W. Va. Code R. § 110-24-27

Current through Register Vol. XLI, No. 50, December 13, 2024

Section 110-24-27 - "Safety Zones" Bar Imposition Of Additions To Tax For Underpayment Of Estimated Tax

27.1. In General. - Additions to tax will not be imposed for any underpayment of any installment of estimated tax if, on or before the date prescribed for payment of the installment (determined with regard to any authorized extension of time for payment), the total amount of all payments of estimated tax made equals or exceeds the least of the amounts due under "Safety zones" set forth in this section.

27.1.a. Safety zone 27.1.a.. - The amount of tax due with the annual return is five hundred dollars ($500) or less.

27.1.b. Safety zone 27.1.b.- The amount of tax due with the annual return is ten percent (10%) or less of the tax liability for the taxable year.

27.1.c. Safety zone. B For tax years beginning on or after January 1, 2010 -- The amount of tax which would be due if computed using current year rates, exemptions, and credits rather than being based on the facts and law applicable to the West Virginia corporation net income tax return for the preceding year. This safety zone avoids additions to tax if the total payments of estimated tax already made by the installment date are at least equal to an amount which would have been required on that installment date if the estimated tax was determined based on the facts shown on the previous year's return and the previous year's law, but using current year rates, exemptions, and credits. In this safety zone, the following rules apply:

27.1.c.1. Nonrecurring items of income and deductions are not to be excluded; and

27.1.c.2. An entity that did not file a West Virginia corporation net income tax return for the preceding tax year cannot use this safety zone.

27.1.d. Application of safety zones to short tax years. B For purposes of this subsection and subsection 27.2. of this rule, additions to tax for an underpayment of estimated tax are equally applicable to short tax years where a declaration of estimated tax is required to be filed. In computing the safety zones for short taxable years, the estimated tax (whether based on that shown on the previous year's return, based on the previous year's facts, or based on annualized current income) is reduced by multiplying the estimated tax for a full year by the percentage which the number of months in the short tax year bears to twelve (12).

27.1.e. For purposes of this subsection and subsection 27.2. of this rule, if the tax rates for the current year have changed from those in effect for the preceding year, the estimated tax shall be computed using current rates.

27.1.f. Safety zone requirements. - For purposes of this subsection and subsection 27.2. of this rule, safety zone requirements shall be satisfied on each installment date to avoid the imposition of additions to tax on an underpayment of estimated tax as of the installment date. For purposes of this rule, it is presumed that a taxpayer's West Virginia taxable income is received in equal installments throughout the taxable year. The taxpayer bears the burden of proof to establish that the West Virginia taxable income was received during the taxable year in some other manner.

27.2. Transition period safety zones. The combined reporting requirements of W. Va. Code §§ 11-24-1, et seq. apply for tax years beginning on and after January 1, 2009. Safety zones set forth in this subsection apply only with relation to estimated payments made for the first tax year beginning on or after January 1, 2009.

27.2.a. For purposes of safety zones set forth in this subsection, the terms "a previous tax year" or "a previous year" mean the tax year immediately preceding the first tax year beginning on or after January 1, 2009.

27.2.a.1. Additions to tax will not be imposed for any underpayment of any installment of estimated tax if, on or before the date prescribed for payment of the installment (determined with regard to any authorized extension of time for payment), the total amount of all payments of estimated tax made equals or exceeds the least of the amounts due under "Transition period safety zones" set forth in this subsection.

27.2.b. Transition period safety zone 27.2.b B This safety zone applies for a Taxpayer who filed separately for the tax year immediately preceding the first tax year beginning on or after January 1, 2009, but not on a combined reporting basis. This safety zone is available only for the first tax year beginning on or after January 1, 2009:

27.2.b.1. For any entity who filed separately for the tax year immediately preceding the first tax year beginning on or after January 1, 2009:

27.2.b.2. If the previous tax year was a full 12 month tax year;

27.2.b.3. If the amount of tax shown for the previous year has not been adjusted, redetermined or the subject of an assessment or other challenge by the Tax Commissioner; and

27.2.b.4. If total payments of estimated tax made by each installment date for the first tax year beginning on or after January 1, 2009, are at least equal to the amount which would have been required on that installment date if the estimated tax was the amount of tax shown on the previous year's West Virginia corporation net income tax return, then this safety zone applies, except that:

27.2.b.5. If the annual return for the preceding year is not filed on or before the due date, including extensions of time to file, of the annual return for the preceding year, then the declaration of estimated tax for the current tax year cannot be based on last year's tax, and this safety zone does not apply; and

27.2.b.6. If the preceding taxable year was a short year, estimated tax for the current year will be computed on an annualized basis. For purposes of this safety zone, the pro forma amount of tax that would have been shown on the preceding tax year's West Virginia corporation net income tax return, on a recomputed separate filing basis, shall be computed on an annualized basis. The requirements of paragraphs 27.2.b.3. through 27.2.b.5 of this rule shall be met for the short year in order for this safety zone to apply. The annual tax payable for the current year and the estimated tax for the current year will not be reduced because the previous year was a short year.

