Newton K. and Kimberly A. McKoin - Page 6

                                        - 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