Withholding overpayment was available for offset on the original return due date

Plain-English summary

Chief Counsel considered whether an individual was entitled to a refund when the IRS had applied two payments in date order. The individual's overpayment came from withholding, which Section 6513(b) treats as paid on the original return due date without regard to an extension or a late-filed or late-processed return. That April payment date preceded the October date of a corporation's payment. Chief Counsel therefore advised that the IRS had properly applied the earlier withholding-derived credit and that the individual was not entitled to a refund. The advice also cited Luque v. Commissioner and Internal Revenue Manual provisions governing overpayment availability dates.

Ruling snapshot

• Question: Was a withholding-derived overpayment available for offset on the original return due date, before a corporation's later payment?
• Outcome: Advice given: yes, so the individual was not entitled to a refund.
• Key authorities: IRC § 6513(b); Luque v. Commissioner, T.C. Memo. 2016-128; IRM 5.19.14.3.4(10), 20.2.4.3, and 20.2.4.3.1

Full text (IRS public release)

ID:         CCA_2018060815523422
UILC:       6513.00-00, 6672.00-00

Number: 201825031
Release Date: 6/22/2018
From:
Sent: Friday, June 08, 2018 3:52:34 PM
To:
Cc:
Bcc:
Subject: CF 6448951 - advice from CC:NTA


Thanks for your patience while I delved deep into this case and coordinated with the
payment experts in Counsel. Unfortunately, the advice you previously received from
CC:SBSE was in fact correct. IRM 5.19.14.3.4(10) advises that payments are to be
applied in date order. Thus, the IRS properly used a payment date of 4/15 for the
individual, which was earlier than the payment date for the corporation’s payment on
10/6. Consequently, the individual is not entitled to a refund.

For purposes of the application of an overpayment credit, the overpayment is
considered available for offset on its availability date, which is determined by the dates
of the payments constituting the overpayment. See Luque v. Comm'r, T.C. Memo. 2016-

128. See also IRM 20.2.4.3, Availability Dates for Overpayments (March 5, 2015). The
overpayment in this case was a result of withholding, so you need to determine the date
the withholding was considered paid.

Under section 6513(b), the IRS credits withholding to a taxpayer's account on the date
the tax return for that year is due. The credits are applied as of the due date without
regard to any extension of time to file and whether the return is filed timely or
late. Therefore, an overpayment comprised of prepayment credits, such as withholding,
is available to be used as an offset as of the date the return is due, even if the return is
filed or processed after the original due date. See Luque. See also IRM 20.2.4.3.1,
Availability Dates for Overpayments-Payment and Credit Types (March 5, 2015).

I’m sorry this isn’t the result you were hoping to receive. And again, my apologies for the
delay in responding, but I wanted to be sure the subject matter experts thoroughly
studied this. Please let me know if you have any questions.


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