Source: http://askcreditcard.com/2012/05/22/no-refund-of-extension-overpayment-followed-by-a-code-%C2%A76166-election/
Timestamp: 2018-08-16 09:01:38
Document Index: 350019758

Matched Legal Cases: ['§6166', '§6166', '§6166', '§6402', '§6402', '§6403', '§6403', '§6403', '§ 6166', '§ 6402', '§ 6166']

No Refund Of Extension Overpayment Followed By A Code §6166 Election – Askcreditcard.com
If an estate files to extend the due date of its Form 706 estate tax return, it can elect to defer the portion of the estimated estate tax that will be deferred pursuant to its Code §6166 election. It does not make the election itself until it files the Form 706 (prior to the expiration of the extended due date period).
This was the issue before the District Court in the recent case of Estate of Donald McNeely. Interestingly, when the extension payment was made, the taxpayer attempted to specifically allocate the payment solely to the nonexempt portion via an accompanying letter. It sought a refund of the excess of the extension payment over the tax attributable to the nondeferred portion on the Form 706.
The District Court held that the excess taxes on the nondeferred portion of $1.979 million need not be refunded by the IRS to the estate, but could instead be applied to the taxes that were otherwise eligible for deferral under Code §6166 as the installment payments became due. The court based its decision on Code §6402 which reads:
The court also noted that even if Code §6402 did not apply on the theory that there was no “overpayment” (a disputed issue in the case), then Code §6403 would allow for a similar result. Code §6403 provides:
The estate made three interesting arguments to support its claim for refund: (1) that its designation of the estimated payment as payment for the nondeferred portion of its estate tax liability, and the IRS’s acceptance of that payment, bound the IRS to that designation and required the IRS to refund the excess amount, (2) that §6403 does not apply because the estate paid prior to making the § 6166 election, and (3) that § 6402 requires a refund of the overpayment, rather than a credit, in recognition of the Estate’s special rights to defer payment under § 6166. None of those arguments was able to persuade the court to allow the refund.
Estate of Donald McNeely, (DC MN 06/12/2014) 113 AFTR 2d ¶ 2014-930
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