C corporations use federal Form 1120-W and Minnesota Form M4, Corporate Franchise Tax Return, to calculate estimated tax payments. C corporations are not required to pay estimated taxes for the first year they are subject to tax in Minnesota. Federal estimated tax payments are deposited with an authorized financial institution. Minnesota payments are made with the Department of Revenue. Partnerships and S corporations must make Minnesota estimated tax payments if their minimum fee and S corporation taxes are expected to be $500 or more, or if they have any nonresident individuals whose tax is expected to be $500 or more and who are included on the entity’s composite income tax. Withholding of tax for nonresident partners or shareholders is subject to estimated tax requirements. INCOME TAX PENALTIES AND INTEREST Both the IRS and the Minnesota Department of Revenue may assess monetary penalties and interest for various reasons, including but not limited to: • Failure to pay a required tax • A substantial underpayment of tax
• Failure to file a return • Failure to file and pay • Filing a fraudulent, false, or frivolous return
The IRS also may impose a penalty for underpayment of tax due to negligence or disregard of the tax rules, or for a substantial understatement of income. In addition, the federal government and the state may impose criminal penalties for deliberately failing to file a return or deliberately filing a false return. The interest rate on unpaid taxes is adjusted periodically by the IRS and the state to reflect current market rates.
SALES AND USE TAX
SALES AND USE TAX REGISTRATION Every person who makes taxable retail sales or provides taxable services in Minnesota must obtain a Minnesota tax identification number and register to collect and remit Minnesota sales and use tax. This must be done before making any taxable sales in Minnesota. You must register and collect sales tax in Minnesota if you have a taxable presence (nexus) in Minnesota, even if you are an out-of-state retailer or marketplace provider. You have presence in Minnesota if your business does any of the following: o Maintains a physical location in Minnesota (office, warehouse, or distribution, sales, or sample room)
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