USC Subchapter A

in effect

26 U.S.C. § 6401 Amounts treated as overpayments

(a) Assessment and collection after limitation period.The term “overpayment” includes that part of the amount of the payment of any internal revenue tax which is assessed or collected after the expiration of the period of limitation properly applicable thereto. (b) Excessive credits(1) In generalIf the amount allowable as credits under subpart C of part IV of subchapter A of chapter 1 (relating to refundable credits) exceeds the tax imposed by subtitle A (reduced by the credits allowable under subparts A, B, D, and G of such part IV), the amount of such excess shall be considered an overpayment. (2) Special rule for credit under section 33For purposes of paragraph (1), any credit allowed under section 33 (relating to withholding of tax on nonresident aliens and on foreign corporations) for any taxable year shall be treated as a credit allowable under subpart C of part IV of subchapter A of chapter 1 only if an election under subsection (g) or (h) of section 6013 is in effect for such taxable year. The preceding sentence shall not apply to any credit so allowed by reason of section 1446. (c) Rule where no tax liabilityAn amount paid as tax shall not be considered not to constitute an overpayment solely by reason of the fact that there was no tax liability in respect of which such amount was paid.

26 U.S.C. § 6402 Authority to make credits or refunds

(a) General ruleIn the case of any overpayment, the Secretary, within the applicable period of limitations, may credit the amount of such overpayment, including any interest allowed thereon, against any liability in respect of an internal revenue tax on the part of the person who made the overpayment and shall, subject to subsections (c), (d), (e), and (f), refund any balance to such person. (b) Credits against estimated taxThe Secretary is authorized to prescribe regulations providing for the crediting against the estimated income tax for any taxable year of the amount determined by the taxpayer or the Secretary to be an overpayment of the income tax for a preceding taxable year. (c) Offset of past-due support against overpaymentsThe amount of any overpayment to be refunded to the person making the overpayment shall be reduced by the amount of any past-due support (as defined in section 464(c) of the Social Security Act) owed by that person of which the Secretary has been notified by a State in accordance with section 464 of such Act. The Secretary shall remit the amount by which the overpayment is so reduced to the State collecting such support and notify the person making the overpayment that so much of the overpayment as was necessary to satisfy his obligation for past-due support has been paid to the State. The Secretary shall apply a reduction under this subsection first to an amount certified by the State as past due support under section 464 of the Social Security Act before any other reductions allowed by law. This subsection shall be applied to an overpayment prior to its being credited to a person’s future liability for an internal revenue tax. For purposes of this subsection, any reference to a State shall include a reference to any Indian tribe or tribal organization receiving a grant under section 455(f) of the Social Security Act. (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 offsetAny overpayment by a person shall be reduced pursuant to this subsection after such overpayment is reduced pursuant to subsection (c) with respect to past-due support collected pursuant to an assignment under section 408(a)(3) of the Social Security Act (42 U.S.C. 608(a)(3)) and before such overpayment is reduced pursuant to subsections (e) and (f) and before such overpayment is credited to the future liability for tax of such person pursuant to subsection (b). If the Secretary receives notice from a Federal agency or agencies of more than one debt subject to paragraph (1) that is owed by a person to such agency or agencies, any overpayment by such person shall be applied against such debts in the order in which such debts accrued. (3) Treatment of OASDI overpayments(A) RequirementsParagraph (1) shall apply with respect to an OASDI overpayment only if the requirements of paragraphs (1) and (2) of section 3720A(f) of title 31, United States Code, are met with respect to such overpayment. (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 returnIf the other person filing a joint return with the person owing the OASDI overpayment takes appropriate action to secure his or her proper share of the refund subject to reduction under this subsection, the Secretary shall pay such share to such other person. The Secretary shall deduct the amount of such payment from amounts which are derived from subsequent reductions in refunds under this subsection and are payable to a trust fund referred to in subparagraph (C). (C) Deposit of amount of reduction into appropriate trust fundIn lieu of payment, pursuant to paragraph (1)(B), of the amount of any reduction under this subsection to the Commissioner of Social Security, the Secretary shall deposit such amount in the Federal Old-Age and Survivors Insurance Trust Fund or the Federal Disability Insurance Trust Fund, whichever is certified to the Secretary as appropriate by the Commissioner of Social Security. (D) OASDI overpaymentFor purposes of this paragraph, the term “OASDI overpayment” means any overpayment of benefits made to an individual under title II of the Social Security Act. (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 offsetParagraph (1) shall apply to an overpayment by any person for a taxable year only if the address shown on the Federal return for such taxable year of the overpayment is an address within the State seeking the 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) RegulationsThe Secretary shall issue regulations prescribing the time and manner in which