26 USC 6401 - Amounts treated as overpayments

Collapse to view only § 6401. Amounts treated as overpayments

§ 6401. Amounts treated as overpayments
§ 6402. Authority to make credits or refunds
§ 6403. Overpayment of installment
§ 6404. Abatements
§ 6405. Reports of refunds and credits
§ 6406. Prohibition of administrative review of decisions
§ 6407. Date of allowance of refund or credit
§ 6408. State escheat laws not to apply
§ 6409. Refunds disregarded in the administration of Federal programs and federally assisted programs

§ 6401. Amounts treated as overpayments

(a) Assessment and collection after limitation period.

(b) Excessive credits

(1) In general

(2) Special rule for credit under section 33

(Aug. 16, 1954, ch. 736, 68A Stat. 791; Pub. L. 89–44, title VIII, § 809(d)(6), June 21, 1965, 79 Stat. 168; Pub. L. 91–172, title III, § 331(c), Dec. 30, 1969, 83 Stat. 598; Pub. L. 91–258, title II, § 207(d)(1), May 21, 1970, 84 Stat. 248; Pub. L. 94–12, title II, § 204(b)(1), Mar. 29, 1975, 89 Stat. 31; Pub. L. 94–455, title VII, § 701(f)(2), (3), Oct. 4, 1976, 90 Stat. 1580; Pub. L. 95–600, title VII, § 701(u)(15)(D), Nov. 6, 1978, 92 Stat. 2919; Pub. L. 95–618, title III, § 301(c)(2), Nov. 9, 1978, 92 Stat. 3199; Pub. L. 96–222, title I, § 103(a)(2)(B)(iv), Apr. 1, 1980, 94 Stat. 209; Pub. L. 96–223, title II, § 223(b)(2), Apr. 2, 1980, 94 Stat. 266; Pub. L. 97–248, title III, §§ 307(a)(9), 308(a), Sept. 3, 1982, 96 Stat. 589, 591; Pub. L. 98–67, title I, § 102(a), Aug. 5, 1983, 97 Stat. 369; Pub. L. 98–369, div. A, title IV, § 474(r)(36), title VII, § 735(c)(16), July 18, 1984, 98 Stat. 846, 985; Pub. L. 99–514, title XII, § 1246(b), Oct. 22, 1986, 100 Stat. 2582; Pub. L. 100–647, title I, § 1012(s)(1)(B), Nov. 10, 1988, 102 Stat. 3527; Pub. L. 105–206, title VI, § 6022(a), July 22, 1998, 112 Stat. 824; Pub. L. 109–58, title XIII, § 1303(c)(4), Aug. 8, 2005, 119 Stat. 997; Pub. L. 110–234, title XV, § 15316(c)(3), May 22, 2008, 122 Stat. 1511; Pub. L. 110–246, § 4(a), title XV, § 15316(c)(3), June 18, 2008, 122 Stat. 1664, 2273; Pub. L. 111–5, div. B, title I, § 1531(c)(5), Feb. 17, 2009, 123 Stat. 360; Pub. L. 115–97, title I, § 13404(c)(4), Dec. 22, 2017, 131 Stat. 2138.)

§ 6402. Authority to make credits or refunds

(a) General rule

(b) Credits against estimated tax

(d) Collection of debts owed to Federal agencies

(1) In generalUpon receiving notice from any Federal agency that a named person owes a past-due legally enforceable debt (other than past-due support subject to the provisions of subsection (c)) to such agency, the Secretary shall—

(A) reduce the amount of any overpayment payable to such person by the amount of such debt;

(B) pay the amount by which such overpayment is reduced under subparagraph (A) to such agency; and

(C) notify the person making such overpayment that such overpayment has been reduced by an amount necessary to satisfy such debt.

(2) Priorities for offset

(3) Treatment of OASDI overpayments

(A) Requirements

(B) Notice; protection of other persons filing joint return

(i) NoticeIn the case of a debt consisting of an OASDI overpayment, if the Secretary determines upon receipt of the notice referred to in paragraph (1) that the refund from which the reduction described in paragraph (1)(A) would be made is based upon a joint return, the Secretary shall—(I) notify each taxpayer filing such joint return that the reduction is being made from a refund based upon such return, and(II) include in such notification a description of the procedures to be followed, in the case of a joint return, to protect the share of the refund which may be payable to another person.

