26 U.S.C. § 6425 — Adjustment of overpayment of estimated income tax by corporation

submitted 58 years ago by Pub. L. 90-364 to r/title-26-INTERNAL-REVENUE-CODE · 609 words · no verdicts yet

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A corporation that overpaid its estimated income tax can apply for an adjustment before filing its tax return. The Secretary reviews the application within 45 days and credits or refunds the overpayment. The adjustment must be at least 10 percent of the estimated tax and at least $500.

(a) A corporation can ask for an adjustment if it overpaid its estimated income tax. It must file this application after the tax year ends. It must file on or before the 15th day of the fourth month after that, and before filing its actual tax return. This application is not the same as a claim for a credit or refund. The application must be signed in the way section 6065 requires, and filed as regulations require. It must state the estimated tax the corporation paid, and what it now estimates its tax liability to be. It must also state the amount of the requested adjustment, and any other information regulations require. (b) The Secretary has 45 days from filing to do a limited check of the application. The Secretary looks for mistakes or missing information, and decides the adjustment amount from what the application and this check show. The Secretary can reject an application with major errors that can't be fixed within those 45 days. Within the same 45 days, the Secretary can apply the adjustment against other taxes the corporation owes, and must refund the rest to the corporation. No adjustment is allowed unless it is at least 10 percent of the corporation's estimated tax liability, and at least $500. Once granted, the adjustment counts as reducing the estimated tax paid, effective the day the credit or refund happens. (c) "Income tax liability" here means specific corporate taxes owed, including regular tax, alternative taxes, and the base erosion tax, minus certain tax credits. "The amount of an adjustment" means how much the corporation's estimated tax payments exceeded what it now estimates it actually owes. (d) If a corporation paid its estimated tax, or plans to file its return, on a consolidated basis with other companies, this section still applies. But it applies only to the extent, and under the conditions, that the Secretary sets by regulation.

facts

- 26 U.S.C. § 6425 addresses the "Adjustment of overpayment of estimated income tax by corporation," located within the Internal Revenue Code. - Originally enacted by Pub. L. 90-364, title I, § 103(d)(1), on June 28, 1968 (82 Stat. 262). - The statute has been amended 10 times, with the most recent amendment via Pub. L. 117-169, title I, § 10101(a)(4)(F), on August 16, 2022. - The section contains 609 words and is organized into four subsections: (a) Application of adjustment, (b) Allowance of adjustment, (c) Definitions, and (d) Consolidated returns. - The source-credit note cites 9 distinct Public Laws reflecting the amendment history from 1968 through 2022.

the actual law source: uscode.house.gov ↗public domain

(a) Application of adjustment

(1) Time for filing

A corporation may, after the close of the taxable year and on or before the 15th day of the fourth month thereafter, and before the day on which it files a return for such taxable year, file an application for an adjustment of an overpayment by it of estimated income tax for such taxable year. An application under this subsection shall not constitute a claim for credit or refund.

(2) Form of application, etc.

An application under this subsection shall be verified in the manner prescribed by section 6065 in the case of a return of the taxpayer, and shall be filed in the manner and form required by regulations prescribed by the Secretary. The application shall set forth—

(A)

the estimated income tax paid by the corporation during the taxable year,

(B)

the amount which, at the time of filing the application, the corporation estimates as its income tax liability for the taxable year,

(C)

the amount of the adjustment, and

(D)

such other information for purposes of carrying out the provisions of this section as may be required by such regulations.

(b) Allowance of adjustment

(1) Limited examination of application

Within a period of 45 days from the date on which an application for an adjustment is filed under subsection (a), the Secretary shall make, to the extent he deems practicable in such period, a limited examination of the application to discover omissions and errors therein, and shall determine the amount of the adjustment upon the basis of the application and the examination; except that the Secretary may disallow, without further action, any application which he finds contains material omissions or errors which he deems cannot be corrected within such 45 days.

(2) Adjustment credited or refunded

The Secretary, within the 45-day period referred to in paragraph (1), may credit the amount of the adjustment against any liability in respect of an internal revenue tax on the part of the corporation and shall refund the remainder to the corporation.

(3) Limitation

No application under this section shall be allowed unless the amount of the adjustment equals or exceeds (A) 10 percent of the amount estimated by the corporation on its application as its income tax liability for the taxable year, and (B) $500.