States must submit notices of past-due, legally enforceable State income tax obligations and the necessary information that must be contained in or accompany such notices. The regulations shall specify the types of State income taxes and the minimum amount of debt to which the reduction procedure established by paragraph (1) may be applied. The regulations may require States to pay a fee to reimburse the Secretary for the cost of applying such procedure. Any fee paid to the Secretary pursuant to the preceding sentence shall be used to reimburse appropriations which bore all or part of the cost of applying such procedure. (7) Erroneous payment to StateAny State receiving notice from the Secretary that an erroneous payment has been made to such State under paragraph (1) shall pay promptly to the Secretary, in accordance with such regulations as the Secretary may prescribe, an amount equal to the amount of such erroneous payment (without regard to whether any other amounts payable to such State under such paragraph have been paid to such 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; (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 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 (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 covered unemployment compensation debt. (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 (C) any penalties and interest assessed on such debt. (5) Regulations(A) In generalThe Secretary may issue regulations prescribing the time and manner in which States must submit notices of covered unemployment compensation debt and the necessary information that must be contained in or accompany such notices. The regulations may specify the minimum amount of debt to which the reduction procedure established by paragraph (1) may be applied. (B) Fee payable to SecretaryThe regulations may require States to pay a fee to the Secretary, which may be deducted from amounts collected, to reimburse the Secretary for the cost of applying such procedure. Any fee paid to the Secretary pursuant to the preceding sentence shall be used to reimburse appropriations which bore all or part of the cost of applying such procedure. (C) Submission of notices through Secretary of LaborThe regulations may include a requirement that States submit notices of covered unemployment compensation debt to the Secretary via the Secretary of Labor in accordance with procedures established by the Secretary of Labor. Such procedures may require States to pay a fee to the Secretary of Labor to reimburse the Secretary of Labor for the costs of applying this subsection. Any such fee shall be established in consultation with the Secretary of the Treasury. Any fee paid to the Secretary of Labor may be deducted from amounts collected and shall be used to reimburse the appropriation account which bore all or part of the cost of applying this subsection. (6) Erroneous payment to StateAny State receiving notice from the Secretary that an erroneous payment has been made to such State under paragraph (1) shall pay promptly to the Secretary, in accordance with such regulations as the Secretary may prescribe, an amount equal to the amount of such erroneous payment (without regard to whether any other amounts payable to such State under such paragraph have been paid to such State). (g) Review of reductionsNo court of the United States shall have jurisdiction to hear any action, whether legal or equitable, brought to restrain or review a reduction authorized by subsection (c), (d), (e), or (f). No such reduction shall be subject to review by the Secretary in an administrative proceeding. No action brought against the United States to recover the amount of any such reduction shall be considered to be a suit for refund of tax. This subsection does not preclude any legal, equitable, or administrative action against the Federal agency or State to which the amount of such reduction was paid or any such action against the Commissioner of Social Security which is otherwise available with respect to recoveries of overpayments of benefits under section 204 of the Social Security Act. (h) Federal agencyFor purposes of this section, the term “Federal agency” means a department, agency, or instrumentality of the United States, and includes a Government corporation (as such term is defined in section 103 of title 5, United States Code). (i) Treatment of payments to StatesThe Secretary may provide that, for purposes of determining interest, the payment of any amount withheld under subsection (c), (e), or (f) to a State shall be treated as a payment to the person or persons making the overpayment. (j) Cross referenceFor procedures relating to agency notification of the Secretary, see section 3721 of title 31, United States Code. (k) Refunds to certain fiduciaries of insolvent members of affiliated groupsNotwithstanding any other provision of law, in the case of an insolvent corporation which is a member of an affiliated group of corporations filing a consolidated return for any taxable year and which is subject to a statutory or court-appointed fiduciary, the Secretary may by regulation provide that any refund for such taxable year may be paid on behalf of such insolvent corporation to such fiduciary to the extent that the Secretary determines that the refund is attributable to losses or credits of such insolvent corporation. (l) Explanation of reason for refund disallowanceIn the case of a disallowance of a claim for refund, the Secretary shall provide the taxpayer with an explanation for such disallowance. (m) Earliest date for certain refundsNo credit or refund of an overpayment for a taxable year shall be made to a taxpayer before the 15th day of the second month following the close of such taxable year if a credit is allowed to such taxpayer under section 24 (by reason of subsection (d) thereof) or 32 for such taxable year. (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.

