In Notice 2024-33, the IRS waived the penalty under IRC Section 6655 for a corporation's failure to pay estimated tax payments attributable to a portion of a corporation's alternative minimum tax (CAMT) due on or before April 15, 2024, or May 15, 2024 (for fiscal-year taxpayers whose tax year begins in February 2024).

This is the second time the IRS has waived the penalty. In June 2023, the IRS waived the penalty for the 2023 tax year (see Tax Alert 2023-1038).

The IRS gives the same reason as it did for the previous waiver, citing the challenges of determining whether a corporation is subject to CAMT, i.e., an "Applicable Corporation" under IRC Section 59(k) and the amount of a corporation's CAMT liability under IRC Section 55.

The IRS also will modify the instructions to Form 2220, Underpayment of Estimated Tax by Corporations, to clarify it will not impose the addition to tax based on a corporation's failure to make estimated tax payments of its CAMT liability for the relevant period.

Implications

Notice 2024-33 is helpful to corporations that expected to make (or made) estimated tax payments for the first quarter by the April 15, 2024, due date and struggled with the complexities and ambiguities of determining whether they are an Applicable Corporation and their CAMT liability. Corporations that may have excluded amounts attributable to CAMT from their calculation of the required estimated payment or made significant judgements in areas for which guidance is still pending will not be penalized for doing so. While the Notice provides penalty relief, it does not clarify the application of the CAMT rules.

Although corporations will not be penalized under IRC Section 6655 (failure by corporation to pay estimated income tax) for failing to make estimated payments attributable to CAMT, other additions to tax could apply if a corporation fails to timely pay its CAMT liability when due. For example, penalties could apply under IRC Section 6651 (failure to file tax return or to pay tax) if the CAMT liability is not paid by the due date (excluding extensions) of the corporation's return. Additionally, taxpayers should also comply with forthcoming instructions to IRS Form 2220 to avoid a penalty under IRC Section 6655.