2024 Sales Tax Holiday


Beginning at 12:01 a.m. on Saturday, August 3, 2024, and ending at 11:59 p.m. on Sunday, August 4, 2024, the state of Arkansas will hold its sales tax holiday allowing shoppers the opportunity to purchase certain electronic devices, school supplies, school art supplies, school instructional materials, and clothing free of state and local sales or use tax. Click the link for more information.


Tennessee’s sales tax holiday on clothing, school supplies, and computers begins at 12:01 a.m. on Friday, July 26, 2024, and ends at 11:59 p.m. on Sunday, July 28, 2024.

During this time clothing, school supplies, and computers may be purchased tax-free; certain restrictions apply.  Items sold online are also eligible.  Items must be purchased for personal use, not for business or trade.  Follow the link for the full details of Tennessee’s 2024 sales tax holiday.


*Sales tax holiday does not apply to the state of Kentucky.

For questions on sales tax holiday information in the states that ATA resides in, reach out to your local ATA representative.

Financial Institutions and Banking General

Keep It Fair – Stay Aligned With Fair Lending Practices

Abstract:   Community banks are on the front lines when it comes to ensuring people in their local areas have equal access to loans. This means they must be vigilant in maintaining stringent lending standards to avoid any suggestion of discriminatory practices. This article suggests five steps for avoiding violations of fair lending laws and developing an effective compliance program, including conducting a risk assessment and providing compliance training.

Keep it fair

Stay aligned with fair lending practices

Community banks are on the front lines when it comes to ensuring people in their local areas have equal access to loans. This means they must be vigilant in maintaining stringent lending standards to avoid any suggestion of discriminatory practices. Violations of fair lending laws have the potential to affect a community bank’s bottom line in the form of litigation or other penalties. Plus, they may cause a bank to lose customers.

The laws are clear

There are two primary fair lending laws. First, the Fair Housing Act (FHA) prohibits discrimination in residential real estate-related transactions based on race or color, national origin, religion, sex, handicap, or familial status. For example, banks can’t discriminate against households with one or more children under 18, pregnant women, or people in the process of adopting or otherwise gaining custody of a child.

Second, the Equal Credit Opportunity Act (ECOA) prohibits discrimination in credit transactions based on race or color, national origin, religion, sex, marital status, age (assuming the applicant has the capacity to contract), an applicant’s receipt of income from a public assistance program, or an applicant’s good faith exercise of his or her rights under the Consumer Credit Protection Act.

In addition, the Home Mortgage Disclosure Act requires certain lenders to report information about mortgage loan activity, including the race, ethnicity and sex of applicants. And the Community Reinvestment Act provides incentives for banks to help meet their communities’ credit needs.

These steps will help

Here are five tips for developing an effective compliance program:

  1. Conduct a risk assessment. Identify your bank’s most significant fair lending risks based on its size, location, customer demographics, product and service mix, and other factors. This can reveal weaknesses in the bank’s credit policies and procedures and other aspects of its credit operations. It’s particularly important to examine the bank’s management of risks associated with third parties, such as appraisers, aggregators, brokers and loan originators.
  2. Develop a written policy. A comprehensive written fair lending policy is key to help minimize your bank’s risks. This document can go a long way toward mitigating the bank’s liability in the event of a violation by demonstrating its commitment to fair lending.
  3. Review your data. Analyzing data about your lending and other credit decisions is important for two reasons: First, it’s the only way to determine whether disparities in access to credit exist for members of the various protected classes. These disparities don’t necessarily signal that unlawful discrimination is taking place — but gathering this data is the only way to make this determination.

Second, lending discrimination isn’t limited to disparate treatment of protected classes. Banks are potentially liable under the FHA and ECOA if their lending practices have a disparate impact on protected classes. For example, a policy of not making single-family mortgage loans under a specified dollar amount may disproportionately exclude certain low-income groups, even though the policy applies equally to all loan applicants.

Banks can defend against allegations of discrimination based on disparate impact by showing that the policy was justified by business necessity and that there was no alternative practice for achieving the same business objective without a disparate impact.