(4) Effect of adjustment

For purposes of this title (other than section 6655), any adjustment under this section shall be treated as a reduction, in the estimated income tax paid, made on the day the credit is allowed or the refund is paid.

For purposes of this section and section 6655(h) (relating to excessive adjustment)—

(1)

The term “income tax liability” means the excess of—

(A)

the sum of—

(i)

the tax imposed by section 11 or subchapter L of chapter 1, whichever is applicable, plus

(ii)

the tax imposed by section 55, plus

(iii)

the tax imposed by section 59A, over

(B)

the credits against tax provided by part IV of subchapter A of chapter 1.

(2)

The amount of an adjustment under this section is equal to the excess of—

(A)

the estimated income tax paid by the corporation during the taxable year, over

(B)

the amount which, at the time of filing the application, the corporation estimates as its income tax liability for the taxable year.

(d) Consolidated returns

If the corporation seeking an adjustment under this section paid its estimated income tax on a consolidated basis or expects to make a consolidated return for the taxable year, this section shall apply only to such extent and subject to such conditions, limitations, and exceptions as the Secretary may by regulations prescribe.

Source credit: (Added Pub. L. 90–364, title I, § 103(d)(1), June 28, 1968, 82 Stat. 262; amended Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 99–499, title V, § 516(b)(4)(C), Oct. 17, 1986, 100 Stat. 1771; Pub. L. 99–514, title VII, § 701(d)(2), Oct. 22, 1986, 100 Stat. 2342; Pub. L. 100–203, title X, § 10301(b)(4), Dec. 22, 1987, 101 Stat. 1330–429; Pub. L. 113–295, div. A, title II, § 221(a)(12)(J), Dec. 19, 2014, 128 Stat. 4039; Pub. L. 114–41, title II, § 2006(a)(2)(E), July 31, 2015, 129 Stat. 457; Pub. L. 115–97, title I, §§ 12001(b)(17), 13001(b)(2)(P), 14401(d)(3), Dec. 22, 2017, 131 Stat. 2094, 2097, 2233; Pub. L. 115–141, div. U, title IV, § 401(a)(293), Mar. 23, 2018, 132 Stat. 1198; Pub. L. 117–169, title I, § 10101(a)(4)(F), Aug. 16, 2022, 136 Stat. 1822.)

history & why it existsrecord from the source credit

1968Enacted · Pub. L. 90-364 · 82 Stat. 262
1976Amended · Pub. L. 94-455 · 90 Stat. 1834
1986Amended · Pub. L. 99-499 · 100 Stat. 1771
1986Amended · Pub. L. 99-514 · 100 Stat. 2342
1987Amended · Pub. L. 100-203 · 101 Stat. 1330
2014Amended · Pub. L. 113-295 · 128 Stat. 4039
2015Amended · Pub. L. 114-41 · 129 Stat. 457
2017Amended · Pub. L. 115-97 · 131 Stat. 2094, 2097, 2233
2018Amended · Pub. L. 115-141 · 132 Stat. 1198
2022Amended · Pub. L. 117-169 · 136 Stat. 1822

The source credit shows that this section was added by Public Law 90–364, title I, § 103(d)(1), enacted June 28, 1968, and codified at 82 Stat. 262. The credit further records ten subsequent amendments spanning from 1976 through 2022, including changes made by the Tax Reform Act of 1976 (Pub. L. 94–455), several 1986 and 1987 enactments, and more recent revisions in 2014, 2015, 2017, 2018, and 2022. This pattern indicates a provision that has been repeatedly revisited by Congress to conform its cross-references and terminology to changes elsewhere in the tax code, most likely to align with revised tax computation provisions and credit structures referenced in subsection (c). Historical context: Public Law 90–364 was a revenue measure enacted in 1968, a period when Congress was adjusting federal tax administration and revenue-raising mechanisms, including estimated tax procedures for corporations. Provisions of this kind are generally understood to have been designed to give corporations a mechanism for correcting overpayments of estimated income tax without waiting for the formal refund-claim process, thereby easing administrative burdens for both taxpayers and the tax authority. However, the record provided does not include committee reports or other legislative history explaining the specific reasoning behind this section's enactment or its many subsequent amendments. Accordingly, beyond the general purpose commonly attributed to estimated-tax adjustment provisions of this era, the specific legislative intent behind § 6425 and its amendments cannot be established from the materials at hand.

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