Attorney-at-Law

DEPOSIT OR PAYMENT?

In Uncategorized on 01/21/2022 at 15:51

You can get back a deposit you made to IRS just by asking, but a payment only comes back when there’s been an overpayment. IRS and Ram Ratan Sharma & Shakuntala Sharma, Docket No. 19466-17, filed 1/22/21, seem confused about which was the $6K Ram & Shak paid back in August, ’17. So Judge Gale man-‘splains the difference.

Ram & Shak were here before; see my blogpost “Oh MAGI, I Wish I’d Never Seen Your Face” – Part Deux, 10/29/20. Judge Gale refers today to an Order from 10/15/21 about a Notice CP21C that Ram & Shak claim lets them off the hook for any deficiency. Unhappily, I can’t find the Order (the Genius Baristas buried it so I can’t get the text online), but I’ll bet it’s the “no assessment because you petitioned,” which civilians take to mean IRS concedes everything, when in fact all it means is that the automatic stay on assessment and collection is in effect until decision or toss.

The parties are doing the Rule 155 beancount, but Ram & Shak are still claiming they’re off the hook and wanting their $6K back.

Howbeit, here’s Judge Gale’s skinny on deposit vs payment.

” The key differences between a deposit and an advance payment are that (1) deposits generally must be returned to a taxpayer on demand, whereas advance payments are subject to refund procedures, and (2) interest on an excess deposit  (when the conditions for payment of such interest have been satisfied) is paid at a lower rate than interest on any overpayment that results from an advance payment.  See §§ 6603(c), (d)(4), 6611(a), 6621(a)(1); Hill v. Commissioner, T.C. Memo. 2021-121, at *20–21. A remittance generally will not be treated as a deposit unless a taxpayer designates it as such in writing—and in particular, a remittance that is not so designated will be treated as a payment if it is made after the mailing of a notice of deficiency in full or partial satisfaction of the deficiency. See Rev. Proc. 2005-18,  §§ 4.01, 4.05(1), 2005-13 I.R.B. 798, 799–800.” Order, at p. 3.

For the story of Hill, supra, see my blogpost “Three Point Play,” 10/25/21.

Howbeit, Ram & Shak used the term “deposit” colloquially, but IRS’ papers are all over the lot. See Order, at pp. 4-5, and read all the footnotes. By the time you’re through, two Tylenols won’t be enough. Judge Gale will never have to find another way to make a living; he found eight (count ’em, eight) ambiguities in IRS’ beancount submissions, and I doubt he was even breathing hard.

So let IRS clean up its act, and tell Judge Gale if there is an overpayment, and how much, if any.

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