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Discussion
In general, a taxpayer making a voluntary payment has the
right to direct its application to whatever tax liability he
chooses.6 Muntwyler v. United States, 703 F.2d 1030, 1032 (7th
Cir. 1983); O’Dell v. United States, 326 F.2d 451, 456 (10th Cir.
1964); Bierhaalder v. Commissioner, T.C. Memo. 1995-307; cf. Rev.
Rul. 73-305, 1973-2 C.B. 43 (if the taxpayer does not provide
specific instructions as to the application of the partial
payment, the Commissioner will apply the payment to tax, penalty,
and interest to the earliest period first).7
Petitioners argue that certain payments made under the
installment agreement were improperly credited to the TFRP
liabilities rather than to their income tax liabilities for the
years in issue. Petitioners allege that they would have
continued to designate their payments to their income tax
liabilities if they had not received respondent’s September 26,
1996, letter. In effect, petitioners contend that respondent
should be equitably estopped from proceeding with collection
6 The payments made pursuant to the installment agreement
herein are voluntary payments. See Amos v. Commissioner, 47 T.C.
65, 69 (1966).
7 Rev. Rul. 73-305, 1973-2 C.B. 43, was superseded by Rev.
Proc. 2002-26, 2002-1 C.B. 746, which provides that unless the
taxpayer provides specific written directions as to the
application of the payment, the Commissioner will apply the
payments that “will serve its best interest.”
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Last modified: May 25, 2011