- 6 -
petitioner to pay 20 percent of his monthly gross receipts to
respondent to “be applied to current year’s estimated tax.”
Payment of estimated tax by a taxpayer constitutes payment on
account of the taxpayer’s current year tax liability as reported
by the taxpayer on the taxpayer’s return. Sec. 6315; see sec.
6654.5 See also In re Ripley, 926 F.2d 440, 441-442 (5th Cir.
1991), for a brief, general discussion of the estimated tax
payment procedure. Once such reported liability is paid, any
excess payment constitutes an overpayment, which may be refunded
to the taxpayer or applied by the Commissioner to any outstanding
liability owed by the taxpayer. See sec. 6402. In this regard,
the Installment Agreement expressly authorizes respondent to
apply any refund that might otherwise be payable to any
outstanding liability covered by the agreement.
Here, petitioner made payments pursuant to the Installment
Agreement in 1997 that respondent properly treated as payments of
estimated tax for 1997. Petitioner then filed his 1997 return
and claimed an overpayment because estimated tax payments (plus
withheld income tax) exceeded his reported tax liability.
Respondent allowed the claim (after adjusting the amount to
correct for certain mathematical or clerical errors made by
petitioner). Then, acting pursuant to section 6402, respondent
5 All section references are to the Internal Revenue Code in
effect for 1997, the taxable year in issue.
Page: Previous 1 2 3 4 5 6 7 Next
Last modified: May 25, 2011