  1. Provide compliance training. Even the most thorough, well-designed policy won’t be worth the paper it’s printed on unless you provide fair lending compliance training for bank directors, management and other relevant employees. It’s also important to evaluate whether the policy is effective.
  2. Monitor compliance. You’ll need to monitor your bank’s compliance with fair lending laws and promptly address any violations or red flags. Among other things, perform regular data analysis; monitor and manage consumer complaints; keep an eye on third-party vendors; and conduct periodic independent audits of your compliance program (by your internal audit team or an outside consultant).

Stay on top of fair lending practices

Lending is a key function of any community bank, so your bank should stay alert to any potential violations of fair lending laws. Although some of these laws have been in place for many years, that doesn’t mean banks should become complacent. If not addressed properly, these issues may come back to haunt your bank’s operations and negatively affect its financial health. Contact us to learn more.

© 2024

Financial Institutions and Banking General

Consumer Reports Study Provides Insights into Mobile Banking Apps

Online and mobile banking apps have become wildly popular. According to a 2023 study by Consumer Reports (CR), 75% of Americans use one or more banking apps to check their balances, monitor transactions, transfer and receive money, deposit checks, pay bills, and perform other tasks. Of those who use banking apps, 77% use them at least once a week — and 32% use them every day, or nearly every day.

In March 2024, CR published a report, “Banking Apps: The Case Study for a Digital Finance Standard.” For this report, CR evaluated 10 popular mobile banking apps — five offered by large traditional banks and five offered by “digital” (that is, online only) banks. CR found that many apps fall short, particularly when it comes to fraud protection, privacy and accessibility. Here are some additional highlights from the report.

Fraud protection

Although CR’s 2023 survey found that the vast majority of users feel confident that their banking apps adequately protect them against fraud and scams, the 2024 report concluded that the banking apps generally don’t “adequately commit to real-time fraud monitoring and notifying users in the event of suspicious activity.” Also, while most banks provide users with basic fraud education on their websites, some fail to provide similar information in their apps.

CR recommends that banking apps make explicit commitments to real-time fraud monitoring and fraud notifications to users. The apps also need to increase education about scams and fraud.


According to CR, “Most of the banking apps we reviewed share data beyond what is required to provide the service the user requests, and only some banking apps offer the ability to opt out of targeted advertising.” The report recommends that banks “practice true data minimization” in their apps.

It also suggests that banks should provide more meaningful information about data that’s shared with third parties. Finally, banks need to provide in-app controls over data sharing and targeted advertising to make it easy for users to opt out.


CR found that many banking apps are lacking when it comes to accessibility for users with disabilities. In addition, the apps aren’t necessarily accessible for those whose primary language isn’t English.

The report urges banks to “build robust accessibility features directly into mobile apps and websites,” particularly for users with visual or hearing disabilities. It also recommends making apps and account information available in Spanish and other languages.

Financial well-being

According to the report, digital banks offer maintenance fee structures that benefit users’ financial health, while traditional banks fall short in this regard. CR also found that banking apps are inconsistent in offering tools and features designed to help users improve their financial well-being, such as automated savings features, budgeting tools, goal-setting features and spending indicators. Plus, most users don’t take advantage of these resources. The report concluded that banks “can do more to educate their customers about the importance of saving and budgeting and make app design decisions that encourage active use of these tools.”

CR recommends that banks eliminate maintenance fees, seamlessly embed interactive financial health tools in their apps and track user financial well-being metrics as institutional key performance indicators.

Best practices

As mobile banking apps continue to grow in popularity and functionality, the CR report provides a useful guide to best practices when designing these apps. Banks can create a competitive edge by ensuring their mobile banking apps are up to speed. Contact us for more information.

© 2024

Financial Institutions and Banking General

Bank Wire

Abstract:   This brief summary of current developments in community banking explains the importance of having internal controls that identify, monitor and control residential real estate valuation discrimination. In addition, it notes that bank customers are generally skeptical of the use of artificial intelligence (AI) to assist in various banking services. Finally, it warns financial institutions about the increasing use of counterfeit U.S. passport cards to perpetrate identify theft and schemes.

