Tax Oddity - Messing with Corporate Estimated Tax Payment Rules

Sometimes Congress makes changes to the timing or calculation of estimated tax payments to create a revenue raiser. This is a really odd technique. First, it really doesn't raise revenue but just the timing of when during the year the tax is collected, and second, it complicates the law.

Recently, the HIRE Act (Hiring Incentives to Restore Employment Act; PL 111-147). It provides:

"SEC. 561. TIME FOR PAYMENT OF CORPORATE ESTIMATED TAXES.
Notwithstanding section 6655 of the Internal Revenue Code of 1986, in the case of a corporation with assets of not less than $1,000,000,000 (determined as of the end of the preceding taxable year)--
(1) the percentage under paragraph (1) of section 202(b) of the Corporate Estimated Tax Shift Act of 2009 in effect on the date of the enactment of this Act is increased by 23 percentage points,
(2) the amount of any required installment of corporate estimated tax which is otherwise due in July, August, or September of 2015 shall be 121.5 percent of such amount,
(3) the amount of any required installment of corporate estimated tax which is otherwise due in July, August, or September of 2019 shall be 106.5 percent of such amount, and
(4) the amount of the next required installment after an installment referred to in paragraph (2) or (3) shall be appropriately reduced to reflect the amount of the increase by reason of such paragraph."

H.R. 4849 (Small Business and Infrastructure Jobs Tax Act) proposes to make further changes to changes that were enacted as part of the Corporate Estimated Tax Shift Act of 2009 (PL 111-42):
"SEC. 310. TIME FOR PAYMENT OF CORPORATE ESTIMATED TAXES.
(a) Shift From 2015 to 2014- The percentage under paragraph (1) of section 202(b) of the Corporate Estimated Tax Shift Act of 2009 in effect on the date of the enactment of this Act is increased by 4.5 percentage points.
(b) Shift From 2016 to 2015- The percentage under paragraph (2) of section 561 of the Hiring Incentives to Restore Employment Act in effect on the date of the enactment of this Act is increased by 3.5 percentage points.
(c) Shift From 2020 to 2019- The percentage under paragraph (3) of section 561 of the Hiring Incentives to Restore Employment Act in effect on the date of the enactment of this Act is increased by 1.25 percentage points."

H.R. 4213 (extenders and closing loopholes proposal) also calls for further changes to corporate estimated tax payments!

There were also changes made to the corporate estimated tax payments by the Worker, Homeownership, and Business Assistance Act (PL 111-92), the extension of the Generalized System of Preferences and the Andean Trade Preference (PL 111-124), and the Health Care and Education Reconciliation Act of 2010 (PL 111-152). Wow!

I include this approach to enacting legislation an "oddity" because it really makes no sense. If Congress is looking for a revenue raiser for PAYGO, find a revenue raiser not one that just shifts payment of tax to an earlier year. There are plenty of possibilities - cut back or eliminate an unnecessary deduction or credit.

For more "tax oddities" - click here.