27.2.c. Transition period safety zone 27.2.c -- This safety zone applies for a Taxpayer who filed as part of a consolidated filing unit, composite filing unit or group filing unit other than a combined reporting or unitary group for the tax year immediately preceding the tax year beginning on or after January 1, 2009. This safety zone is available only for the first tax year beginning on or after January 1, 2009:

27.2.c.1. For any entity that filed corporation net income tax as a component member of a consolidated, composite or group filing unit other than a combined or unitary filing group:

27.2.c.2. If the previous tax year was a full 12 month tax year; and

27.2.c.3. If the previous year amount of tax shown has not been adjusted, or redetermined or the subject of an assessment or other challenge by the Tax Commissioner; and

27.2.c.4. If total payments of estimated tax made by each installment date are at least equal to the amount which would have been required on that installment date if the estimated tax was determined based on the pro forma amount of tax that would have been shown on the pro forma previous year's West Virginia corporation net income tax return, determined on a recomputed separate filing basis for the Taxpayer but not on a combined reporting basis, then this safety zone applies, except that:

27.2.c.5. If the annual return for the preceding year is not filed on or before the due date, including extensions of time to file, of the annual return for the preceding year, then the declaration of estimated tax for the current tax year cannot be based on last year's tax, and this safety zone does not apply; and

27.2.c.6. If the preceding taxable year was a short year, estimated tax for the current year will be computed on an annualized basis. For purposes of this safety zone, the pro forma amount of tax that would have been shown on the preceding tax year's West Virginia corporation net income tax return, on a recomputed separate filing basis, but not on a combined reporting basis, shall be computed on an annualized basis. The requirements of paragraphs 27.2.c.3 through 27.2.c.5 of this rule shall be met for the short year in order for this safety zone to apply. The annual tax payable for the current year and the estimated tax for the current year will not be reduced because the previous year was a short year.

27.2.d. Transition period safety zone 27.2.d -- This safety zone applies for a Taxpayer who filed a separate tax return, but as a component member of a unitary, or combined reporting group for the tax year immediately preceding the first tax year beginning on or after January 1, 2009. This safety zone is available only for estimated payments made for the first tax year beginning on or after January 1, 2009.

27.2.d.1. This safety zone applies with relation to taxpayers that filed a separate tax return, but as a component member of a unitary, or combined reporting group, for the tax year immediately preceding the tax year beginning on or after January 1, 2009:

27.2.d.2. For any entity that filed corporation net income tax as a component member of a unitary, composite or group filing unit:

27.2.d.3. If the previous tax year was a full 12 month tax year;

27.2.d.4. The amount of tax shown for the previous year has not been adjusted, redetermined or the subject of an assessment or other challenge by the Tax Commissioner;

27.2.d.5. If the unitary or combined reporting group remains the same for the first tax year beginning on or after January 1, 2009, as the previous tax year, and

27.2.d.6. If total payments of estimated tax made by each installment date are at least equal to the amount which would have been required on that installment date if the estimated tax was computed based on the amount of tax shown on the previous year's West Virginia corporation net income tax return, then this safety zone applies, except that:

27.2.d.7. If the annual return for the preceding year is not filed on or before the due date, including extensions of time to file, of the annual return for the preceding year, then the declaration of estimated tax for the current tax year cannot be based on last year's tax, and this safety zone does not apply; and

27.2.d.8. If the preceding taxable year was a short year, estimated tax for the current year will be computed on an annualized basis. The requirements of paragraphs 27.2.d.4. through 27.2.d.7 of this rule shall be met for the short year in order for this safety zone to apply. The annual tax payable for the current year and the estimated tax for the current year will not be reduced because the previous year was a short year.