Bank Wire

Steering clear of discrimination in real estate valuation

A recent Federal Financial Institutions Examination Council (FFIEC) statement discusses “Principles Related to Valuation Discrimination and Bias in Residential Lending.” The statement notes that “Deficiencies in real estate valuations, including those due to valuation discrimination or bias, can lead to increased safety and soundness risks, as well as consumer harm.” The statement lists several examples of potential consumer harm, such as:

  • Denial of access to credit for which a consumer is otherwise qualified,
  • Offering consumers credit at less favorable terms, and
  • Steering consumers to a narrower class of loan products.

Banks whose internal controls fail to identify, monitor and control valuation discrimination or bias may be exposed to legal and compliance risks or negative assessments by regulators. To avoid these issues, the FFIEC encourages banks to establish a formal valuation review program consistent with the Interagency Appraisal and Evaluation Guidelines.

Consumers are skeptical of AI

Banks increasingly use artificial intelligence (AI) to streamline and enhance various processes, including customer service, fraud prevention and detection, compliance, underwriting, collections, and marketing. But it’s important to recognize that customers may not be fully on board.

According to a recent survey by J.D. Power, “While banks are investing time and resources to integrating AI into their offerings, customers are simply not convinced that AI is to be trusted. More than half (56%) say they only somewhat trust the quality of the output generated by their bank’s use of AI, with 32% saying they don’t trust it at all.”

Part of the problem, the report theorizes, may be that banking customers “view their institution’s use of AI as less advanced than other industries’ solutions.” To get customers more comfortable with AI, J.D. Power says, banks “need to go the extra mile by making [customers] understand how they’ll personally benefit from it.”

Watch out for counterfeit U.S. passport cards

In a recent notice, the Financial Crimes Enforcement Network (FinCen) warned financial institutions about the use of counterfeit U.S. passport cards to perpetrate identify theft and fraud schemes. Some examples of warning signs include:

  • Photos that are in color, have a white, blurry border or have a dark gray square surrounding them,
  • Account holder photos on file that don’t match the photo on the card or the individual presenting it, and
  • A missing holographic U.S. Department of State seal or a seal from an unrelated agency.

The notice provides an overview of these schemes and highlights 17 selected technical, behavioral and financial red flags to assist banks in identifying and reporting suspicious activity. Contact us for more information.

© 2024

Financial Institutions and Banking General

Is Your Bank Ready for FDICIA Compliance?

Is your bank ready for FDICIA compliance?

The Federal Deposit Insurance Corporation (FDIC) reports that the number of insured financial institutions has dropped from around 8,000 to just under 4,600 over the last 14 years. When institutions consolidate, their average asset size swells, so it’s important for banks to be mindful of their obligations under the FDIC Improvement Act of 1991 (FDICIA).

What does the FDICIA require?

The FDICIA imposes stricter auditing, reporting and governance obligations once banks have $500 million in total assets, followed by even more rigorous requirements at $1 billion in assets. According to the FDIC’s most recent Community Banking Study (December 2020), the average asset size of community banks in 2019 was approximately $470 million. So, it’s likely that many community banks will cross the $500 million threshold in the future.

It’s important to monitor your bank’s assets closely to prepare for FDICIA compliance before you reach the threshold (ideally one to two years). An early start will help ensure a smooth transition. It will also give you an opportunity to test new controls and procedures, allowing you to remedy any deficiencies before you start submitting reports to federal regulators.

What’s required before reaching $500 million?

Your bank should take several steps as you approach the first reporting threshold. The FDICIA will require submission of comparative financial statements. If you don’t currently prepare audited financials, you can use unaudited ones for the year before you’re subject to the FDICIA. Nevertheless, it’s a good idea to obtain at least a balance sheet audit for the previous year. That way, any material weaknesses or significant deficiencies the auditor identifies can be addressed before you report to federal regulators.

