing an
Accounting Period . . . . . . . . . . .
5
income or deduction from the Reserve
immediate threat of adverse action.
Rounding Off to Whole
Transition Relief under section
The corporation has tried
Dollars . . . . . . . . . . . . . . . .
5
13517(c)(3) of Public Law 115-97.
repeatedly to contact the IRS but no
Recordkeeping . . . . . . . . . . . . .
5
Lines 6 and 28b reserved. Public
one has responded, or the IRS hasn't
Other Forms and
Statements That May Be
Law 115-97 repealed section 847. As
responded by the date promised.
Required . . . . . . . . . . . . . . .
6
a result, lines 6 and 28b are reserved
The TAS toolkit at
Specific Instructions . . . . . . . . . . . . .
6
for future use.
TaxpayerAdvocate.IRS.gov
can help
Period Covered
. . . . . . . . . . . .
6
Form 8997, Initial and Annual
the corporation understand these
Name and Address . . . . . . . . . .
7
Statement of Qualified Opportunity
rights.
Item A. Identifying
Fund (QOF) Investments. Use
Information . . . . . . . . . . . . .
7
TAS has offices in every state, the
Form 8997 to identify qualified
Item B. Employer
District of Columbia, and Puerto Rico.
Identification Number
investments held in a QOF at any time
Local advocates' numbers are in their
(EIN) . . . . . . . . . . . . . . . . .
8
during the year. See Form 8997 and
Item D. Section 953
local directories and at
its instructions.
Elections . . . . . . . . . . . . . . .
8
TaxpayerAdvocate.IRS.gov. The
Item E. Final Return, Name
Increase in penalty for failure to
corporation can also call TAS at
Change, Address
file. For returns due after 2019, the
1-877-777-4778.
Change, or Amended
minimum penalty for failure to file a
Return . . . . . . . . . . . . . . . .
8
TAS also works to resolve
return that is more than 60 days late
Life Insurance Company
large-scale or systemic problems that
has increased to the smaller of the tax
Taxable Income . . . . . . . . . .
8
affect many taxpayers. If the
due or $435. See
Late filing of
return,
Schedule A—Dividends,
corporation knows of one of these
Inclusions,
later.
broad issues, please report it to TAS
Dividends-Received
Deduction, and Other
Photographs of Missing
through the Systemic Advocacy
Special Deductions . . . . . . .
16
Management System at
IRS.gov/
Children
Schedule B—Investment
SAMS.
Income . . . . . . . . . . . . . . .
18
The IRS is a proud partner with the
Schedule F—Increase
For more information, go to
National Center for Missing &
(Decrease) in Reserves
IRS.gov/Advocate.
Exploited Children®
(NCMEC).
(Section 807) . . . . . . . . . . .
19
Photographs of missing children
Schedule G—Policy
selected by the Center may appear in
Acquisition Expenses . . . . . .
20
instructions on pages that would
Schedule K—Tax
Computation . . . . . . . . . . .
20
otherwise be blank. You can help
Mar 13, 2020
Cat. No. 11485H
How To Get Forms and
Enter the combined tax on line 2 of
investment in a qualified opportunity
Schedule J, Form 1120. File Form
fund (QOF) at any time during the
Publications
1120 and attach Form 1120-L as a
year, the corporation must file its
Internet. You can access the IRS
statement (and identify it as such) or
return with Form 8997, Initial and
website 24 hours a day, 7 days a
attach a statement showing the
Annual Statement of Qualified
week, at IRS.gov to:
computation of the taxable income of
Opportunity Fund Investments,
Download forms, instructions, and
the life insurance department
attached. See the instructions for
publications;
(including all relevant information that
Form 8997.
Order IRS products online;
would be reported on Form 1120-L).
Other Insurance Companies
Research your tax questions online;
Foreign Life Insurance
Insurance companies, other than life
Search publications online by topic
Companies
insurance companies, should file
or keyword;
Form 1120-PC, U.S. Property and
View Internal Revenue Bulletins
A foreign life insurance company that
Casualty Insurance Company Income
(IRBs) published in recent years; and
sells a U.S. real property interest must
Tax Return. A burial or funeral benefit
Sign up to receive local and
file Form 1120-L and Schedule D
insurance company that directly
national tax news by email.
