Corporate Income Tax Forecast Methodology
The corporate income tax forecast is
1. Forecasting total annual corporate
2. Forecasting annual liability by
payment type - advance payments,
final payments, delinquent
payments3 and refunds.
3. Convert the annual tax liability
forecast by payment types into a
quarterly collections forecast.
Figure 6 outlines the different models
and variables used to produce the
corporate income tax forecast.
Corporate Liability Model
The corporate income tax model is similar in nature to the personal models. However,
the transition from collections to liability is far more complex. A specific corporate tax
year may start any time during the same calendar year. Many corporations use calendar
year or fiscal year as their tax year, but not all. As a result, collections and refunds for a
given tax year are spread over several years (See Figure 7).
The differing tax years also means
that payments are received on
multiple tax years simultaneously.
For example, an average of 72
percent of advanced payments
received during a calendar year
belongs to that tax year. The
remaining 28 percent belong to the
prior tax year.
The top half of Figure 8 shows
how collections data are processed
to develop monthly liability data
by payment type. In essence,
3 Delinquent payments are defined as advance payments associated with tax years that are at least two years
prior to the current tax year and final payments for tax years that are at least three years prior to the current
Timing of Corporate Income Tax Payments
Tax Year 1997
9 11 13 15 17 19 21 23 25 27 29 31 33 35
Months Since Start of Tax Year 1997
Millions of DollarsRefunds
CORPORATE INCOME TAX MODELS
ANNUAL LIABILITY BY