News Release for Immediate Release November 19, 2003 Automatic Penalty for Underpaying Estimated Tax to Begin in 2005 (Washington, DC) The Office of Tax and Revenue (OTR) is issuing an early warning to taxpayers - starting January 1, 2005, OTR will begin automatically charging a penalty for underpayment of estimated tax by any person, financial institution or business. The change will apply to returns filed for tax year 2004. OTR will charge 10 percent on any underpayment. The charge is compounded daily from the due date to the last day of the month when payment is made or a return is due, whichever is sooner. In the past, auditors manually added this charge, but OTR's new Integrated Tax System allows the agency to find all underpayments of estimated taxes and automatically charge penalties. To avoid such charges, taxpayers should remember the following instructions when filing District returns: Individuals and Fiduciaries You must pay estimated taxes if your residence is in the District, your gross income is not subject to withholding tax, and you have a tax liability of more than $100 for the tax year. DC residents must pay estimated taxes on any wages they earn outside the District, unless their employer pays DC withholding taxes. You must make your four (4) estimated payments with vouchers from your D-40ES booklet. They are due April 15, 2004; June 15, 2004; September 15, 2004; and January 15, 2005. Corporations, Financial Institutions, and Unincorporated Businesses Each corporation, financial institution, and unincorporated business required to file a return must pay estimated taxes, if its tax for the year can reasonably be expected to be more than $1,000. Businesses and financial institutions can pay their estimated tax payments online via the Electronic Taxpayer Service Center or with vouchers from the D-20ES or D-30ES payment voucher booklet. Persons with questions about estimated tax requirements should call OTR Customer Service at (202) 727-4TAX (727-4829).