(Form 1120) to report the sale. Gain
manufactures funeral supplies or
or loss from the sale of a U.S. real
Tax forms and publications. The
performs funeral services is taxable
property interest is considered
corporation can download or print all
under section 831 and should file
effectively connected with the conduct
of the forms and publications it may
Form 1120-PC.
of a U.S. business, even though the
need on IRS.gov/FormsPubs.
foreign life insurance company does
Otherwise, the corporation can go to
Definitions
not carry on any insurance business in
IRS.gov/OrderForms
to place an
the United States and is not otherwise
An “insurance company” means any
order and have forms mailed to it. The
corporation if more than half of its
required to file a U.S. income tax
corporation should receive its order
business during the tax year is from
return. See sections 842 and 897; and
within 10 business days.
the issuance of insurance or annuity
the instructions for Schedule K, line 8,
contracts or the reinsuring of risks
later.
General Instructions
underwritten by insurance companies.
Foreign-owned domestic disregar-
A “life insurance company” is an
ded entities. If a foreign person,
Purpose of Form
insurance company in the business of
including a foreign corporation, wholly
Use Form 1120-L, U.S. Life Insurance
issuing life insurance and annuity
owns a domestic disregarded entity
Company Income Tax Return, to
contracts either separately or
(DE), the domestic DE is treated as a
report the income, gains, losses,
combined with health and accident
domestic corporation separate from
deductions, credits, and to figure the
insurance, or noncancelable contracts
its owner (the foreign corporation) for
income tax liability of life insurance
of health and accident insurance that
purposes of the reporting
companies.
meet the reserves test in section
requirements under section 6038A
816(a). Guaranteed renewable life,
that apply to 25% foreign-owned
Who Must File
health, and accident insurance that
domestic corporations. These rules
Every domestic life insurance
the corporation cannot cancel but
apply to a domestic DE owned by a
company and every foreign
reserves the right to adjust premium
foreign insurance company that
corporation that would qualify as a life
rates by classes, according to
makes an election under section
insurance company if it were a U.S.
experience under the kind of policy
953(c)(3)(C) but do not apply to a
corporation must file Form 1120-L.
involved, are treated as
domestic DE owned by a foreign
This includes organizations described
noncancelable.
insurance company that makes an
in section 501(m)(1) that provide
election under section 953(d) (for
The “reserves test” requires that life
commercial-type life insurance.
information on these elections, see
insurance reserves, as defined in
the instructions for Item D). If a foreign
Mutual Savings Banks
section 816(b), plus unearned
insurance company electing under
premiums and unpaid losses (whether
Conducting Life Insurance
section 953(c)(3)(C) wholly owns a
or not ascertained) on noncancelable
Business
domestic DE, the DE may be required
life, health, or accident policies not
Mutual savings banks conducting life
to file Form 5472. For additional
included in life insurance reserves
insurance business and meeting the
information and coordination with
must make up more than 50% (0.50)
requirements of section 594 are
Form 5472 filing by the domestic DE,
of total reserves as defined in section
subject to an alternative tax consisting
see the Instructions for Form 5472.
816(c). When determining whether
of:
the reserves test has been met:
A partial tax computed on Form
Note. A domestic DE is generally a
1. Life insurance reserves and
1120, U.S. Corporation Income Tax
transparent entity. Any insurance
total reserves must each be reduced
Return, on the taxable income of the
company that must file Form 1120-L
by an amount equal to the mean of the
bank, excluding the life insurance
will include on Form 1120-L any tax
aggregates, at the beginning and end
department; and
items of a wholly owned domestic DE
of the tax year, of the policy loans
A partial tax on the taxable income
that are subject to reporting.
outstanding with respect to contracts
computed on Form 1120-L of the life
Qualified opportunity investment.
for which life insurance reserves are
insurance department.
If the corporation held a qualified
maintained;
-2-
Instructions Form 1120-L (2019)
2. Amounts set aside and held at
Where To File
interest to satisfy obligations under
contracts that do not contain
File the corporation's return at the applicable IRS address listed below.
permanent guarantees with respect to
life, accident, or health contingencies
must not be included in either life
If the corporation's principal business, office,
insurance reserves (section 816(c)(1))
or agency is located in:
Use the following address:
or other reserves required by law
Department of the Treasury
(section 816(c)(3)); and
The United States
Internal Revenue Service Center
3. Deficiency reserves must not be
Ogden, UT 84201-0012
included in either life insurance
Internal Revenue Service Center
reserves or total reserves.
A foreign country or U.S. possession
P.O. Box 409101
Ogden, UT 84409
Electronic Filing
Corporations can generally
to
IRS.gov/PDS
for the current list of
should not complete that section.
electronically file (e-file) Form 7004
designated services.
Generally, anyone who is paid to
(automatic extension of time to file)
prepare the return must sign it and fill
and Forms 940, 941, and 944
The PDS can tell you how to get
in the “Paid Preparer Use Only” area.
