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Tax Payment Posted Incorrectly

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Level 1

Extension payment not posted corrrectly, only part of it.  Rest was applied to a previous year even thought the year 2018 and Form 1040 was written on the check which I thought meant the IRS could not apply it to a previous year.  Need the Code Section or something to back this up.

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Level 12

Revenue Procedure 2002-26.

 If additional taxes, penalty, and interest for one or more taxable periods have been assessed against a taxpayer (or have been mutually agreed to as to the amount and liability but are unassessed) at the time the taxpayer voluntarily tenders a partial payment that is accepted by the Service and the taxpayer provides specific written directions as to the application of the payment, the Service will apply the payment in accordance with those directions.

 

So the taxpayer just needs to contact the IRS to correct it, preferably with proof of the "specific written directions" for how to apply it.

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Level 13

This is October 2020. There is no filing for an Extension for 2018 at this time. 2018 is a previous year.

Can you be more specific?

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Level 12

Revenue Procedure 2002-26.

 If additional taxes, penalty, and interest for one or more taxable periods have been assessed against a taxpayer (or have been mutually agreed to as to the amount and liability but are unassessed) at the time the taxpayer voluntarily tenders a partial payment that is accepted by the Service and the taxpayer provides specific written directions as to the application of the payment, the Service will apply the payment in accordance with those directions.

 

So the taxpayer just needs to contact the IRS to correct it, preferably with proof of the "specific written directions" for how to apply it.

View solution in original post

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Level 11

I don't think a notation on a check qualifies as a "specific written direction as to the application of the payment" -- especially if the payment is being sent to a private lockbox, as extension payments are supposed to be.  There is obviously more to this story than what we have been told.  

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Level 1

He did owe for previous years, which is why I put specific instructions on the check and included the extension form.  I did not want it posted to the previous years to avoid penalties for 2018.   It was paid on April 15, 2019 

What other information would be needed?

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Level 13

"even thought the year 2018 and Form 1040 was written on the check"

From Form 4868 instructions:

"Write your SSN, daytime phone number, and “2018 Form 4868” on your check or money order."

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Level 1

thanks, I think i will try saying it was "specific written instructions" and see if they buy it.

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Level 12

If the payment amount was on Line 7 of Form 4868, that is clearly "specific written instruction".

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Level 15
Level 15
Did a 2018 1040-V payment voucher accompany the payment? or was it just written on the check?

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Level 1

It was with the 4868 form on April 15, 2019

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Level 11

My guess is that you sent it to the IRS Service Center and not the required lockbox address.  But why is this problem just surfacing now?  Second guess is that the 2018 return asked for the refund to be rolled over to 2019 -- but IRS won't do that when there is tax owed for a previous year.  So when the 2019 return was filed, the expected credit was not there.