26 U.S.C. § 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.

26 U.S.C. § 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 taxesNo claim for abatement shall be filed by a taxpayer in respect of an assessment of any tax imposed under subtitle A or B. (c) Small tax balancesThe Secretary is authorized to abate the unpaid portion of the assessment of any tax, or any liability in respect thereof, if the Secretary determines under uniform rules prescribed by the Secretary that the administration and collection costs involved would not warrant collection of the amount due. (d) Assessments attributable to certain mathematical errors by Internal Revenue ServiceIn the case of an assessment of any tax imposed by chapter 1 attributable in whole or in part to a mathematical error described in section 6213(g)(2)(A), if the return was prepared by an officer or employee of the Internal Revenue Service acting in his official capacity to provide assistance to taxpayers in the preparation of income tax returns, the Secretary is authorized to abate the assessment of all or any part of any interest on such deficiency for any period ending on or before the 30th day following the date of notice and demand by the Secretary for payment of the deficiency. (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 generalThe Secretary shall abate any portion of any penalty or addition to tax attributable to erroneous advice furnished to the taxpayer in writing by an officer or employee of the Internal Revenue Service, acting in such officer’s or employee’s official capacity. (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 applicationThis paragraph shall be applied separately with respect to each item or adjustment. 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; (C) any interest, penalty, addition to tax, or additional amount with respect to any tax liability shown on the return; (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 generalThe Tax Court shall have jurisdiction over any action brought by a taxpayer who meets the requirements referred to in section 7430(c)(4)(A)(ii) to determine whether the Secretary’s failure to abate interest under this section was an abuse of discretion, and may order an abatement, if such action is brought—(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 mailingRules similar to the rules of section 6213 shall apply for purposes of determining the date of the mailing referred to in paragraph (1). (B) ReliefRules similar to the rules of section 6512(b) shall apply for purposes of this subsection. (C) ReviewAn order of the Tax Court under this subsection shall be reviewable in the same manner as a decision of the Tax Court, but only with respect to the matters determined in such order. (i) Cross referenceFor authority to suspend running of interest, etc. by reason of Presidentially declared disaster or terroristic or military action, see section 7508A.

26 U.S.C. § 6405 Reports of refunds and credits

(a) By Treasury to Joint CommitteeNo refund or credit of any income, war profits, excess profits, estate, or gift tax, or any tax imposed with respect to public charities, private foundations, operators’ trust funds, pension plans, or real estate investment trusts under chapter 41, 42, 43, or 44, in excess of $2,000,000 ($5,000,000 in the case of a C corporation) shall be made until after the expiration of 30 days from the date upon which a report giving the name of the person to whom the refund or credit is to be made, the amount of such refund or credit, and a summary of the facts and the decision of the Secretary, is submitted to the Joint Committee on Taxation. (b) Tentative adjustmentsAny credit or refund allowed or made under section 6411 shall be made without regard to the provisions of subsection (a) of this section. In any such case, if the credit or refund, reduced by any deficiency in such tax thereafter assessed and by deficiencies in any other tax resulting from adjustments reflected in the determination of the credit or refund, is in excess of $2,000,000 ($5,000,000 in the case of a C corporation), there shall be submitted to such committee a report containing the matter specified in subsection (a) at such time after the making of the credit or refund as the Secretary shall determine the correct amount of the tax. (c) Refunds attributable to certain disaster lossesIf any refund or credit of income taxes is attributable to the taxpayer’s election under section 165(i) to deduct a disaster loss for the taxable year immediately preceding the taxable year in which the disaster occurred, the Secretary is authorized in his discretion to make the refund or credit, to the extent attributable to such election, without regard to the provisions of subsection (a) of this section. If such refund or credit is made without regard to subsection (a), there shall thereafter be submitted to such Joint Committee a report containing the matter specified in subsection (a) as soon as the Secretary shall determine the correct amount of the tax for the taxable year for which the refund or credit is made.

26 U.S.C. § 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.

26 U.S.C. § 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.

26 U.S.C. § 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.

26 U.S.C. § 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.