(employment tax returns). If there is a
written proof of the mailing date.
balance due, the corporation can
The paid preparer must complete
For the IRS mailing address to use
authorize an electronic funds
the required preparer information and:
if you're using a PDS, go to
IRS.gov/
withdrawal while e-filing. Form 1099
Sign the return in the space
PDSStreetAddress.
and other information returns can also
provided for the preparer's signature,
be electronically filed. The option to
Private delivery services
and
e-file does not, however, apply to
cannot deliver items to P.O.
!
Give a copy of the return to the
certain returns.
boxes. You must use the U.S.
taxpayer.
CAUTION
Postal Service to mail any item to an
For more information, visit
IRS.gov/
Note. A paid preparer may sign
IRS P.O. box address.
Filing. Click on the links for
original or amended returns by rubber
“Businesses & Self-Employed” and
Extension of Time To File
stamp, mechanical device, or
“Corporations.”
computer software program.
File Form 7004, Application for
Automatic Extension of Time To File
When To File
Paid Preparer
Certain Business Income Tax,
Generally, a corporation must file its
Authorization
Information, and Other Returns, to
income tax return by the 15th day of
request an extension of time to file.
If the corporation wants to allow the
the 4th month after the end of its tax
Generally, file Form 7004 by the
IRS to discuss its 2019 tax return with
year. A new corporation filing a
regular due date of the return. See the
the paid preparer who signed it, check
short-period return must generally file
Instructions for Form 7004.
the “Yes” box in the signature area of
by the 15th day of the 4th month after
the return. This authorization applies
the short period ends. A corporation
Who Must Sign
only to the individual whose signature
that has dissolved must generally file
appears in the “Paid Preparer Use
The return must be signed and dated
by the 15th day of the 4th month after
Only” section of the return. It doesn’t
by:
the date it dissolved.
apply to the firm, if any, shown in that
The president, vice-president,
section.
treasurer, assistant treasurer, chief
However, a corporation with a fiscal
accounting officer; or
tax year ending June 30 must file by
If the “Yes” box is checked, the
Any other corporate officer (such as
the 15th day of the 3rd month after the
corporation is authorizing the IRS to
tax officer) authorized to sign.
end of its tax year. A corporation with
call the paid preparer to answer any
a short tax year ending anytime in
If a return is filed on behalf of a
questions that may arise during the
June will be treated as if the short year
corporation by a receiver, trustee, or
processing of its return. The
ended on June 30, and must file by
assignee, the fiduciary must sign the
corporation is also authorizing the
the 15th day of the 3rd month after the
return, instead of the corporate officer.
paid preparer to:
end of its tax year.
Give the IRS any information that is
Returns and forms signed by a
missing from the return;
receiver or trustee in bankruptcy on
If the due date falls on a Saturday,
Call the IRS for information about
behalf of a corporation must be
Sunday, or legal holiday, the
accompanied by a copy of the order
the processing of the return or the
corporation can file on the next
or instructions of the court authorizing
status of any related refund or
business day.
signing of the return or form.
payment(s); and
Private Delivery Services
Respond to certain IRS notices
If an employee of the corporation
about math errors, offsets, and return
Corporations can use certain private
completes Form 1120-L, the paid
preparation.
delivery services (PDSs) designated
preparer space should remain blank.
by the IRS to meet the “timely mailing
Anyone who prepares Form 1120-L
The corporation is not authorizing
as timely filing” rule for tax returns. Go
but does not charge the corporation
the paid preparer to receive any
Instructions Form 1120-L (2019)
-3-
refund check, bind the corporation to
3. Form 8978, Partner’s Additional
institution to submit a same-day
anything (including any additional tax
Reporting Year Tax.
payment (discussed later) on its
liability), or otherwise represent the
behalf. EFTPS is a free service
4. Form 965-B, Corporate and
corporation before the IRS.
provided by the Department of the
Real Estate Investment Trust (REIT)
Treasury. Services provided by a tax
Report of Net 965 Tax Liability and
The authorization will automatically
professional, financial institution,
Electing REIT Report of 965 Amounts.
end no later than the due date
payroll service, or other third party
5. Form 8941, Credit for Small
(excluding extensions) for filing the
may have a fee.
Employer Health Insurance
corporation's 2020 tax return. If the
To get more information about
Premiums.
corporation wants to expand the paid
EFTPS or to enroll in EFTPS, visit
preparer's authorization or revoke the
6. Form 3800, General Business
www.eftps.gov
or call 1-800-555-4477
authorization before it ends, see Pub.
Credit.
(TTY/TDD 1-800-733-4829).
947, Practice Before the IRS and
7. Additional schedules in
Power of Attorney.