(ii) Adjustments based on protections given to other taxpayers on joint return

(D) OASDI overpayment

(e) Collection of past-due, legally enforceable State income tax obligations

(1) In generalUpon receiving notice from any State that a named person owes a past-due, legally enforceable State income tax obligation to such State, the Secretary shall, under such conditions as may be prescribed by the Secretary—

(A) reduce the amount of any overpayment payable to such person by the amount of such State income tax obligation;

(B) pay the amount by which such overpayment is reduced under subparagraph (A) to such State and notify such State of such person’s name, taxpayer identification number, address, and the amount collected; and

(C) notify the person making such overpayment that the overpayment has been reduced by an amount necessary to satisfy a past-due, legally enforceable State income tax obligation.

If an offset is made pursuant to a joint return, the notice under subparagraph (B) shall include the names, taxpayer identification numbers, and addresses of each person filing such return.

(2) Offset permitted only against residents of State seeking offset

(3) Priorities for offsetAny overpayment by a person shall be reduced pursuant to this subsection—

(A) after such overpayment is reduced pursuant to—

(i) subsection (a) with respect to any liability for any internal revenue tax on the part of the person who made the overpayment;

(ii) subsection (c) with respect to past-due support; and

(iii) subsection (d) with respect to any past-due, legally enforceable debt owed to a Federal agency; and

(B) before such overpayment is credited to the future liability for any Federal internal revenue tax of such person pursuant to subsection (b).

If the Secretary receives notice from one or more agencies of the State of more than one debt subject to paragraph (1) or subsection (f) that is owed by such person to such an agency, any overpayment by such person shall be applied against such debts in the order in which such debts accrued.

(4) Notice; consideration of evidenceNo State may take action under this subsection until such State—

(A) notifies by certified mail with return receipt the person owing the past-due State income tax liability that the State proposes to take action pursuant to this section;

(B) gives such person at least 60 days to present evidence that all or part of such liability is not past-due or not legally enforceable;

(C) considers any evidence presented by such person and determines that an amount of such debt is past-due and legally enforceable; and

(D) satisfies such other conditions as the Secretary may prescribe to ensure that the determination made under subparagraph (C) is valid and that the State has made reasonable efforts to obtain payment of such State income tax obligation.

(5) Past-due, legally enforceable State income tax obligationFor purposes of this subsection, the term “past-due, legally enforceable State income tax obligation” means a debt—

(A)

(i) which resulted from—(I) a judgment rendered by a court of competent jurisdiction which has determined an amount of State income tax to be due; or(II) a determination after an administrative hearing which has determined an amount of State income tax to be due; and

(ii) which is no longer subject to judicial review; or

(B) which resulted from a State income tax which has been assessed but not collected, the time for redetermination of which has expired, and which has not been delinquent for more than 10 years.

For purposes of this paragraph, the term “State income tax” includes any local income tax administered by the chief tax administration agency of the State.

(6) Regulations

(7) Erroneous payment to State

(f) Collection of unemployment compensation debts

(1) In generalUpon receiving notice from any State that a named person owes a covered unemployment compensation debt to such State, the Secretary shall, under such conditions as may be prescribed by the Secretary—

(A) reduce the amount of any overpayment payable to such person by the amount of such covered unemployment compensation debt;

(C) notify the person making such overpayment that the overpayment has been reduced by an amount necessary to satisfy a covered unemployment compensation debt.

If an offset is made pursuant to a joint return, the notice under subparagraph (C) shall include information related to the rights of a spouse of a person subject to such an offset.

(2) Priorities for offsetAny overpayment by a person shall be reduced pursuant to this subsection—

(A) after such overpayment is reduced pursuant to—

(i) subsection (a) with respect to any liability for any internal revenue tax on the part of the person who made the overpayment;

(ii) subsection (c) with respect to past-due support; and

(iii) subsection (d) with respect to any past-due, legally enforceable debt owed to a Federal agency; and

(B) before such overpayment is credited to the future liability for any Federal internal revenue tax of such person pursuant to subsection (b).

If the Secretary receives notice from a State or States of more than one debt subject to paragraph (1) or subsection (e) that is owed by a person to such State or States, any overpayment by such person shall be applied against such debts in the order in which such debts accrued.

