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20.2.4.2
(03-01-2002)
Definition of Overpayment
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An overpayment includes any amount that is:
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erroneously assessed and collected;
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assessed and collected after the applicable period of limitation has expired;
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a refundable credit that exceeds the tax liability against which the credit is allowed;
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tax withheld at the source that exceeds the tax liability against which the withheld tax is allowed as a credit;
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paid in response to a proposed examination assessment that is later determined to be in excess of the liability for tax, penalty
and interest due for the year in which submitted (see Rev. Proc. 84–58);
Example:
A taxpayer fully pays a deficiency including tax, penalties, and interest. It is later determined by Appeals that part of
the tax, all of the penalties, and part of the interest should be abated. In this situation, the abatements result in an overpayment.
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an excess payment of tax, penalty, addition to tax, or interest,
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an amount paid after a 90 day letter was mailed that is in excess of the finally determined deficiency.
Note:
If the taxpayer files a petition to Tax Court, the court must determine (as a part of its decision) that there is an overpayment
and that such portion was paid after the notice of deficiency was mailed.
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