- 7 - 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 Rul. 73-305, 1973-2 C.B. 43, was superseded by Rev.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.”Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011