(3) Notice; consideration of evidenceNo State may take action under this subsection until such State—

(A) notifies the person owing the covered unemployment compensation debt that the State proposes to take action pursuant to this section;

(B) provides such person at least 60 days to present evidence that all or part of such liability is not legally enforceable or is not a covered unemployment compensation debt;

(C) considers any evidence presented by such person and determines that an amount of such debt is legally enforceable and is a covered unemployment compensation debt; and

(4) Covered unemployment compensation debtFor purposes of this subsection, the term “covered unemployment compensation debt” means—

(A) a past-due debt for erroneous payment of unemployment compensation due to fraud or the person’s failure to report earnings which has become final under the law of a State certified by the Secretary of Labor pursuant to section 3304 and which remains uncollected;

(B) contributions due to the unemployment fund of a State for which the State has determined the person to be liable and which remain uncollected; and

(5) Regulations

(A) In general

(B) Fee payable to Secretary

(6) Erroneous payment to State

(g) Review of reductions

(h) Federal agency

(i) Treatment of payments to States

(j) Cross reference

(k) Refunds to certain fiduciaries of insolvent members of affiliated groups

(l) Explanation of reason for refund disallowance

(m) Earliest date for certain refunds

(n) Misdirected direct deposit refundNot later than the date which is 6 months after the date of the enactment of the Taxpayer First Act, the Secretary shall prescribe regulations to establish procedures to allow for—

(1) taxpayers to report instances in which a refund made by the Secretary by electronic funds transfer was not transferred to the account of the taxpayer;

(2) coordination with financial institutions for the purpose of—

(A) identifying the accounts to which transfers described in paragraph (1) were made; and

(B) recovery of the amounts so transferred; and

(3) the refund to be delivered to the correct account of the taxpayer.

(Aug. 6, 1954, ch. 736, 68A Stat. 791; Pub. L. 94–455, title XIX, § 1906(b)(13) (A), (K), Oct. 4, 1976, 90 Stat. 1834, 1835; Pub. L. 97–35, title XXIII, § 2331(c), Aug. 13, 1981, 95 Stat. 861; Pub. L. 98–369, div. B, title VI, § 2653(b)(1), (2), July 18, 1984, 98 Stat. 1154, 1155; Pub. L. 98–378, § 21(e), Aug. 16, 1984, 98 Stat. 1325; Pub. L. 100–647, title VI, § 6276, Nov. 10, 1988, 102 Stat. 3753; Pub. L. 101–508, title V, § 5129(c), Nov. 5, 1990, 104 Stat. 1388–288; Pub. L. 103–296, title I, § 108(h)(7), Aug. 15, 1994, 108 Stat. 1487; Pub. L. 104–134, title III, § 31001(u)(2), Apr. 26, 1996, 110 Stat. 1321–375; Pub. L. 104–193, title I, § 110(l)(7), Aug. 22, 1996, 110 Stat. 2173; Pub. L. 105–33, title V, § 5514(a)(1), Aug. 5, 1997, 111 Stat. 620; Pub. L. 105–206, title III, §§ 3505(a), 3711(a), (c), July 22, 1998, 112 Stat. 771, 779, 781; Pub. L. 109–171, title VII, § 7301(d), Feb. 8, 2006, 120 Stat. 144; Pub. L. 110–328, § 3(a), (d), Sept. 30, 2008, 122 Stat. 3570, 3573; Pub. L. 111–291, title VIII, § 801(a), Dec. 8, 2010, 124 Stat. 3157; Pub. L. 111–312, title V, § 503(a), Dec. 17, 2010, 124 Stat. 3308; Pub. L. 114–113, div. Q, title II, § 201(b), Dec. 18, 2015, 129 Stat. 3076; Pub. L. 115–141, div. U, title IV, § 401(a)(285)–(287), Mar. 23, 2018, 132 Stat. 1198; Pub. L. 116–25, title I, § 1407, July 1, 2019, 133 Stat. 1001.)

§ 6403. Overpayment of installment

In the case of a tax payable in installments, if the taxpayer has paid as an installment of the tax more than the amount determined to be the correct amount of such installment, the overpayment shall be credited against the unpaid installments, if any. If the amount already paid, whether or not on the basis of installments, exceeds the amount determined to be the correct amount of the tax, the overpayment shall be credited or refunded as provided in section 6402.

(Aug. 16, 1954, ch. 736, 68A Stat. 791.)

§ 6404. Abatements

(a) General ruleThe Secretary is authorized to abate the unpaid portion of the assessment of any tax or any liability in respect thereof, which—

(1) is excessive in amount, or

(2) is assessed after the expiration of the period of limitation properly applicable thereto, or

(3) is erroneously or illegally assessed.

