IL-2220 Instructions

              IL-2220 instructions (R-12/05) Page 1 of 4
Illinois Department of Revenue
IL-2220 Instructions 2005
General Information
What is the purpose of this form?
The purpose of this form is to calculate penalties you may owe if
you did not
• make timely estimated payments,
• pay the tax you owe by the original due date, or
• file a processable return by the extended due date.
Form IL-2220, Computation of Penalties for Businesses
may only be used with original returns or corrected returns filed
before the extended due date. If you are filing an amended return
for any reason, you cannot use Form IL-2220 to calculate your
penalties.
What is late-payment penalty?
Late-payment penalty is a penalty assessed for failure to pay the
tax you owe by the due date. This penalty could result from two
different underpayment situations and is assessed at either 2
percent or 10 percent of the unpaid liability based on the number
of days the payment is late. This method of figuring penalties is for
returns due on or after January 1, 2006.
For returns due before January 1, 2006, see Publication 103,
Penalties and Interest for Illinois Taxes.
You will be assessed late-payment penalty for unpaid tax if you
do not pay the total tax you owe by the original due date of the
return. An extension of time to file does not extend the amount of
time you have to make your payment.
You will be assessed a late-payment penalty for underpayment of
estimated tax if you were required to make estimated tax payments
and failed to do so, or failed to pay the required amount by the
payment due date.
You do not owe the late-payment penalty for underpayment of
estimated taxes if
• you are not filing Form IL-1120;
• you were not required to file Form IL-1120 for 2004; or
• your 2004 net tax liability (Form IL-1120, Step 8, Line 52)
is $400 or less.
What is late-filing or nonfiling penalty?
Late-filing or nonfiling penalty is a penalty assessed for failure to
file a processable return by the extended due date. The penalty is
the lesser of $250 or 2 percent of the tax amount required to be
shown due on your return, reduced by any payments made by the
original due date and any credits allowed on your return.
An additional penalty will be assessed if you do not file a
processable return within 30 days of the date we notify you that we
are not able to process your return. This additional penalty is equal
to the greater of $250 or 2 percent of the tax shown due on your
return, determined without regard to payments and credits, and
may be assessed up to a maximum of $5,000.
Do I need to complete this form if I owe penalties?
No, you do not need to complete this form if you owe penalties.
You may choose to have us figure your penalties and send you a
bill instead of completing and filing this form yourself. If you choose
to have us figure your penalties, complete your return as usual and
do not attach Form IL-2220. However, you must complete this form
if you are using the annualized income installment method for late-payment
penalty for underpayment of estimated tax in Step 6.
If you prefer to calculate your penalties, complete this form. For
more information, see Publication 103, Penalties and Interest for
Illinois Taxes. To receive a copy of this publication,
• visit our web site at www.tax.illinois.gov;
• call our 24-hour Forms Order Line at 1 800 356-6302; or
• call our TDD (telecommunications device for the deaf)
at 800 544-5304.
What if I underpaid my estimated tax because of
a change in the law during the tax year?
If a change in the IITA enacted during the tax year increased your
liability and the new statute does not specifically provide for relief
from penalties, you may reduce or eliminate your penalty for
underpayment of estimated tax by using the annualized income
installment method in Step 6 and computing your income and
liability for each period according to the IITA in effect as of the end
of that period. See Specific Instructions for Step 6.
Specific Instructions
Step 1: Complete the following information
Lines 1 through 4 — Follow the instructions on the form.
Step 2: Figure your required installments
(Form IL-1120 filers only)
Line 5 — Write in Column A the total net income and
replacement tax written on your 2005 Form IL-1120, Step 8, Line
52. Write in Column B the total net income and replacement tax
written on your 2004 Form IL-1120, Part II, Line 3.
If the preceding year's return was for a short tax year, or you
reported zero total net tax, write “N/A” in Column B.
For Columns A and B, if a corrected return was filed for
either year on or before the automatic extension date, the
corrected tax should be used. If an amended return was filed after
the automatic extension date for either year, use the most current
tax reported prior to that date.
Line 6 — Follow the instructions on the form.
Line 7 — If Column A, Line 5 is $400 or less, write “0” and go to
Step 3. Otherwise, write the lesser of Column A, Line 6, or
Column B, Line 5. If you wrote “N/A” in Column B, write the
amount from Column A, Line 6.
Lines 8 and 9 — Follow the instructions on the form.
Line 10 — Write the amount of your required installment for
each due date. For most taxpayers, this is the amount shown on
Line 8. However, if you are annualizing your income, write the
amounts from Step 6, Line 47.
Annualized income installment method: If your
income was not received evenly throughout the year, you may be
able to lower or eliminate the amount of your required installment
by using the annualized income installment method in Step 6.
If you choose to annualize your income in Step 6, you must use
this method for all installments. When completing the worksheet,
select the lesser of the annualized income installment or the
regular installment to arrive at the amount of each required
installment.
Line 11 —
Quarter 1 — Write the amount of credit carried forward from
the prior year.
Line 12 —
Quarter 1 — Subtract Line 11 from Line 10 and write that
amount here. If this amount is negative, use brackets.