The Treasury Department and the Internal Revenue Service have announced procedures that business taxpayers may use to redesignate their estimated income tax overpayments as employment tax deposits, so that their overpayments can be used to pay their current employment tax obligations.
The announcement addresses situations where companies have already paid estimated tax payments that equal or exceed their income tax liability for the year. This could occur due to unanticipated loses as a result of the September 11 terrorism attacks. Businesses whose projected income fell as a result of the attacks will be allowed to apply previous estimated tax payments to cover their current employment tax obligations.
"This redesignation of estimated taxes is a common sense move that will help some of the hardest-hit businesses meet their cash flow needs," stated Mark Weinberger, Treasury Assistant Secretary for Tax Policy.
This is another in a series of administrative actions the Treasury Department and the IRS have taken in the past two weeks to alleviate the tax burdens on individuals and businesses as a result of changing circumstances surrounding the Sept. 11 tragedy. The Treasury Department and the IRS have provided mid-quarter convention relief (10/18/01) and issued interim guidance that provides employees will not be taxed on donated leave (10/24/01).
These administrative actions are in addition to the filing relief provided to individuals and businesses immediately after the attacks (9/12/01 and 9/13/01).
Many taxpayers have informed the Internal Revenue Service (IRS) that their income for the current year will be substantially less than previously expected because of economic disruptions resulting from the September 11, 2001 Terrorist Attack.
To make a redesignation, contact the IRS through its Disaster Relief toll-free telephone number 1-866-562-5227.
The IRS warns that taxpayers who wish to redesignate their estimated tax payments should keep in mind their estimated income tax obligations. If, as a result of the redesignation, the amount of estimated tax payments is reduced below the amount required to satisfy the taxpayer's estimated income tax obligation, the taxpayer may be liable for additions to tax.
