Rev. Proc. 64-13

SECTION 1. PURPOSE.

The purpose of this Revenue Procedure is to enlarge upon Revenue Procedure 63-11, C.B. 1963-1, 497, so as to provide additional circumstances under which the acceptance of an advance payment by the Internal Revenue Service will result in the termination of the accrual of interest on so much of a deficiency as is satisfied by an advance payment at the date of payment or 30 days after the filing of a waiver of restrictions on assessment and collection, whichever is the earlier.

SEC. 2. BACKGROUND.

Many difficulties have arisen in the past, in connection with advance payments of tax deficiencies, resulting in numerous suits and conflicting decisions by the courts. The enactment of the Internal Revenue Code of 1954, specifically section 6213(b)(3), and the conclusion of the United States Court of Appeals for the Fourth Circuit in the case of James G. McConkey v. Commissioner , 199 Fed.(2d), 892 (1952), certiorari denied, 345 U.S. 924 (1953), enabled the Service to re-examine the procedure being followed with respect to such payments and to take steps to avoid future conflicts. Section 6213(b)(3) of the Code provides, in effect, that any amounts paid as a tax or in respect of a tax may be assessed upon receipt, notwithstanding the restrictions on assessment imposed by section 6213(a) of the Code.

SEC. 3. GENERAL.

.01 An advance payment made after the mailing of a statutory notice of deficiency (90-day letter), which is made by a taxpayer as a payment in respect of the proposed deficiency, will be assessed upon receipt or as soon thereafter as is practicable. Such assessment shall be consistent with any designation of the payment as to tax and interest which may have been made by the taxpayer. An advance payment which is made after the mailing of the statutory notice of deficiency does not deprive the Tax Court of the United States of jurisdiction over the deficiency.

.02 An advance payment made before the mailing of a statutory notice of deficiency (90-day letter), which is made by a taxpayer as a payment in respect of a pending deficiency, will also be assessed upon receipt or as soon thereafter as is practicable, provided the District Director of Internal Revenue is in a position to ascertain the amount of the deficiency, and further provided that such assessment would not imperil successful criminal investigation or prosecution. As in the case of advance payments made after the mailing of a statutory notice of deficiency, the assessment shall be consistent with any designation of the payment as to tax and interest which may have been made by the taxpayer. If the amount paid or any portion thereof is designated by the taxpayer as a payment of deficiency and such payment satisfies the entire deficiency, no statutory notice of deficiency will be mailed, since several courts have held that under these circumstances the Tax Court of the United States has no jurisdiction. Where less than the total deficiency is paid and assessed, such assessment will be taken into account in determining the amount for which a statutory notice of deficiency must be mailed.

.03 An advance payment received before the mailing of a statutory notice of deficiency which is not assessed will be treated as a deposit in the nature of a cash bond for the payment of taxes thereafter found to be due. As such it is not subject to a claim for credit or refund as an overpayment of tax, nor will the excess of the deposit over the liability ultimately determined to be due bear interest under section 6611 of the 1954 Code or section 3771 of the 1939 Code. The taxpayer will be placed on notice by certified mail as to the status of the payment and, at his election, the deposit will be returned to him, without interest, at any time prior to assessment of the deficiency. If the taxpayer elects to leave the payment on deposit until such time as the deficiency is determined, the amount of the deficiency will be assessed as soon as possible after such determination, and the amount of the deposit, or so much of it as is necessary, will be applied in discharge of the liability.

SEC. 4. INTEREST.

.01 The running of interest on any amount of the deficiency which is satisfied by application of an advance payment (whether or not it is treated as a deposit as provided in section 3.03), will be terminated on the date the payment is received, except that in any case in which a waiver of restrictions on assessment and collection has been filed with respect to the amount covered by an advance payment, the running of interest on such amount will be terminated at the date of payment or 30 days after the waiver is filed, whichever is the earlier. In all cases, any interest due will be assessed at the same time as the tax. In those cases where the taxpayer designates the entire amount of an advance payment as being with respect to tax, a plea of hardship will not be accepted as a proper basis for forbearance in the collection of the amount of interest due on that portion of the liability satisfied by the payment.

.02 The assessment of an advance payment of interest only will not affect the running of interest on the deficiency.

.03 No interest will be allowed on advance payments or portions thereof which are returned to taxpayers prior to assessment.

.04 Advance payments which are assessed will be treated in the same manner as any other assessed amount and the allowance of interest on any resulting overpayment is mandatory under the provisions of section 6611 of the 1954 Code and section 3771 of the 1939 Code.

SEC. 5. EFFECTIVE DATE.

This Revenue Procedure is effective with respect to all advance payments made after February 24, 1964.

SEC. 6. EFFECT ON OTHER DOCUMENTS.

Revenue Procedure 63-11, C.B. 1963-1, 497, remains in effect with respect to payments received prior to the effective date of this Revenue Procedure.