Late filing return with a refund applied to 2023 4th QTR Estimate

[dturner959]

I have a client who did not provide information before the IRS E-filing shutdown for individuals for the 2023 tax season. The client is receiving a refund, however, they will need to make a 4th QTR estimate for a significant amount. The IRS has announced that they will start processing individual returns on January 29th, which is past the January 16th deadline for 4th QTR estimates.

My question is, do you think the IRS would accept the refund amount as a timely filed 4th QTR estimate if I file the 2022 return on January 29th requesting to have the refund applied to the 2023 4th QTR estimate?

[itonewbie]

Yes.  See §301.6513-1(d).

But if your client's 2022 return gets held up for review, the credit elect may not get posted on time depending on when the 2023 return is filed.

[Skylane]

Efile 1/29 and applying refund to 23 is way to go.... (IRS has had the $$ anyway)

@itonewbie  hope you're well.... 

[itonewbie]

Thanks, @Skylane!  Did you end up visiting HK?

[BobKamman]

No.

[Skylane]

We were in HK for a few days in Nov then took cruise south...   Too much traffic.. kind of like LA. 

[BobKamman]

Check the Internal Revenue Manual.  This applies to one situation but it indicates that credit elects are not processed after end of year.

2

The credit-elect posted is less than the original return requested. The UNAPPLD-CR-ELECT field on CC TXMOD displays the amount of unapplied credit elect from the return.

The date is prior to the end of the processing year in which the credit-elect originated

The computer continues to auto-offset as more credit becomes available until the full credit elect amount is satisfied. Example:   A credit elect from 2022 to 2023 is systemically applied thru Dec. 31, 2023. The adjustment must be posted by the end of the year.

https://www.irs.gov/irm/part21/irm_21-006-003r

[itonewbie]

Yeah, HK can get very congested.

The old cruise ship terminal at Ocean Terminal is a lot nicer than the new one at an isolated corner of Kai Tak (which is where the colonial-days airport was and you can still see the runway there).

[itonewbie]

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@BobKamman wrote:

Check the Internal Revenue Manual.  This applies to one situation but it indicates that credit elects are not processed after end of year.

2

The credit-elect posted is less than the original return requested. The UNAPPLD-CR-ELECT field on CC TXMOD displays the amount of unapplied credit elect from the return.

The date is prior to the end of the processing year in which the credit-elect originated

The computer continues to auto-offset as more credit becomes available until the full credit elect amount is satisfied. Example:   A credit elect from 2022 to 2023 is systemically applied thru Dec. 31, 2023. The adjustment must be posted by the end of the year.

https://www.irs.gov/irm/part21/irm_21-006-003r

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That's only in relation to what prefaces that section: "An overpayment is refunded or applied as credit-elect only after all other outstanding obligations are satisfied (spousal obligations, non-tax debts, etc.)."

There are plenty of cases that support the statute and regulations.

[BobKamman]

Let's hope @dturner959 comes back in a couple months and lets us know how it turned out.