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Title 26, Internal Revenue CodeRelease 119-110

§6603 Deposits Made to Suspend Running of Interest on Potential Underpayments, Etc.

Title 26 › Subtitle F — Procedure and Administration › CHAPTER 67 — INTEREST › Subchapter A — Interest on Underpayments › § 6603

Last updated Sep 22, 2026|Official source

Summary

You can give the IRS a cash deposit that it may use later to pay taxes that have not yet been assessed. The deposit can cover taxes under subtitle A or B or chapters 41, 42, 43, or 44. The IRS will set the rules for how to make the deposit. If the deposit is used to pay tax, the tax is treated as paid at the time you made the deposit for purposes of interest on underpayments. If you ask in writing, the IRS must return any part of the deposit it did not use, unless collecting the tax is in jeopardy. If the deposit is returned, it will count as a payment for interest on overpayments only up to the amount you gave as your reasonable estimate of the maximum tax from disputed items. A disputable item is one you reasonably reported and reasonably think the IRS could disallow. If you got a 30-day letter, that estimate cannot be less than the proposed deficiency in the letter. Interest on returned deposits uses the Federal short-term rate under section 6621(b), compounded daily. Deposits are applied in the order given unless you say otherwise, and returns are made last-in, first-out.

Full Legal Text

Title 26, §6603

Internal Revenue Code, Source: USLM XML via OLRC

(a)Authority to make deposits other than as payment of tax
A taxpayer may make a cash deposit with the Secretary which may be used by the Secretary to pay any tax imposed under subtitle A or B or chapter 41, 42, 43, or 44 which has not been assessed at the time of the deposit. Such a deposit shall be made in such manner as the Secretary shall prescribe.
(b)No interest imposed
To the extent that such deposit is used by the Secretary to pay tax, for purposes of section 6601 (relating to interest on underpayments), the tax shall be treated as paid when the deposit is made.
(c)Return of deposit
Except in a case where the Secretary determines that collection of tax is in jeopardy, the Secretary shall return to the taxpayer any amount of the deposit (to the extent not used for a payment of tax) which the taxpayer requests in writing.
(d)Payment of interest
(1)In general
For purposes of section 6611 (relating to interest on overpayments), except as provided in paragraph (4), a deposit which is returned to a taxpayer shall be treated as a payment of tax for any period to the extent (and only to the extent) attributable to a disputable tax for such period. Under regulations prescribed by the Secretary, rules similar to the rules of section 6611(b)(2) shall apply.
(2)Disputable tax
(A)In general
For purposes of this section, the term “disputable tax” means the amount of tax specified at the time of the deposit as the taxpayer’s reasonable estimate of the maximum amount of any tax attributable to disputable items.
(B)Safe harbor based on 30-day letter
In the case of a taxpayer who has been issued a 30-day letter, the maximum amount of tax under subparagraph (A) shall not be less than the amount of the proposed deficiency specified in such letter.
(3)Other definitions
For purposes of paragraph (2)—
(A)Disputable item
The term “disputable item” means any item of income, gain, loss, deduction, or credit if the taxpayer—
(i)has a reasonable basis for its treatment of such item, and
(ii)reasonably believes that the Secretary also has a reasonable basis for disallowing the taxpayer’s treatment of such item.
(B)30-day letter
The term “30-day letter” means the first letter of proposed deficiency which allows the taxpayer an opportunity for administrative review in the Internal Revenue Service Independent Office of Appeals.
(4)Rate of interest
The rate of interest under this subsection shall be the Federal short-term rate determined under section 6621(b), compounded daily.
(e)Use of deposits
(1)Payment of tax
Except as otherwise provided by the taxpayer, deposits shall be treated as used for the payment of tax in the order deposited.
(2)Returns of deposits
Deposits shall be treated as returned to the taxpayer on a last-in, first-out basis.

Legislative History

Notes & Related Subsidiaries

Editorial Notes

Amendments

2019—Subsec. (d)(3)(B). Pub. L. 116–25 substituted “Internal Revenue Service Independent Office of Appeals” for “Internal Revenue Service Office of Appeals”.

Statutory Notes and Related Subsidiaries

Effective Date

Pub. L. 108–357, title VIII, § 842(c), Oct. 22, 2004, 118 Stat. 1599, provided that: “(1) In general.—The

Amendments

made by this section [enacting this section] shall apply to deposits made after the date of the enactment of this Act [Oct. 22, 2004]. “(2) Coordination with deposits made under revenue procedure 84–58.—In the case of an amount held by the Secretary of the Treasury or his delegate on the date of the enactment of this Act as a deposit in the nature of a cash bond deposit pursuant to Revenue Procedure 84–58, the date that the taxpayer identifies such amount as a deposit made pursuant to section 6603 of the Internal Revenue Code (as added by this Act) shall be treated as the date such amount is deposited for purposes of such section 6603.”

Reference

Citations & Metadata

Citation

26 U.S.C. § 6603

Title 26, Internal Revenue Code

Last Updated

Sep 22, 2026

Release point: 119-110