Additionally, review your audit committee’s composition to ensure that a majority of its members are independent. You may need to replace some members who have conflicts and add new directors, so leave plenty of time to conduct a diligent search.

Also review your accountants’ services for potential independence issues. Early preparation will provide time to arrange separate firms for audit services and prohibited nonaudit services. Your auditor won’t be allowed to prepare financial statements, so management should be prepared to assume greater responsibility for financial statement preparation and review.

What’s required at $500 million?

When your bank’s total assets reach $500 million, key requirements include:

  • Audited financial statements. Audited financial statements must be submitted with the independent auditor’s report to the relevant federal banking agency within 120 days after the fiscal year-end (90 days for publicly traded banks).
  • Auditor independence. Your bank must comply with the strictest auditor independence standards applicable to public companies. That means your auditor must avoid conflicts of interest and prohibited financial relationships with your bank, rotate audit partners at least every five years, and refrain from providing prohibited nonaudit services to your bank. Examples include bookkeeping, financial statement preparation, valuation, internal audits and tax services for certain bank insiders.
  • Management reports. Annual reports must include statements on management’s responsibility for 1) preparing financial statements, 2) establishing and maintaining adequate internal control over financial reporting (ICFR), and 3) complying with certain safety and soundness laws and regulations.
  • Audit committee composition. Your bank’s board must have a separate audit committee, and a majority of the committee’s members must be outside directors who are independent of management.

Remember these requirements when preparing to comply.

What’s required at $1 billion?

The following additional requirements apply when your bank’s total assets reach $1 billion:

  • Expanded management reports. Your bank must submit an evaluation of the effectiveness of its ICFR as of the fiscal year-end, based on a recognized framework.
  • External opinion on ICFR. You must submit an independent auditor’s attestation report on the effectiveness of ICFR as of the fiscal year-end.
  • Fully independent audit committee. All members of your audit committee must be independent of management.

These time- and resource-intensive steps require an early start.

Create a roadmap

A smooth journey to FDICIA compliance requires a detailed plan. Contact your CPA to discuss steps needed as your bank’s total assets approach the $500 million and $1 billion mileposts.

Sidebar:   Measuring assets for FDICIA purposes

The applicability of the FDIC Improvement Act (FDICIA) is based on total assets as of the beginning of your bank’s fiscal year, per your most recent Call Report. Banks that operate on a calendar year should consult their December 31 Call Reports to determine total assets on January 1 of the following calendar year.

FDICIA coverage for a given fiscal year is based on a bank’s total assets as of the first day of that year, regardless of asset-level fluctuations during the year. For example, if a calendar-year institution’s total assets are $550 million as of September 30, 2024, it won’t be subject to the FDICIA in 2025 if total assets drop to $495 million as of December 31, 2024.

However, if the bank’s assets are greater than $500 million as of the end of 2024, it will be subject to the FDICIA throughout 2025, even if its total assets dip below the threshold during the year. Contact us for more information.

© 2024


2024 Q3 Tax Calendar

Here are some of the key tax-related deadlines affecting businesses and other employers during the third quarter of 2024. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. Contact us to ensure you’re meeting all applicable deadlines and to learn more about the filing requirements.

July 15

  • Employers should deposit Social Security, Medicare and withheld income taxes for June if the monthly deposit rule applies. They should also deposit nonpayroll withheld income tax for June if the monthly deposit rule applies.

July 31

  • Report income tax withholding and FICA taxes for second quarter 2024 (Form 941) and pay any tax due. (See the exception below, under “August 12.”)
  • File a 2023 calendar-year retirement plan report (Form 5500 or Form 5500-EZ) or request an extension.

August 12

  • Report income tax withholding and FICA taxes for second quarter 2024 (Form 941), if you deposited on time and in full all the associated taxes due.

