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20.2.4.3
(03-01-2002)
Availability Dates for Overpayments
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Prepaid credits (payments made before the due date of the return) are deemed paid as of the due date of the return (determined
without regard to any extension of time to file) whether the return is timely or late filed.
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Prepaid credits are available for refund or offset as of the return due date.
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Interest allowed on overpayments based on prepaid credits can accrue interest no earlier than the due date of the return.—IRC section 6513(b)
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For late filed returns, interest is allowed from the received date of the return.—IRC section 6611(b)(3)
Exception:
Interest is allowed on excess prepaid credits on delinquent returns filed on or before October 3, 1982, from the due date of the return for both refunds and offsets.
Example:
A taxpayer late files his Forms 1040 for 1998, 1999, and 2000 on August 16, 2001. There is an overpayment on the 1999 tax
period that fully pays the balances owing on 1998 and 2000. The credit from 1999 is available to be applied to the balance
on 1998 on April 15, 2000. Debit interest runs from April 15, 1999 to April 15, 2000 on the 1998 balance when it is fully
paid by offset of the taxpayer's 1999 overpayment. The overpayment from 1999 is available to pay the 2000 balance in full
on April 15, 2001. However, no credit interest can be allowed on the 1999 overpayment until it is filed. Therefore, credit
interest on the 1999 overpayment remaining after both 1998 and 2000 are fully paid begins on August 16, 2001.
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Payments made after the return due date are available for refund or offset as of the received date of the payment or the delinquent return received
date, whichever is later..
| If the return is |
Then |
| timely filed |
compute interest from the payment received date |
| late filed |
compute interest from the later of the payment received date or the return received date |
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If a return is postmarked (U.S. or Designated Delivery Service) on or before the due date, the return is considered timely
filed.—IRC section 7502(a)
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A return filed by an extended due date is timely filed.
Caution:
This extension does not apply to payments. If a payment is received within the extended due date, but after the normal return
due date, the payment is delinquent.
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A Substitute For Return (SFR) (IRC IRC section 6020(b)) is a return prepared by the Service. No credit interest is allowed
until a delinquent return or signed waiver is received by the Service. Then, the overpayment availability date is the later
of:
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the payment received date, or
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the delinquent return received date, or
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the date the taxpayer signed an agreement to make the assessment.
Note:
If the taxpayer does not provide a return or signed waiver, input TC 770 .00 to prevent credit interest from being paid.
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See LEM 20.2.
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