When you send a check with a Form 4868, facts-and-circumstances still head the payment-vs-deposit playlist, so Sir Eddie Elgar needs to write an appropriate march. IRS wants everything sent in with a Form 4868 to be a payment, but ex-Ch J L Paige (“Iron Fist”) Marvel won’t go there. No reason to overrule long-standing precedent, despite some CCA mutterings to the contrary.

Daniel Serfaty, Docket No. 3673-19, filed 8/8/22, is a wee bit casual about filing and paying. After Daniel paid estimateds for year-at-issue (all statutorily deemed paid as of April 15), his trusty CPA sent in a Form 4868 with another $110K, showing an estimated tax due greater than what the late-filed final return showed. Meantime, IRS hit Daniel with a SFR and a SNOD, which Daniel petitioned, but IRS folded when they got the late-filed return. So Daniel owes nothing.

Except Daniel wants his $110K back, as the estimateds plus some withholding covered his agreed-upon tax bill.

IRS is trying for one-size-fits-all solutions, like Mandy Mobley Li  wiping out whstleblowing. Here, they want everything accompanying a 4868 to start the three-year Section 6511 lookback.

The law has been that whether a remittance to IRS is a payment or a deposit depends upon facts and circumstances, chiefest of which is whether a written statement accompanied the remittance, stating that it is a deposit. Deposits are refundable on demand if not applied to assessed tax. Some CCAs have said otherwise, but Daniel is Golsenized to 1 Cr, and they haven’t.

“A taxpayer’s intent to have his remittance treated as a deposits established by all of the relevant facts and circumstances. A disorderly or random remittance—one made by a taxpayer ‘arbitrarily, without regard to an orderly, apparent, or reasonably possible ultimate tax liability, and that is made prior to any determination by [the Commissioner] of the taxpayer’s tax liability’—will generally be regarded as a deposit. By contrast, a remittance is not random and is generally considered a payment when the taxpayer makes the remittance voluntarily based on a bona fide estimate of an uncontested tax liability. In order to obtain an extension of time to file, a taxpayer must show ‘the full amount properly estimated as tax’ on his Form 4868 application. Treas. Reg. § 1.6081-4(b)(4). Although a taxpayer is not required to make a payment of the amount estimated in order to obtain an extension of time to file, cf. Treas. Reg. § 1.6081-4(b), an extension of time to file does not operate as an extension of time to pay. Treas. Reg. § 1.6081-4(c).

“Petitioner, through his accountant, made a voluntary remittance of an amount that he represented on his Form 4868 to be his estimated income tax liability… and he did so without making any statement indicating that the remittance was intended to be a deposit with respect to his … federal income tax liability. See § 6603. Under these facts, we have no trouble concluding that the remittance was not random. The mere fact that petitioner’s estimate was inaccurate does not change that. Indeed, demanding precise calculations of tax on Forms 4868 would obviate the need for taxpayers to request such extensions.” Order, at p. 6. (Citations omitted).

Sure there can be deposits. “Additionally, although no regulations have been promulgated under section 6603 to provide definitive guidance on the exclusive means by which a taxpayer may make a deposit, guidance from the Commissioner indicates that a taxpayer intending to make a deposit may do so by attaching a written statement to that effect to his remittance. Rev. Proc. 2005-18, 2005-13 I.R.B. 798.” Order, at p. 7.

Neither Daniel nor trusty CPA breathed Word One about the $110K being a deposit, and IRS promptly applied it to Daniel’s account. Daniel waited five (count ’em, five) years to claim the $110K was a deposit. So no factual dispute, and IRS gets to keep Daniel’s $110K.

Takeaway (if you need one): Write “DEPOSIT” on check, 4868, and send accompanying billet doux similarly endorsed.