Academic journal article Journal of Accountancy

Tax Payment or Deposit?

Academic journal article Journal of Accountancy

Tax Payment or Deposit?

Article excerpt

In 1986, a county court appointed the local commissioner of finance as the administrator of the estate of a taxpayer who died intestate. In 1988, the administrator submitted a check for $100,000 to the Internal Revenue Service with a notation that read "estate estimated taxes."

The estate filed Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, in 1993, five years after the administrator paid the $100,000 to the IRS. The return showed $12,989 in estate tax due, $100,000 in prior payments and an overpayment of $87,011.

Under Internal Revenue Code section 6511(b)(2)(A), if a claim for refund is filed within three years of the time the return was filed, the amount of the refund is limited to the tax paid within the three-year period (plus extensions) preceding the filing of the claim.

In private letter ruling 9613001, the IRS treated form 706 as an informal claim for refund, despite the fact that the claim was not made on form 843, Claim for Refund and Request for Abatement, as required by IRC section 301.6402-2(c). Because the refund claim and the return were filed simultaneously, the claim was filed within three years of filing the return, and because the $100,000 payment was not paid in the three years immediately preceding the claim for refund, the IRS denied the refund. …

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