(b) No claim for abatement of income, estate, and gift taxes

(d) Assessments attributable to certain mathematical errors by Internal Revenue Service

(e) Abatement of interest attributable to unreasonable errors and delays by Internal Revenue Service

(1) In generalIn the case of any assessment of interest on—

(A) any deficiency attributable in whole or in part to any unreasonable error or delay by an officer or employee of the Internal Revenue Service (acting in his official capacity) in performing a ministerial or managerial act, or

(B) any payment of any tax described in section 6212(a) to the extent that any unreasonable error or delay in such payment is attributable to such an officer or employee being erroneous or dilatory in performing a ministerial or managerial act,

the Secretary may abate the assessment of all or any part of such interest for any period. For purposes of the preceding sentence, an error or delay shall be taken into account only if no significant aspect of such error or delay can be attributed to the taxpayer involved, and after the Internal Revenue Service has contacted the taxpayer in writing with respect to such deficiency or payment.

(2) Interest abated with respect to erroneous refund checkThe Secretary shall abate the assessment of all interest on any erroneous refund under section 6602 until the date demand for repayment is made, unless—

(A) the taxpayer (or a related party) has in any way caused such erroneous refund, or

(B) such erroneous refund exceeds $50,000.

(f) Abatement of any penalty or addition to tax attributable to erroneous written advice by the Internal Revenue Service

(1) In general

(2) LimitationsParagraph (1) shall apply only if—

(A) the written advice was reasonably relied upon by the taxpayer and was in response to a specific written request of the taxpayer, and

(B) the portion of the penalty or addition to tax did not result from a failure by the taxpayer to provide adequate or accurate information.

(g) Suspension of interest and certain penalties where Secretary fails to contact taxpayer

(1) Suspension

(A) In generalIn the case of an individual who files a return of tax imposed by subtitle A for a taxable year on or before the due date for the return (including extensions), if the Secretary does not provide a notice to the taxpayer specifically stating the taxpayer’s liability and the basis for the liability before the close of the 36-month period beginning on the later of—

(i) the date on which the return is filed; or

(ii) the due date of the return without regard to extensions,

the Secretary shall suspend the imposition of any interest, penalty, addition to tax, or additional amount with respect to any failure relating to the return which is computed by reference to the period of time the failure continues to exist and which is properly allocable to the suspension period.

(B) Separate application

If, after the return for a taxable year is filed, the taxpayer provides to the Secretary 1 or more signed written documents showing that the taxpayer owes an additional amount of tax for the taxable year, clause (i) shall be applied by substituting the date the last of the documents was provided for the date on which the return is filed.

(2) ExceptionsParagraph (1) shall not apply to—

(A) any penalty imposed by section 6651;

(B) any interest, penalty, addition to tax, or additional amount in a case involving fraud;

(D) any interest, penalty, addition to tax, or additional amount with respect to any gross misstatement;

(E) any interest, penalty, addition to tax, or additional amount with respect to any reportable transaction with respect to which the requirement of section 6664(d)(3)(A) is not met and any listed transaction (as defined in 6707A(c)); or

(F) any criminal penalty.

(3) Suspension periodFor purposes of this subsection, the term “suspension period” means the period—

(A) beginning on the day after the close of the 36-month period under paragraph (1); and

(B) ending on the date which is 21 days after the date on which notice described in paragraph (1)(A) is provided by the Secretary.

(h) Judicial review of request for abatement of interest

(1) In general

(A) at any time after the earlier of—

(i) the date of the mailing of the Secretary’s final determination not to abate such interest, or

(ii) the date which is 180 days after the date of the filing with the Secretary (in such form as the Secretary may prescribe) of a claim for abatement under this section, and

(B) not later than the date which is 180 days after the date described in subparagraph (A)(i).

