Shelved proposed regulations did not change erroneous-refund penalty analysis

Plain-English summary

Chief Counsel reviewed an earlier memorandum concerning the § 6676 erroneous-refund-claim penalty after the limitations period for another underpayment penalty had expired. That memorandum reflected a position developed for proposed regulations, but used tentative language. The proposed regulations were never approved, and the project was closed in 2015. The memorandum therefore did not alter Counsel's existing analysis.

Ruling snapshot

• Question: Did an earlier memorandum associated with abandoned proposed regulations change the analysis of the § 6676 penalty?
• Outcome: Advice given, the memorandum did not change the analysis
• Key authorities: IRC § 6676

Full text (IRS public release)

ID: CCA_2024102414275618 [Third Party Communication:

UILC: 6676.00-00 Date of Communication: Month DD, YYYY]

Number: 202538020
Release Date: 9/19/2025
From: ---------------------
Sent: Thursday, October 24, 2024 2:27:56 PM
To: ------------------
Cc: ----------------------
Bcc:
Subject: RE: Request for advice on large erroneous refund and associated penalty

Hi ------,

That’s quite all right! It’s good to hear from you and I hope you are enjoying the fall.

The memo you provided appears to have arisen out of an attempt to draft regulations for section 6676. The memo is consistent with the view taken in the draft proposed regs that section 6676 should be available when the limitations period on other penalties has expired. The proposed regulations were drafted and sent to OTP, but they were not signed off on. In 2015 the decision was made to close the project.

Since the memo doesn’t use firm language on the applicability of the 6676 penalty following expiration of the limitations period on assessment of a penalty on the underpayment (“arguably applies”) and it reflects a position taken in conjunction with draft proposed regulations that were later shelved, the PMTA doesn’t change our analysis.

Please let us know if you have any questions.

Respectfully,
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