On June 2, the Internal Revenue Services (IRS) released Notice 2025-27, offering important interim guidance for corporate taxpayers who may be subject to the Corporate Alternative Minimum Tax (CAMT). This notice introduced transitional relief measures and a simplified method for determining CAMT applicability, helping corporations navigate compliance for this new and complex area.
Key Takeaways From Notice 2025-27
Optional Simplified Method To Determine CAMT Applicability
The notice provides a voluntary, interim simplified method for determining whether a corporation meets the $1 billion average annual adjusted financial statement income (AFSI) threshold that triggers CAMT liability.
The approach is intended to reduce the computational and administrative burden of full CAMT compliance until formal regulations are in place.
Expanded: Penalty Relief for Estimated Tax Underpayments
A central feature of Notice 2025-27 is its temporary waiver of estimated tax penalties related to CAMT liability for certain corporations.
Here’s how it works:
- Under IRC §6655, corporations are generally required to make quarterly estimated tax payments and may face penalties if they underpay.
- For corporations newly subject to CAMT, calculating the correct estimated tax can be especially difficult given the complex and evolving nature of the CAMT rules.
- Notice 2025-27 provides penalty relief for underpayment of estimated CAMT for taxable years beginning after December 31, 2024, and before January 1, 2026.
This relief is limited to a corporation’s CAMT. It does not extend to underpayments of regular corporate income tax. Notice 2025- 27 also provides guidance as to how to complete Form 2220, Underpayment of Estimated Tax by Corporations, in order to avoid penalty notices as it relates to the CAMT.
This provision is critical because it gives corporations a grace period to refine their CAMT calculations and avoid unnecessary penalties during the rollout of a novel and technically demanding tax regime.
Future Regulatory Developments Expected
The Treasury Department and IRS have indicated that formal regulations are forthcoming and will likely include a version of the simplified method introduced in this notice. These rules are expected to be refined through public comments and will eventually replace this interim relief.
Why This Matters
The CAMT, introduced by the Inflation Reduction Act (IRA) of 2022, imposes a 15% minimum tax on the financial statement income of large corporations, fundamentally shifting the tax landscape for many multinationals and book-profit-heavy firms.
Notice 2025-27 provides both compliance flexibility and temporary penalty protection, giving affected corporations some breathing room. The simplified method can help determine CAMT exposure, while the penalty relief provisions shield compliant taxpayers from costly consequences during the transition period.
A Note on Legal Authority
While IRS notices do not carry the same legal authority as statutes or final Treasury regulations, they reflect the official interpretation and enforcement position of the IRS.
Taxpayers who follow the guidance in IRS notices — such as Notice 2025-27 — are typically considered to be acting in good faith and are often protected from penalties. This principle is especially important when notices explicitly provide administrative relief, as this one does.
Your Guide Forward
Cherry Bekaert helps businesses navigate Corporate AMT compliance by applying the simplified method in Notice 2025-27, optimizing tax strategies, and enabling accurate estimated tax payments to avoid penalties. We stay ahead of evolving regulations, providing knowledgeable guidance on CAMT filing and long-term tax planning. Reach out to us so your business remains compliant and financially efficient.