27.2.e. Transition period safety zone 27.2.e -- This safety zone applies for a Taxpayer who filed as a component member of a composite tax return or group tax return, and as a component member of a unitary, or combined reporting group for the tax year immediately preceding the first tax year beginning on or after January 1, 2009, and who will likewise file as a component member of a composite tax return or group tax return, and as a component member of a unitary, or combined reporting group for the first tax year beginning on or after January 1, 2009. This safety zone is available only for estimated payments made for the first tax year beginning on or after January 1, 2009.

27.2.e.1. This safety zone applies with relation to Taxpayers that did not file a separate return in the previous year, and who instead filed as a component member of a composite tax return or group tax return filing unit, and as a component member of a unitary, or combined reporting group for the tax year immediately preceding the tax year beginning on or after January 1, 2009:

27.2.e.2. For any entity that filed corporation net income tax as a component member of a composite tax return or group tax return, and as a component member of a unitary, or combined reporting group filing unit for the tax year immediately preceding the tax year beginning on or after January 1, 2009:

27.2.e.3. If the previous tax year was a full 12 month tax year;

27.2.e.4. The amount of tax shown for the previous year has not been adjusted, redetermined or the subject of an assessment or other challenge by the Tax Commissioner;

27.2.e.5. If the unitary or combined reporting group remains the same for the first tax year beginning on or after January 1, 2009, as the previous tax year;

27.2.e.6. If the component membership of the composite tax return or group tax return remains the same for the first tax year beginning on or after January 1, 2009, as the previous tax year; and

27.2.e.7. If total payments of estimated tax made by each installment date are at least equal to the amount which would have been required on that installment date if the estimated tax was computed based on the amount of tax shown on the previous year's West Virginia corporation net income tax return, then this safety zone applies, except that:

27.2.e.8. If the annual return for the preceding year is not filed on or before the due date, including extensions of time to file, of the annual return for the preceding year, then the declaration of estimated tax for the current tax year cannot be based on last year's tax, and this safety zone does not apply;

27.2.e.9. If the preceding taxable year was a short year, estimated tax for the current year will be computed on an annualized basis. The requirements of paragraphs 27.2.e.4. through 27.2.d.8 of this rule shall be met for the short year in order for this safety zone to apply. The annual tax payable for the current year and the estimated tax for the current year will not be reduced because the previous year was a short year.

27.2.f. Transition period safety zone 27.2.f. -- This safety zone applies for a Taxpayer who filed as a component member of a composite tax return or group tax return, and as a component member of a unitary, or combined reporting group for the tax year immediately preceding the first tax year beginning on or after January 1, 2009, and who will file separately as a component member of a unitary, or combined reporting group for the first tax year beginning on or after January 1, 2009. This safety zone is available only for estimated payments made for the first tax year beginning on or after January 1, 2009.

27.2.f.1. This safety zone applies with relation to Taxpayers who filed as a component member of a composite tax return or group tax return filing unit, and as a component member of a unitary, or combined reporting group for the tax year immediately preceding the tax year beginning on or after January 1, 2009, and who will file separately as a component member of a unitary, or combined reporting group for the first tax year beginning on or after January 1, 2009;

27.2.f.2. For any entity that filed corporation net income tax as a component member of a composite tax return or group tax return, and as a component member of a unitary, or combined reporting group filing unit, and who will file separately as a component member of a unitary, or combined reporting group for the first tax year beginning on or after January 1, 2009:

27.2.f.3. If the previous tax year was a full 12 month tax year;

27.2.f.4. The amount of tax shown for the previous year has not been adjusted, redetermined or the subject of an assessment or other challenge by the Tax Commissioner;

27.2.f.5. If the unitary or combined reporting group remains the same for the first tax year beginning on or after January 1, 2009, as the previous tax year; and

27.2.f.6. If total payments of estimated tax made by each installment date are at least equal to the amount which would have been required on that installment date if the estimated tax was determined based on the pro forma amount of tax that would have been shown on the pro forma previous year's West Virginia corporation net income tax return, determined on a recomputed separate filing basis for the Taxpayer and on a combined reporting basis, then this safety zone applies, except that:

27.2.f.7. If the annual return for the preceding year is not filed on or before the due date, including extensions of time to file, of the annual return for the preceding year, then the declaration of estimated tax for the current tax year cannot be based on last year's tax, and this safety zone does not apply; and

27.2.f.8. If the preceding taxable year was a short year, estimated tax for the current year will be computed on an annualized basis. The requirements of paragraphs 27.2.f.4. through 27.2.f.7. of this rule shall be met for the short year in order for this safety zone to apply. The annual tax payable for the current year and the estimated tax for the current year will not be reduced because the previous year was a short year.

W. Va. Code R. § 110-24-27