September 16

  • If a calendar-year C corporation, pay the third installment of 2024 estimated income taxes.
  • If a calendar-year S corporation or partnership that filed an automatic six-month extension:
    • File a 2023 income tax return (Form 1120-S, Form 1065 or Form 1065-B) and pay any tax, interest and penalties due.
    • Make contributions for 2023 to certain employer-sponsored retirement plans.
  • Employers should deposit Social Security, Medicare and withheld income taxes for August if the monthly deposit rule applies. They should also deposit nonpayroll withheld income tax for August if the monthly deposit rule applies.

For more information on key deadlines and how to file, contact us.

© 2024

General Helpful Articles Tax

What Might Be Ahead as Many Tax Provisions Are Scheduled to Expire?

Buckle up, America: Major tax changes are on the horizon. The reason has to do with tax law and the upcoming elections.

Our current situation

The Tax Cuts and Jobs Act (TCJA), which generally took effect in 2018, made sweeping changes. Many of its provisions are set to expire on December 31, 2025.

With this date getting closer each day, you may wonder how your federal tax bill will be affected in 2026. The answer isn’t clear because the outcome of this November’s presidential and congressional elections is expected to affect the fate of many expiring provisions. A new political landscape in Washington could also mean other tax law changes.

Corporate vs. individual taxes

The TCJA cut the maximum corporate tax rate from 35% to 21%. It also lowered rates for individual taxpayers, with the highest tax rate reduced from 39.6% to 37%. But while the individual rate cuts expire in 2025, the law made the corporate tax cut “permanent.” (In other words, there’s no scheduled expiration date. Tax legislation could still change the corporate tax rate.)

In addition to lowering rates, the TCJA revised tax law in many other ways. On the individual side, standard deductions were increased, significantly reducing the number of taxpayers who benefit from itemizing deductions for certain expenses, such as charitable donations and medical costs. (You benefit from itemizing on your federal income tax return only if your total allowable itemized write-offs for the year exceed your standard deduction.)

In addition, through 2025, certain itemized deductions are eliminated. Others are more limited, including those for home mortgage interest and state and local tax (SALT).

For small business owners, one of the most significant changes is the potential expiration of the Section 199A qualified business income (QBI) deduction. This is the write-off for up to 20% of QBI from noncorporate pass-through entities, including S corporations and partnerships, as well as from sole proprietorships.

The expiring provisions will affect many taxpayers’ tax bills in 2026, unless legislation extending them is signed into law.

Possible scenarios

The outcome of the presidential election in less than five months, as well as the balance of power in Congress, will determine the TCJA’s future. Here are four possible scenarios:

  1. All of the TCJA provisions scheduled to expire will actually expire at the end of 2025.
  2. All of the TCJA provisions scheduled to expire will be extended past 2025 (or made permanent).
  3. Some TCJA provisions will be allowed to expire, while others will be extended (or made permanent).
  4. Some or all of the temporary TCJA provisions will expire — and new laws will be enacted that provide different tax breaks and/or different tax rates.

How your tax bill will be affected in 2026 will partially depend on which one of these scenarios becomes reality and whether your tax bill went down or up when the TCJA became effective back in 2018. That was based on a number of factors including your income, your filing status, where you live (the SALT limitation negatively affects more taxpayers in certain states), and whether you have children or other dependents.

Your tax situation will also be affected by who wins the presidential election and who controls Congress. Democrats and Republicans have competing visions about how to proceed when it comes to taxes. Proposals can become law only if tax legislation passes both houses of Congress and is signed by the President (or there are enough votes in Congress to override a presidential veto).

The tax horizon

As the TCJA provisions get closer to expiring, it’s important to know what might change and what tax-wise moves you can make if the law does change. We’ll keep you informed about what’s ahead. We’re here to answer any questions you may have. Contact us.

© 2024

General Helpful Articles Tax

Social Security Tax Update: How High Can It Go?

Employees, self-employed individuals and employers all pay Social Security tax, and the amounts can get bigger every year. And yet, many people don’t fully understand the Social Security tax they pay.

If you’re an employee

If you’re an employee, your wages are hit with the 12.4% Social Security tax up to the annual wage ceiling. Half of the Social Security tax bill (6.2%) is withheld from your paychecks. The other half (also 6.2%) is paid by your employer, so you never actually see it. Unless you understand how the Social Security tax works and closely examine your pay statements, you may be blissfully unaware of the size of the tax. It’s potentially a lot!

