                                 CODE OF VIRGINIA

FAILURE TO PAY ESTIMATED INCOME TAX (§ 58.1-504)

A. In case of any underpayment of estimated tax by a corporation, except as
provided in subsection D, there shall be added to the tax for the taxable year
an amount determined at the rate established for interest under &#xA7; 58.1-15,
upon the amount of the underpayment (determined under subsection B) for the
period of the underpayment (determined under subsection C).

B. For purposes of subsection A, the amount of the underpayment shall be the
excess of:

   1. The amount of the installment which would be required to be paid if the
   estimated tax were equal to ninety percent of the tax shown on the return for
   the taxable year or, if no return was filed, ninety percent of the tax for
   such year, over

   2. The amount, if any, of the installment paid on or before the last date
   prescribed for payment.

C. The period of the underpayment shall run from the date the installment was
required to be paid to whichever of the following dates is the earlier:

   1. The fifteenth day of the fourth month following the close of the taxable
   year.

   2. With respect to any portion of the underpayment, the date on which such
   portion is paid. For purposes of this subdivision, a payment of estimated tax
   on any installment date shall be considered a payment of any previous
   underpayment only to the extent such payment exceeds the amount of the
   installment determined under subdivision B 1 for such installment date.

D. Notwithstanding the provisions of subsections A, B and C, the addition to the
tax with respect to any underpayment of any installment shall not be imposed if
the total amount of all payments of estimated tax made on or before the last
date prescribed for the payment of such installment equals or exceeds the amount
which would have been required to be paid on or before such date if the
estimated tax were whichever of the following is the lesser:

   1. The tax shown on the return of the corporation for the preceding taxable
   year, if a return showing a liability for tax was filed by the corporation for
   the preceding taxable year and such preceding year was a taxable year of
   twelve months.

   2. An amount equal to the tax computed at the rate applicable to the taxable
   year but otherwise on the basis of the facts shown on the return of the
   corporation for, and the law applicable to, the preceding taxable year.

   3. An amount equal to ninety percent of the tax for the taxable year computed
   by placing on an annualized basis the taxable income:
   				a. For the first three months of the taxable year, in the case of the
   installment required to be paid in the fourth month,
   				b. For the first three months or for the first five months of the taxable
   year, in the case of the installment required to be paid in the sixth month,
   				c. For the first six months or for the first eight months of the taxable
   year, in the case of the installment required to be paid in the ninth month,
   and
   				d. For the first nine months or for the first eleven months of the taxable
   year, in the case of the installment required to be paid in the twelfth month
   of the taxable year. For purposes of this subdivision, the taxable income
   shall be placed on an annualized basis by (i) multiplying by twelve the
   taxable income referred to in subdivision D 3 and (ii) dividing the resulting
   amount by the number of months in the taxable year (three, five, six, eight,
   nine, or eleven, as the case may be) referred to in subsection A.

E. For purposes of subsection B, subdivisions D 2 and D 3, the term
&#8220;tax&#8221; means the excess of the tax imposed by this chapter over the
sum of any credits allowable against the tax.

F. The application of this to taxable years of less than twelve months shall be
in accordance with regulations prescribed by the Commissioner.

G. Pipeline distribution companies as defined in &#xA7; 58.1-2600 and gas
utilities, gas suppliers and electric suppliers as defined in &#xA7; 58.1-400.2
that become subject to taxation under this chapter and prior thereto paid the
annual license tax based on gross receipts, shall make estimated tax payments
during the first year, or short taxable year under subsection E of &#xA7;
58.1-400.2, they are so subject, and notwithstanding subsection D, any excesses
described in subsection B shall constitute an underpayment for such year.

HISTORY: Code 1950, § 58-151.40; 1968, c. 14; 1977, c. 396; 1983, c. 575; 1984,
c. 675; 1999, c. 971; 2000, cc. 691, 706.