Depositing on time. To make your
alphabetical order.
EFTPS deposits on time, the
Statements
8. Additional forms in numerical
corporation must submit the
order.
transaction by 8 p.m. Eastern time the
Annual statement. In general, every
9. Supporting statements and
day before the date the deposit is due.
domestic or foreign life insurance
attachments.
If the corporation uses a third party to
company must attach a copy of the
make deposits on its behalf, they may
National Association of Insurance
Complete every applicable entry
have different cutoff times.
Commissioners (NAIC) annual
space on Form 1120-L. Do not enter
statement filed with the state of
“See Attached” or “Available Upon
Same-day wire payment option. If
domicile and used as the basis for
Request” instead of completing the
the corporation fails to submit a
computing taxable income. If a
entry spaces. If more space is needed
deposit transaction on EFTPS by 8
different annual statement was used
on the forms or schedules, attach
p.m. Eastern time the day before the
as the basis for computing taxable
separate sheets using the same size
date a deposit is due, it can still make
income, attach that annual statement
and format as on the printed forms. If
the deposit on time by using the
to Form 1120-L. However, see
there are supporting statements and
Federal Tax Collection Service
Electronic filing, next.
attachments, arrange them in the
(FTCS). Before using the same-day
same order as the schedules or forms
wire payment option, the corporation
Electronic filing. If a domestic or
they support and attach them last.
will need to make arrangements with
foreign life insurance company files
Show the totals on the printed forms.
its financial institution ahead of time
Form 1120-L electronically, do not
Enter the corporation's name and EIN
regarding availability, deadlines, and
attach the annual statement or pro
on each supporting statement or
costs. Financial institutions may
forma annual statement to the
attachment.
charge a fee for payments made this
electronically filed return. However,
way. To learn more about making a
you must provide a copy of the annual
Tax Payments
same-day wire payment, visit
statement or pro forma annual
Generally, the corporation must pay
IRS.gov/SameDayWire.
statement to the IRS if requested and
any tax due in full no later than the
retain it with your other tax records for
due date for filing its tax return (not
Estimated Tax Payments
the period required by the regulations.
including extensions). See the
Generally, the following rules apply to
Reconciliation. Corporations that
instructions for line 30. If the due date
the corporation's payments of
do not file Schedule M-3 (Form
falls on a Saturday, Sunday, or legal
estimated tax.
1120-L) with Form 1120-L must attach
holiday, the payment is due on the
The corporation must make
a statement that reconciles Form
next day that isn't a Saturday,
installment payments of estimated tax
1120-L with the annual statement
Sunday, or legal holiday.
if it expects its total tax for the year
used as the basis for computing
Electronic Deposit
(less applicable credits) to be $500 or
taxable income reported on Form
more.
Requirement
1120-L. Also, see the Note under the
The installments are due by the
instructions for Schedule F for
Corporations must use electronic
15th day of the 4th, 6th, 9th, and 12th
additional required reconciliations.
funds transfer to make all federal tax
months of the tax year. If any date
deposits (such as deposits of
Assembling the Return
falls on a Saturday, Sunday, or legal
employment, excise, and corporate
holiday, the installment is due on the
income tax). Generally, electronic
To ensure that the corporation's tax
next regular business day.
funds transfers are made using the
return is correctly processed, attach
The corporation must use electronic
Electronic Federal Tax Payment
all schedules and other forms after
funds transfer to make installment
System (EFTPS).
page 5 of Form 1120-L in the
payments of estimated tax.
following order.
If the corporation does not want to
Use Form 1120-W, Estimated Tax
1. Schedule N (Form 1120),
use EFTPS, it can arrange for its tax
for Corporations, as a worksheet to
Foreign Operations of U.S.
professional, financial institution,
compute estimated tax. See the
Corporations.
payroll service, or other trusted third
Instructions for Form 1120-W.
2. Form 4136, Credit for Federal
party to make deposits on its behalf.
Penalties may apply if the
Tax Paid on Fuels.
Also, it can arrange for its financial
corporation does not make required
-4-
Instructions Form 1120-L (2019)
estimated tax payment deposits. See
each month or part of a month the
Change in accounting method.
