The IRS released guidance on June 2 to determine the Internal Revenue Code (I.R.C.) §55 corporate alternative minimum tax (CAMT). Notice 2025-27 offers an optional simplified method for determining applicable corporation status under I.R.C. §59(k)(1). A corporation is an applicable corporation under the simplified method if its:
- Adjusted financial statement income (AFSI) is at least $800 million, or
- Foreign parent AFSI is at least $80 million.
In addition, the IRS will waive any additional tax due to the corporation’s §6655 underpayment of estimated tax with respect to the corporation’s CAMT liability for the tax years beginning after Dec. 31, 2024, and before Jan. 1, 2026.
Glen Frost’s Takeaways:
The IRS has created a new shortcut for large companies to determine if they owe the new Corporate Alternative Minimum Tax (CAMT), and it’s giving them a break on penalties for 2025 as they adjust.
- A Time-Saving Shortcut: Instead of a long, complicated analysis, there’s now an easier test. If a company’s financial statement income is clearly over the limit (e.g., $800 million), they can just assume they are subject to the tax. This saves a lot of time and money that would have been spent proving the obvious.
- A Penalty “Free Pass” for 2025: The IRS understands this new tax is difficult to calculate. So, for the 2025 tax year, it won’t charge underpayment penalties if a company’s quarterly tax payments are too low. This is a huge relief that gives companies breathing room to get their calculations right without being punished for honest mistakes.
- The Bottom Line for Big Companies: For very large, profitable corporations, this is simple. They can use the simple test and focus their energy on calculating the tax correctly, knowing they are protected from estimation penalties for this year.
This is the IRS being practical: making life easier for companies that will obviously owe the tax, and forgiving honest errors on a brand-new, complex law.
