Refund result depends on when amended return was filed

Plain-English summary

Chief Counsel compared payments accompanying amended returns filed before and after the assessment limitations deadline. A payment with a return filed after that deadline is a statutory overpayment under section 6401(a) and must be refunded if the taxpayer makes a timely refund claim. If the amended return was filed on or before the deadline but the IRS did not timely assess it, section 6401(a) does not automatically create an overpayment. In that second situation, the ordinary meaning of overpayment controls, so no refund is due if the taxpayer actually owed the amount.

Ruling snapshot

• Question: Does a payment with an unassessed amended return constitute an overpayment?
• Outcome: Advice given, the answer depends on whether the return was filed after the assessment deadline
• Key authorities: IRC §§ 6401(a) and 6402; Rev. Rul. 74-580; Rev. Rul. 85-67; Jones v. Liberty Glass Co.; Lewis v. Reynolds

Full text (IRS public release)

ID: CCA_2015010914274558
UILC: 6401.00-00

Number: 201509033
Release Date: 2/27/2015
From:
Sent: Friday, January 09, 2015 2:27:45 PM
To:
Cc:
Bcc:
Subject: RE: IRC Section 6401 overpayment issue

Hi. I agree that where an amended return is filed after the ASED, any amount paid with that return must
be refunded if the taxpayer makes a timely claim for refund (within two years of payment) because the
amount is a “statutory overpayment” under IRC 6401(a) as indicated by Rev. Rul. 74-580. Under IRC
6402 the Service may only issue a refund if the taxpayer has overpaid tax; but IRC 6401(a) creates an
overpayment regardless of the payments made by, and the total tax liability of, the taxpayer for a tax
period.

If, instead, the amended return was filed on or before the ASED but not timely assessed and a payment
was made with that return, then there’s no statutory overpayment under IRC 6401(a). In this second
situation, there might not be an overpayment despite the lack of a timely assessment. This second
situation is addressed in Rev. Rul. 85-67 which distinguishes Rev. Rul. 74-580. While there’s no general
definition of an “overpayment” in the Code or regs, case law has established that the word should be
given its ordinary meaning—a payment to the government in excess of what is due. Jones v. Liberty
Glass Co., 332 U.S. 524, 531 (1947). So, in this second situation if the Service believed that the taxpayer
actually owed the amount being claimed, then there’s no overpayment. See Lewis v. Reynolds, 284 U.S.
281 (1932) (all adjustments that increase or decrease taxable income, even those barred by the period of
limitations, must be taken into account in determining the amount of an overpayment of tax).