Estimated tax penalty below.
return is late, up to a maximum of 25%
Generally, the corporation must get
If the corporation overpaid
of the unpaid tax. The minimum
IRS consent to change either an
estimated tax, it may be able to get a
penalty for a return that is over 60
overall method of accounting or the
quick refund by filing Form 4466,
days late is the smaller of the tax due
accounting treatment of any material
Corporation Application for Quick
or $435 (adjusted for inflation). The
item for income tax purposes. To
Refund of Overpayment of Estimated
penalty will not be imposed if the
obtain consent, the corporation must
Tax.
corporation can show that the failure
generally file Form 3115, Application
to file on time was due to reasonable
See the instructions for line 28c
for Change in Accounting Method
cause. See Caution, earlier.
and line 28d, later.
during the tax year for which the
change is requested. See the
Late payment of tax. A corporation
Estimated tax penalty. A
Instructions for Form 3115 and Pub.
that does not pay the tax when due
corporation that does not make
538 for more information and
may generally be penalized
/
of 1%
1
estimated tax payments when due
2
exceptions.
of the unpaid tax for each month or
may be subject to an underpayment
part of a month the tax is not paid, up
penalty for the period of
Accounting Period
to a maximum of 25% of the unpaid
underpayment. Generally, a
An insurance company must figure its
tax. See Caution, earlier.
corporation is subject to the penalty if
taxable income on the basis of a tax
its tax liability is $500 or more and it
Trust fund recovery penalty. This
year. A tax year is the annual
did not timely pay at least the smaller
penalty may apply if certain excise,
accounting period an insurance
of:
income, social security, and Medicare
company uses to keep its records and
Its tax liability for the current year,
taxes that must be collected or
report its income and expenses.
or
withheld are not collected or withheld,
Its prior year's tax.
As a general rule under section
or these taxes are not paid. These
843, the tax year for every insurance
taxes are generally areported on:
See section 6655 for details and
company is the calendar year.
Form 720, Quarterly Federal Excise
exceptions, including special rules for
Tax Return;
However, if an insurance company
large corporations.
Form 941, Employer's
joins in the filing of a consolidated
Use Form 2220, Underpayment of
QUARTERLY Federal Tax Return;
return, it may adopt the tax year of the
Estimated Tax by Corporations, to
Form 944, Employer's ANNUAL
common parent corporation even if
see if the corporation owes a penalty
that year is not a calendar year.
Federal Tax Return; or
and to figure the amount of the
Form 945, Annual Return of
penalty. If Form 2220 is completed,
Rounding Off to Whole
Withheld Federal Income Tax.
enter the penalty on line 29. See the
Dollars
The trust fund recovery penalty
instructions for line 29, later.
may be imposed on all persons who
The corporation may enter decimal
Interest and Penalties
are determined by the IRS to be
points and cents when completing its
responsible for collecting, accounting
return. However, the corporation
If the corporation receives a
for, or paying over these taxes, and
should round off cents to whole
notice about penalties after it
!
who acted willfully in not doing so.
dollars on its return, forms, and
files its return, send the IRS
The penalty is equal to the full amount
schedules to make completing its
CAUTION
an explanation and we will determine
of the unpaid trust fund tax. See the
return easier. The corporation must
if the corporation meets reasonable
Instructions for Form 720, Pub. 15
either round off all amounts on its
cause criteria. Do not attach an
(Circular E), Employer's Tax Guide,
return to whole dollars, or use cents
explanation when the corporation's
for details, including the definition of
for all amounts. To round, drop
return is filed.
responsible persons.
amounts under 50 cents and increase
amounts from 50 to 99 cents to the
Other penalties. Other penalties can
Interest. Interest is charged on taxes
next dollar. For example, $8.40
be imposed for negligence,
paid late even if an extension of time
rounds to $8 and $8.50 rounds to $9.
substantial understatement of tax,
to file is granted. Interest is also
charged on penalties imposed for
reportable transaction
If two or more amounts must be
failure to file, negligence, fraud,
understatements, and fraud. See
added to figure the amount to enter on
substantial valuation misstatements,
sections 6662, 6662A, and 6663.
a line, include cents when adding the
substantial understatements of tax,
amounts and round off only the total.
Accounting Methods
and reportable transaction
Recordkeeping
understatements from the due date
The return of a life insurance company
(including extensions) to the date of
must be filed using the accrual
Keep the corporation's records for as
payment. The interest charge is
method of accounting or, to the extent
long as they may be needed for the
figured at a rate determined under
permitted under regulations, a
administration of any provision of the
section 6621.
combination of the accrual method
Internal Revenue Code. Usually,
with any other method, except the
records that support an item of
Late filing of return. A corporation
cash receipts and disbursements
income, deduction, or credit on the
that does not file its tax return by the
method. In all cases, the method used
return must be kept for 3 years from
due date, including extensions, may
must clearly show life insurance
the date the return is due or filed,
be penalized 5% of the unpaid tax for
company taxable income (LICTI).
whichever is later. Keep records that
Instructions Form 1120-L (2019)
-5-