The Social Security tax wage ceiling for 2024 is $168,600 (up from $160,200 for 2023). If your wages meet or exceed that ceiling, the Social Security tax for 2024 will be $20,906 (12.4% x $168,600). Half of that comes out of your paychecks and your employer pays the other half.

If you’re self employed

Self-employed individuals (sole proprietors, partners and LLC members) know all too well how hard the Social Security tax can hit. That’s because they must pay the entire Social Security tax bill out of their own pockets, based on their net self-employment income.

For 2024, the Social Security tax ceiling for net self-employment income is $168,600 (same as the wage ceiling for employees). So, if your net self-employment income for 2024 is $168,600 or more, you’ll pay the maximum $20,906 Social Security tax.

Projected future ceilings

The Social Security tax on your 2024 income is expensive enough, but it could get worse in future years — much worse, according to Social Security Administration (SSA) projections. That’s because the Social Security tax ceiling will continue to go up based on the inflation factor that’s used to determine the increases. In turn, maximum Social Security tax bills for higher earners will go up. The latest SSA projections for Social Security tax ceilings for the next nine years are:

  • $174,900 for 2025,
  • $181,800 for 2026,
  • $188,100 for 2027,
  • $195,900 for 2028,
  • $204,000 for 2029,
  • $213,600 for 2030,
  • $222,900 for 2031,
  • $232,500 for 2032 and
  • $242,700 for 2033.

These projected ceilings are not always accurate (they could be higher or lower). If the projected numbers pan out, the maximum Social Security tax on wages and net self-employment income in 2033 will be $30,095 (12.4% x $242,700).

Your future benefits

Despite what you pay in, you might receive more in Social Security benefits than you pay into the system. An Urban Institute report looked at some average situations. For example, a single man who earned average wages every year of his adult life and retired at age 65 in 2020 would have paid about $466,000 in Social Security and Medicare taxes.

But he can expect to receive about $640,000 in benefits during retirement. Of course, there are many factors involved and each situation is unique. Plus, these calculations don’t account for the interest the Social Security tax dollars would have earned over the years.

Some people think the government has set up an account with their name on it to hold money to pay their future Social Security benefits. After all, that must be where those Social Security taxes on wages and self-employment income go. Sorry, but this is incorrect. There are no individual accounts — just a promise from the government.

Is the Social Security system financially solid? It’s on shaky ground. Congress has known that for years and has done nothing about it (although there have been many proposals on how to fix things).

A Social Security Administration report states that “benefits are now expected to be payable in full on a timely basis until 2037, when the trust fund reserves are projected to become exhausted. At the point where the reserves are used up, continuing taxes are expected to be enough to pay 76% of scheduled benefits.”

The agency adds that “Congress will need to make changes to the scheduled benefits and revenue sources for the program in the future.” These changes could include a higher age to receive full benefits, additional Social Security tax hikes in the form of higher rates, some tax-law revision that effectively implements higher ceilings or a combination of these.

Stay tuned

The Social Security tax paid by many individuals will continue to go up. If you operate a small business, there may be some strategies than can potentially cut your Social Security tax bill. If you’re an employee, you need to take Social Security into account in your financial planning. Contact us for details.

© 2024

Press Releases

ATA Names Chief Financial Officer

ATA appoints Clay Crockett as Chief Financial Officer (CFO) to lead strategic financial planning, forecasting, and analysis in support of ATA’s long-term objectives.

With over 15 years of experience in both public accounting and the private sector, Clay brings expertise in strengthening financial internal controls, budgeting & forecasting, business process improvement, software system implementations and risk management.

“We welcome Clay to our senior executive team,” said Managing Partner John Whybrew. “His experience in financial management and strategic planning makes him a great addition to ATA. We look forward to his contributions to our continued growth and success.”

