In a restitution-assessment case, section 6511 does not govern payments the Service parked in excess collections for the same tax year

Plain-English summary

This is informal Chief Counsel advice, sent by email, about a Taxpayer Advocate Service (TAS) case involving a criminal restitution-based assessment, the interest on it, and how the refund-claim deadline in section 6511 fits in. Counsel concluded that section 6511 (the time limit for claiming refunds) is not relevant when the issue is an underpayment and an overpayment for the same tax year, and that the limitations period for recovering erroneously assessed interest is set by Title 26, not by the criminal restitution rules in Title 18. On the facts, for two tax years the Service had moved the taxpayer's payments into "excess collections" even though those same periods still showed unpaid balances. Counsel advised that the amounts sitting in excess collections should instead be applied to the underpayment for each period (and to any accruing penalty for that period), which would stop further penalty accrual. The unpaid balance in each year appeared to be less than the amount sitting in excess collections. The point of the advice was to help TAS get the payments moved out of excess collections and back onto the taxpayer's account. This is internal analysis, not a ruling that grants or denies relief.

Ruling snapshot

• Question: In a restitution-assessment case, does section 6511 control payments the Service placed in excess collections for the same tax year, and where should those amounts be applied?
• Outcome: Advice given (section 6511 not relevant for same-year underpayment/overpayment; excess-collection amounts should be applied to the underpayments and any accruing penalties).
• Key authorities: IRC §§ 6511, 6601, 6201; Title 26 (limitations) versus Title 18 (restitution).

Full text (IRS public release)

 ID:          CCA_2021112317420304                                     [Third Party Communication:

 UILC:        6511.00-00, 6601.00-00,                                  Date of Communication: Month DD, YYYY]

              6201.00-00
Number: 202208016
Release Date: 2/25/2022
From: ---------------------
Sent: Tuesday, November 23, 2021 5:42:03 PM
To: ----------------------------------------------------------------------------------
Cc: -------------------------------------------
Bcc:
Subject: follow-up on restitution case we have been discussing


You may recall that we held a conference call on October 21st to discuss restitution based
assessment, interest, and section 6511 in a TAS case. Thanks for your patience. My colleagues
in CC:PA have spent a great deal of time looking at the facts in this case, and have provided
their views below, which you will likely need to share with the IRS in order to get payments
moved from excess collection. Please let me know if you have any questions or need anything
further.

--------– please post in POSTN-112106-21, Restitution and Section 6511. Thanks.


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From: --------------------------------------------------------------------------------
Sent: Monday, November 22, 2021 2:13 PM
To: -----------------------------------------------------------------------------------------------Cc: ----------
---------------------------------------------------------------------------------------------------------------------
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Subject: RE: Account Transcripts/Balances Due

Good afternoon --------,

Thank you for sending the additional cases highlighted by TAS. As with Taylor, we do not see these cases
as particularly relevant to the precise issue here. These cases do not cover interest or abatements, and,
like Taylor, we do not see how they have any effect on what is a section 6601 and section 6511 issue, or
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provide reason as to why the statute of limitations for recovery of erroneously assessed interest would
be set by Title 18 instead of Title 26.

However, based on the documents and emails you sent us, it does appear that for the ------- and -------
tax years, the Service sent payments to excess collections. Section 6511 is not relevant when discussing
underpayments and overpayments for the same tax year. It is not certain why the ------- payments were
placed in excess collection. The ------- payments/credits should not have been placed in excess
collection if a liability is still reflected as unpaid for the ------- tax period, and the same applies for ---------
----. Moreover, if the amount sent to excess collections for that specific tax period should have been
applied to an accruing penalty for the same tax period, then the penalty should have been satisfied as
of the date the payment was sent to excess collections to prevent any further accrual.

Here, the relevant numbers and dates are as follows:

------- tax period: ---------------------------------------------------------------------
------- tax period: --------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------

The account transcripts show for -------, --------------------------------, and for -------, ---------------------------------
------------------------------------------------------------------------------------------------------------------. Therefore, in
both years, the unpaid balance appears to be less than the amount in excess collections for each year.
Based on the transcripts, there do not appear to be any penalty accruals due, but I nonetheless wanted
to raise this issue just in case there is something we are missing, since TAS is more familiar with the facts
of this matter. Regardless, the amount in excess collections should be applied to -------------------------------
-------in each of these periods. Please let me know if you have any questions.

Best,

-------