The IRS and the Treasury Department issued a notice regarding penalty relief for corporations that have yet to pay their estimated corporate alternative minimum tax (CAMT), Accounting Today reported.

The CAMT, created by the Inflation Reduction Act of 2022, imposes a 15 percent minimum tax on the adjusted financial statement income of large corporations for taxable years beginning in 2023. Taxpayers generally affected by the CAMT are corporations, including insurance companies, with an average annual adjusted financial statement income exceeding $1 billion.

The notice said that the IRS would waive the penalty for a corporation's failure to pay estimated income tax with respect to the tax for a taxable year that begins after Dec. 31, 2022, and before Jan. 1, 2024. If, however, a corporation fails to pay its CAMT liability when due, other sections of the Tax Code may apply.

Modifications to Form 2220 will be made to clarify that no addition to tax will be imposed under Section 6655 of the Internal Revenue Code based on a corporation's failure to make estimated tax payments of its CAMT liability under Section 55 for any covered CAMT year, and that a taxpayer can exclude those amounts when calculating the amount of its required annual payment on Form 2220. 

Corporate taxpayers will still need to file Form 2220 with their federal income tax return, even if they do not owe an estimated tax penalty.

"Form 2220 must be completed without including the CAMT liability from Schedule J of Form 1120, U.S. Corporation Income Tax Return (or other appropriate line of the corporation's income tax return in the Form 1120 series),” the guidance read. "Affected taxpayers must also include an amount of estimated tax penalty on Line 34 of their Form 1120 (or other appropriate line of the corporation's income tax return in the Form 1120 series), even if that amount is zero. Failure to follow these instructions could result in affected taxpayers receiving a penalty notice that will require an abatement request to apply the relief provided by this notice."