Printer Friendly
The Free Library
22,728,043 articles and books

Subsequently Determined Deficiency.



If an overpayment o·ver·pay  
v. o·ver·paid , o·ver·pay·ing, o·ver·pays

v.tr.
1. To pay (a party) too much.

2. To pay an amount in excess of (a sum due).

v.intr.
To pay too much.
 claimed on a return is credited to the succeeding year's estimated tax Federal and state tax laws require a quarterly payment of estimated taxes due from corporations, trusts, estates, non-wage employees, and wage employees with income not subject to withholding.  or refunded without interest, from what date will interest be assessed on a subsequently determined deficiency A shortage or insufficiency. The amount by which federal Income Tax due exceeds the amount reported by the taxpayer on his or her return; also, the amount owed by a taxpayer who has not filed a return.  for the overpayment return year?

In Situation 1 of Rev REV Revolution
REV Reverse
REV Reverend
REV Revision
REV Review
REV Revised
REV Revelations (bible)
REV Reversal
REV Revolver (Beatles album)
REV Reverendo
. Rul. 99-40, X Corp. is a calendar-year taxpayer. For 1995, X made timely estimated tax payments of $100. On March 15,1996, X filed an extension request and paid $120. On Sept. 15, 1996, X filed a 1995 Form 1120, showing a tax liability of $210 and elected e·lect  
v. e·lect·ed, e·lect·ing, e·lects

v.tr.
1. To select by vote for an office or for membership.

2. To pick out; select: elect an art course.
 to have the $10 overpayment credited against its 1996 estimated tax. The $10 overpayment was deemed to arise on March 15, 1996. X's required estimated tax for 1996 was $100. To avoid the addition to tax, for underpayment of estimated tax for 1996, X was required to make payments of $25 each on April 15, 1996, June June: see month.  15, 1996, Sept. 15, 1996, and Dec. 15, 1996. X timely made the required $25 payments in April and June. X made a $15 payment on September September: see month.  15. In 1998, the Service determined that X's correct 1995 tax was $215, resulting in a $5 deficiency.

Rev. Rul. 99-40 concludes that interest on the $5 1995 deficiency runs from Sept. 15, 1996, the date on which the $10 overpayment was applied to X's third installment of 1996 estimated taxes. The overpayment was not needed to satisfy an installment of estimated tax before Sept. 15, 1996.

The facts are the same in Situation 2, except that X paid $23 on April 15, 1996 and $14 on June 15, 1996, instead of the required $25 payments on each of these dates.

Rev. Rul. 99-40 holds that interest on the $5 1995 deficiency runs from June 15, 1996, the date on which the overpayment is applied to X's 1996 estimated taxes; $2 of the overpayment is applied to the April 15 installment of 1996 estimated tax. The remaining $8 of the overpayment is applied to X's June 15 installment of 1996 estimated tax. Because the $8 portion of the overpayment exceeded the subsequently determined deficiency of $5, interest does not begin to run for 1995 before the date that portion was applied to X's 1996 estimated taxes.

In Situation 3, individual A is a calendar-year taxpayer. In 1995, A made timely estimated tax payments of $100. On April 15, 1996, A filed for an extension. On Aug. 15, 1996, A filed a 1995 Form 1040, showing tax due of $80, and requested a refund TO REFUND. To pay back by the party who has received it, to the party who has paid it, money which ought not to have been paid.
     2. On a deficiency of assets, executors and administrators cum testamento annexo, are entitled to have refunded to them legacies
 of the $20 overpayment. The overpayment was deemed to arise on April 15, 1996. The refund was made within 45 days of the date the timely return was fried 1. (hardware) fried - Non-working due to hardware failure; burnt out. Especially used of hardware brought down by a "power glitch" (see glitch), drop-outs, a short, or some other electrical event. , by check dated Sept. 14, 1996. In 1998, the Service determined that the correct tax was $85, resulting in a $5 deficiency.

According to according to
prep.
1. As stated or indicated by; on the authority of: according to historians.

2. In keeping with: according to instructions.

3.
 Rev. Rul. 99-40, interest on the $5 deficiency runs from Sept. 14, 1996. Although A's 1995 taxes were due on April 15, 1996, they were not underpaid un·der·paid  
v.
Past tense and past participle of underpay.


underpaid
Adjective

not paid as much as the job deserves

underpaid adj
 until the $20 was refunded without interest to A on Sept. 14, 1996.

The facts are the same in Situation 4, except that A's correct tax liability was $105, resulting in a $25 deficiency.

The ruling concludes that interest runs from Sept. 14, 1996, on $20 of the deficiency, and from April 15, 1996, on the remaining $5 of the deficiency. Because A's 1995 taxes of $105 were due on April 15, 1996, and A had only paid $100 as of that date, A's 1995 taxes were underpaid by $5 on April 15, 1996. However, A was not underpaid as to the $20 until that amount was refunded to A on Sept. 14, 1996.

In all four situations, the estimated tax rules in effect for the tax year for which the election to credit a return overpayment is effective are used to determine when the overpayment is applied to that tax year's estimated taxes and, thus, for determining when interest begins to run on the subsequently determined deficiency.

Rev. Rul. 99-40 concludes that, when a taxpayer reports an overpayment on its income tax return, interest will be assessed on that portion of a subsequently determined deficiency for the overpayment return year that is less than or equal to the overpayment as of(1) the date on which the Service refunds the overpayment without interest or (2) the date on which the overpayment is applied to the succeeding year's estimated taxes. Interest will be assessed on any remaining portion of the deficiency from the original due date of the tax for the overpayment return year.

Rev. Rul. 99-40 supersedes Rev. Ruls. 88-98, 84-58 and 77-475, but will not be applied adversely to a taxpayer that designated an overpayment to apply to an installment of estimated tax in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[]

As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh.
 with Rev. Rul. 84-58 before Oct. 4, 1999.
COPYRIGHT 1999 American Institute of CPA's
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1999, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

 Reader Opinion

Title:

Comment:



 

Article Details
Printer friendly Cite/link Email Feedback
Author:Laffie, Lesli S.
Publication:The Tax Adviser
Date:Nov 1, 1999
Words:801
Previous Article:Electing to aggregate rental real estate activities for real estate professionals.
Next Article:Quick and Easy State Tax Research.



Related Articles
Temporary and proposed "hot interest" regulations under section 6621(c).
Practitioners beware - use of Form 1045 or 1139 may create unexpected liability.
Beware of hot interest.
Overpayments credited to estimated tax.
IRS Issues Guidance as to Interest on Overpayments and Subsequently Determined Deficiencies.
Applicability of sec. 6662 accuracy-related penalties to refund claims.
The tax is assessed, not the taxpayer.
Payment strategy to reduce interest costs on IRS settlements.
IRS changes procedures for equitable innocent spouse cases.
Three states "high risk" for NCLB teacher plans.

Terms of use | Copyright © 2014 Farlex, Inc. | Feedback | For webmasters