A Certified Public Accountant, Clay is an active member of the Tennessee Society of CPAs (TSCPA) where he currently serves on the Legislative Committee for 2024-2025 and previously was past president of the West TN Chapter. Clay is a member of the American Institute of CPAs. With a Lean Six Sigma Green Belt certification, he has demonstrated his commitment to continuous improvement and excellence in his field.

In 2019, Clay was honored with the Distinguished Leadership Award by the Association of Leadership Programs, recognizing his exceptional contributions and leadership.His community involvement includes board memberships with the Rotary Club of Jackson and Trinity Christian Academy, as well as participation in their finance committees. Clay resides in Jackson, TN with his family and spends free time visiting State & National Parks, tinkering on DIY projects around the house, and laughing at the latest viral video with his daughter.

Clay holds a Master of Business Administration from the University of Tennessee at Martin. He also earned a Bachelor of Business Administration in Business Management with a minor in Economics from Lambuth University. Additionally, he graduated from the Barret School of Banking in Memphis, TN, in May 2011.


About ATA

ATA is an advisory firm that works with clients on all aspects of their business needs. ATA guides its clients towards success by providing consulting services that are not traditionally associated with the accounting industry. For example, Revolution Partners, ATA’s wealth management entity provides financial planning expertise; ATA Technologies provides trustworthy IT solutions; ATA Digital focuses on growth through the design and development of marketing and digital products as well as offers video, social media, and digital content for small businesses; ATA Capital is an investment banking firm dedicated to providing clients with M&A brokerage services; and lastly, ATA Employment Solutions is a comprehensive human resource management agency.

ATA has 16 office locations in Tennessee, Arkansas, Kentucky and Mississippi. Recognized as an IPA Top 150 regional accounting firm, it provides a wide array of accounting, auditing, tax and consulting services for clients ranging from small family-owned businesses to publicly traded companies and international corporations. ATA is also an alliance member of BDO USA LLP, a top five global accounting firm, which provides additional resources and expertise for clients.


Figuring Corporate Estimated Tax

The next quarterly estimated tax payment deadline is June 17 for individuals and businesses, so it’s a good time to review the rules for computing corporate federal estimated payments. You want your business to pay the minimum amount of estimated tax without triggering the penalty for underpayment of estimated tax. Four possible options The required installment of estimated tax that a corporation must pay to avoid a penalty is the lowest amount determined under one of the following four methods:

1. Current year method.

Under this option, a corporation can avoid the estimated tax underpayment penalty by paying 25% of the tax shown on the current tax year’s return (or, if no return is filed, 25% of the tax for the current year) by each of four installment due dates. The corporate due dates are generally April 15, June 15, September 15 and December 15. If a due date falls on a Saturday, Sunday or legal holiday, the payment is due the following business day.

2. Preceding year method.

Under this option, a corporation can avoid the estimated tax underpayment penalty by paying 25% of the tax shown on the return for the preceding tax year by each of four installment due dates. (Note, however, that for 2022, certain corporations can only use the preceding year method to determine their first required installment payment. This restriction is placed on corporations with taxable income of $1 million or more in any of the last three tax years.) In addition, this method isn’t available to corporations with a tax return that was for less than 12 months or a corporation that didn’t file a preceding tax year return that showed some tax liability.

3. Annualized income method.

Under this option, a corporation can avoid the estimated tax underpayment penalty if it pays its “annualized tax” in quarterly installments. The annualized tax is computed on the basis of the corporation’s taxable income for the months in the tax year ending before the due date of the installment and assumes income will be received at the same rate over the full year.

4.  Seasonal income method. Under this option, corporations with recurring seasonal patterns of taxable income can annualize income by assuming income earned in the current year is earned in the same pattern as in preceding years. There’s a somewhat complicated mathematical test that corporations must pass in order to establish that they meet the threshold and therefore qualify to use this method. If you think your corporation might qualify for this method, don’t hesitate to ask for our assistance in determining if it does. Also, note that a corporation can switch among the four methods during a given tax year.

We can examine whether your corporation’s tax bill can be reduced. If you’d like to discuss this matter further, contact us. © 2024