A. Declaration of Estimated Income Tax (G.S. 105-163.38 through G.S. 105-163.44)

1. Preliminary Statement
   A declaration of estimated tax must be filed by a corporation for each taxable year in which it can reasonably be expected to have an income tax liability to North Carolina of at least $500. To insure proper credit, the corporation should use the pre-addressed coded Form CD-429 furnished by the Department of Revenue.
   
   The term "estimated tax" means the amount of income tax the corporation expects to owe for the taxable year after subtracting any tax credits.
   
   The term "taxable year," for the purpose of filing declarations of estimated tax, means the calendar or fiscal year in which the company expects to earn the income upon which the estimated tax is based.
   
   
2. When Due
   Declaration returns and payments of tax are due to be filed on or before the 15th day of the 4th, 6th, 9th and 12th months of the taxable year.
   
   
3. Penalty for Failure to Pay and/or File Estimated Tax
   Failure to pay the required amount of estimated income tax will subject the corporation to the underpayment penalty provided in Article 4B of additional tax charges at the rate pursuant to G.S. 105-241.1(i).
   
   
4. "No Penalty" Tests
   No additional tax charges (penalties) for underpayment will be assessed if the estimated tax paid on or before the estimated tax due date is at least as large as the payment that would be due if the estimated tax fell into one of the following categories: (Note: Large corporations as defined in IRS Code Section 6655 are excluded from the exceptions in a. or b.)
   
   
   1. It amounts to as much as the tax paid on the return of the preceding taxable year of 12 months.
      
      
   2. It amounts to as much as the tax would be by applying the current year's income tax rate to the corporation's taxable income in the previous year. (Note: This provision has no effect for 2001 because the tax rates are the same as in 2000.)
      
      
   3. It amounts to 90% of the tax shown on the current annual income tax return.
      
      
   4. It amounts to 90% of the tax that would be due on the basis of current income up to a specified cut-off date, annualized for the year.
      
      
5. Short Taxable Years
   No estimated tax is required if the short period is less than four months, or the requirements to make an estimated payment are not met before the first day of the last month in the short tax year.
   
   
6. Overpayment of Tax
   Upon the request of the taxpayer, any overpayment of tax resulting from an overstatement of estimated tax may be refunded or applied to the subsequent year's estimated income tax liability only after the corporation's annual income tax return has been filed. Any amount of tax credited as estimated tax is considered payment of tax made on the subsequent return.
   
   
7. Electronic Funds Transfer (EFT) Requirement (G.S. 105-163.40; G.S. 105-241(b)
   A corporation subject to State estimated tax is required to make the payments of its estimated tax liability by electronic funds transfer (EFT) if either of the following conditions exist:
   
   
   1. The corporation is required under the Internal Revenue Code to pay its federal estimated corporate income tax by electronic funds transfer.
      
      
   2. The corporation has paid estimated corporate income tax installments of $240,000 or more in a twelve-month period. This $20,000 monthly average threshold applies separately to the corporate tax liability and is not a combination of tax liabilities from other taxing schedules.