§6603 Deposits made to suspend running of interest on potential underpayments, etc.

Summary

You can give the IRS a cash deposit to cover taxes that haven’t been assessed yet for taxes under subtitle A or B or chapters 41, 42, 43, or 44. The IRS will tell you how to make the deposit. If the IRS uses the deposit to pay tax, the tax counts as paid on the day you made the deposit for interest purposes under section 6601. If you ask in writing, the IRS must return any unused part of the deposit unless it thinks collection of the tax is in jeopardy. If the IRS returns money, that return is treated as a tax payment for overpayment interest under section 6611 only for the part tied to a “disputable tax.” Disputable tax means the amount you named when you deposited money as your reasonable estimate of the maximum tax linked to disputable items. If you got a 30-day letter, that estimate can’t be less than the proposed deficiency in the letter. A disputable item is one you reasonably treat one way and reasonably expect the IRS could reasonably disallow. Interest on returned amounts uses the Federal short-term rate under section 6621(b), compounded daily. Deposits are applied in the order you made them unless you say otherwise, and returns are given back last-in, first-out.