§1314 — Title 26 Internal Revenue Code | U.S. Code

Summary

When an old tax error is being corrected under these rules, the first step is to figure the tax that was previously determined for the year of the error: the tax shown on the return plus any amounts later assessed or collected, minus any rebates. The correction is then handled like a regular deficiency or refund, and the IRS and the taxpayer are treated as having one more year on the clock to assess the tax or claim the refund, even if the normal deadline has passed. The adjustment covers only the one item that was the subject of the correction; it cannot be reduced by, or recovered based on, any other item. If the correction comes from a change in a net operating loss or capital loss carried back, no interest runs for the time before the year the loss arose. These rules do not apply to employment taxes.

Title 26, §1314

Internal Revenue Code — Source: USLM XML via OLRC

(a)In computing the amount of an adjustment under this part there shall first be ascertained the tax previously determined for the taxable year with respect to which the error was made. The amount of the tax previously determined shall be the excess of—

(1)the sum of—

(A)the amount shown as the tax by the taxpayer on his return (determined as provided in section 6211(b)(1), (3), and (4), relating to the definition of deficiency), if a return was made by the taxpayer and an amount was shown as the tax by the taxpayer thereon, plus

(B)the amounts previously assessed (or collected without assessment) as a deficiency, over—

(2)the amount of rebates, as defined in section 6211(b)(2), made.

(b)The adjustment authorized in section 1311(a) shall be made by assessing and collecting, or refunding or crediting, the amount thereof in the same manner as if it were a deficiency determined by the Secretary with respect to the taxpayer as to whom the error was made or an overpayment claimed by such taxpayer, as the case may be, for the taxable year or years with respect to which an amount is ascertained under subsection (a), and as if on the date of the determination one year remained before the expiration of the periods of limitation upon assessment or filing claim for refund for such taxable year or years. If, as a result of a determination described in section 1313(a)(4), an adjustment has been made by the assessment and collection of a deficiency or the refund or credit of an overpayment, and subsequently such determination is altered or revoked, the amount of the adjustment ascertained under subsection (a) of this section shall be redetermined on the basis of such alteration or revocation and any overpayment or deficiency resulting from such redetermination shall be refunded or credited, or assessed and collected, as the case may be, as an adjustment under this part. In the case of an adjustment resulting from an increase or decrease in a net operating loss or net capital loss which is carried back to the year of adjustment, interest shall not be collected or paid for any period prior to the close of the taxable year in which the net operating loss or net capital loss arises.

(c)The amount to be assessed and collected in the same manner as a deficiency, or to be refunded or credited in the same manner as an overpayment, under this part, shall not be diminished by any credit or set-off based upon any item other than the one which was the subject of the adjustment. The amount of the adjustment under this part, if paid, shall not be recovered by a claim or suit for refund or suit for erroneous refund based upon any item other than the one which was the subject of the adjustment.

(d)This part shall not apply to any tax imposed by subtitle C (sec. 3101 and following relating to employment taxes).

Notes & Related Subsidiaries

Editorial Notes

Amendments

2014—Subsecs. (d), (e). Pub. L. 113–295 redesignated subsec. (e) as (d) and struck out former subsec. (d). Prior to amendment, text of subsec. (d) read as follows: “No adjustment shall be made under this part in respect of any taxable year beginning prior to January 1, 1932.” 1976—Subsec. (b). Pub. L. 94–455 struck out “or his delegate” after “Secretary”. 1969—Subsec. (a). Pub. L. 91–172, § 512(f)(7), substituted “capital loss carryback or carryover” for “capital loss carryover”. Subsec. (b). Pub. L. 91–172, § 512(f)(8), inserted reference to net capital loss. 1965—Subsec. (a)(1)(A). Pub. L. 89–44 struck out “(b)(1) and (3)” and inserted in lieu thereof “(b)(1), (3), and (4)”. 1958—Subsec. (c). Pub. L. 85–866 substituted in second sentence “The” for “Other than in the case of an adjustment resulting from a determination under section 1313(a)(4), the”.

Statutory Notes and Related Subsidiaries

Effective Date

of 2014 AmendmentAmendment by Pub. L. 113–295 effective Dec. 19, 2014, subject to a

Savings Provision

, see section 221(b) of Pub. L. 113–295, set out as a note under section 1 of this title.

Effective Date

of 1969 AmendmentAmendment by Pub. L. 91–172 applicable with respect to net capital losses sustained in taxable years beginning after Dec. 31, 1969, see section 512(g) of Pub. L. 91–172, set out as a note under section 1212 of this title.

Effective Date

of 1965 AmendmentAmendment by Pub. L. 89–44 applicable to taxable years beginning on or after July 1, 1965, see section 809(f) of Pub. L. 89–44, set out as a note under section 6420 of this title.

Effective Date

of 1958 AmendmentAmendment by Pub. L. 85–866 effective with respect to determinations made after Nov. 14, 1954, see section 59(c) of Pub. L. 85–866, set out as a note under section 1312 of this title.

§1314 Amount and Method of Adjustment

Summary

Title 26, §1314

Notes & Related Subsidiaries

Editorial Notes

Amendments

Statutory Notes and Related Subsidiaries

Effective Date

Savings Provision

Effective Date

Effective Date

Effective Date

Citations & Metadata