(2) Special rules

(A) Date of mailing

(B) Relief

(i) Cross reference

(Aug. 16, 1954, ch. 736, 68A Stat. 792; Pub. L. 94–455, title XII, § 1212(a), title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1712, 1834; Pub. L. 96–589, § 6(b)(2), Dec. 24, 1980, 94 Stat. 3407; Pub. L. 99–514, title XV, § 1563(a), Oct. 22, 1986, 100 Stat. 2762; Pub. L. 100–647, title I, § 1015(n), title VI, § 6229(a), Nov. 10, 1988, 102 Stat. 3572, 3733; Pub. L. 104–168, title III, §§ 301(a), (b), 302(a), title VII, § 701(c)(3), July 30, 1996, 110 Stat. 1457, 1464; Pub. L. 105–206, title III, §§ 3305(a), 3309(a), July 22, 1998, 112 Stat. 743, 745; Pub. L. 105–277, div. J, title IV, § 4003(e)(2), Oct. 21, 1998, 112 Stat. 2681–909; Pub. L. 107–134, title I, § 112(d)(1), Jan. 23, 2002, 115 Stat. 2434; Pub. L. 108–357, title VIII, § 903(a)–(c), Oct. 22, 2004, 118 Stat. 1652; Pub. L. 109–135, title III, § 303(b)(1), Dec. 21, 2005, 119 Stat. 2609; Pub. L. 110–28, title VIII, § 8242(a), May 25, 2007, 121 Stat. 200; Pub. L. 113–295, div. A, title II, § 221(a)(111), Dec. 19, 2014, 128 Stat. 4054; Pub. L. 114–113, div. Q, title IV, § 421(a), Dec. 18, 2015, 129 Stat. 3123; Pub. L. 115–141, div. U, title IV, § 401(a)(288), Mar. 23, 2018, 132 Stat. 1198.)

§ 6405. Reports of refunds and credits

(a) By Treasury to Joint Committee

(b) Tentative adjustments

(Aug. 16, 1954, ch. 736, 68A Stat. 792; Pub. L. 92–418, § 2(b), Aug. 29, 1972, 86 Stat. 657; Pub. L. 92–512, title II, § 203(a), Oct. 20, 1972, 86 Stat. 944; Pub. L. 94–455, title XII, § 1210(a), (b), title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1711, 1834; Pub. L. 95–227, § 4(d)(3), Feb. 10, 1978, 92 Stat. 23; Pub. L. 98–369, div. A, title VII, § 711(c)(3), July 18, 1984, 98 Stat. 946; Pub. L. 99–514, title XVIII, § 1879(e), Oct. 22, 1986, 100 Stat. 2906; Pub. L. 101–508, title XI, §§ 11801(c)(21)(A), 11834(a), Nov. 5, 1990, 104 Stat. 1388–528, 1388–560; Pub. L. 106–554, § 1(a)(7) [title III, § 305(a)], Dec. 21, 2000, 114 Stat. 2763, 2763A–634; Pub. L. 113–295, div. A, title III, § 301(a), Dec. 19, 2014, 128 Stat. 4055.)

§ 6406. Prohibition of administrative review of decisions

In the absence of fraud or mistake in mathematical calculation, the findings of fact in and the decision of the Secretary upon the merits of any claim presented under or authorized by the internal revenue laws and the allowance or non-allowance by the Secretary of interest on any credit or refund under the internal revenue laws shall not, except as provided in subchapters C and D of chapter 76 (relating to the Tax Court), be subject to review by any other administrative or accounting officer, employee, or agent of the United States.

(Aug. 16, 1954, ch. 736, 68A Stat. 792; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)

§ 6407. Date of allowance of refund or credit

The date on which the Secretary first authorizes the scheduling of an overassessment in respect of any internal revenue tax shall be considered as the date of allowance of refund or credit in respect of such tax.

(Aug. 16, 1954, ch. 736, 68A Stat. 793; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)

§ 6408. State escheat laws not to apply

No overpayment of any tax imposed by this title shall be refunded (and no interest with respect to any such overpayment shall be paid) if the amount of such refund (or interest) would escheat to a State or would otherwise become the property of a State under any law relating to the disposition of unclaimed or abandoned property. No refund (or payment of interest) shall be made to the estate of any decedent unless it is affirmatively shown that such amount will not escheat to a State or otherwise become the property of a State under such a law.

(Added Pub. L. 100–203, title X, § 10621(a), Dec. 22, 1987, 101 Stat. 1330–452.)

§ 6409. Refunds disregarded in the administration of Federal programs and federally assisted programs

Notwithstanding any other provision of law, any refund (or advance payment with respect to a refundable credit) made to any individual under this title shall not be taken into account as income, and shall not be taken into account as resources for a period of 12 months from receipt, for purposes of determining the eligibility of such individual (or any other individual) for benefits or assistance (or the amount or extent of benefits or assistance) under any Federal program or under any State or local program financed in whole or in part with Federal funds.

(Added Pub. L. 111–312, title VII, § 728(a), Dec. 17, 2010, 124 Stat. 3317; amended Pub. L. 112–240, title I, § 103(d), Jan. 2, 2013, 126 Stat. 2320.)