Withholding is not credited to another year until the overpayment is processed and applied

Number

201621010

Outcome

Advice

Document type

Chief Counsel Advice

IRS subject

REFUNDS: Offset

Topics

Income and deductions

Code sections

§ 6402, § 6513

Ruling dated

April 19, 2016

Publicly released

May 20, 2016

Source

View Official PDF

Apply this to your situation

This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2016, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.

About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.

View official IRS release (PDF)

Plain-English summary

Chief Counsel explained that section 6513(b) treats withheld tax as paid on the return’s due date. That deemed payment does not automatically credit the amount against an outstanding liability for a different year. Under section 6402(a), the IRS may apply an overpayment against another liability but is not required to do so in a particular order or at a particular earlier time. Prepaid amounts for one year are credited to another year only when the first year’s return is processed and the IRS actually applies the credit.

Ruling snapshot

Question: When is withholding for one tax year credited against an outstanding liability for another year?
Outcome: Advice given.
Key authorities: IRC §§ 6402(a), 6513(b); Donahue v. United States, 33 Fed. Cl. 600 (1995); IRS FSA 199904032; IRS SCA 200051042.

Full text (IRS public release)

ID: CCA_2016041909321004
UILC: 69.04.00-00

Number: 201621010
Release Date: 5/20/2016
From:
Sent: Tuesday, April 19, 2016 9:32:10 AM
To:
Cc:
Bcc:
Subject: 6402/6407 question

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Section 6513(b) of the Code does provide that amounts withheld are deemed paid by the taxpayer as of the due date of the return for that year. However, the fact that the amount was “paid” does not mean it would automatically be applied to the outstanding liability for 2000. Rather, under IRC 6402(a), the Service may credit an overpayment against any liability (“and shall …refund any balance….”) but is not required to do so in any particular manner. As a result, Counsel has previously opined that prepaid amounts for a given year are not deemed credited to a tax liability for another year until the time the return for the first year is processed and the credit is applied. See, e.g., IRS FSA 199904032, IRS SCA 200051042 . See also Donahue v. United States, 33 Fed. Cl. 600 (1995).

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