Rev. Proc. 81-18

SECTION 1. PURPOSE

The purpose of this revenue procedure is to inform the trustee (or debtor in possession) representing the bankruptcy estate of the debtor of the procedure to be followed in filing a claim for credit or refund of any overpayment of tax.

This revenue procedure is applicable to all cases commenced under the Bankruptcy Reform Act of 1978, Pub. L. 95-598 (hereinafter referred to as the "Bankruptcy Code") after September 30, 1979, with the exception of chapter 9 municipal debt adjustment cases. However, this revenue procedure is not applicable to the filing by the trustee of an application for a tentative carryback or refund adjustment under section 6411 of the Internal Revenue Code.

SEC. 2. BACKGROUND

.01 Section 505(a)(2)(B) of the Bankruptcy Code provides, in effect, that the bankruptcy court does not have jurisdiction to determine any right of the estate to tax refund, as property of the estate under section 541(a) of the Bankruptcy Code, before the earlier of:

1 120 days after the trustee properly requests such refund from the Service; or

2 a determination by the Service of such request.

.02 The legislative history of section 505 of the Bankruptcy Code provides that if the refund results from an offset or counterclaim to a claim or request for payment by the Service, the trustee does not first have to file an administrative claim for refund with the Service. 124 Cong. Rec. H 11,110 (daily ed. Sept. 28, 1978) (remarks of Rep. Edwards); 124 Cong. Rec. S 17,427 (Oct. 6, 1978) (remarks of Sen. DeConcini).

SEC. 3. APPLICATION

.01 If a credit or refund of an overpayment of tax was not claimed on a return previously filed by the debtor, the trustee may do so by filing the appropriate amended return or form with the District Director for the district in which the bankruptcy case is pending (marked for the "Personal Attention of the Special Procedures Function. DO NOT OPEN IN MAILROOM"). If the debtor, however, has claimed a credit or refund of an overpayment of tax on a properly filed return, the trustee may rely on such claim. See, e.g., United States v. Roth, 164 F.2d 575,577 (2d Cir. 1948).

.02 Pursuant to section 301.6402-3(a) of the Regulations on Procedure and Administration and section 601.105(e)(1) of the Statement of Procedural Rules (26 CFR Part 601), in the case of an overpayment of income taxes for a taxable year for which: 1 a Form 1040 or 1040A has been filed by an individual debtor, a claim for credit or refund shall be made by the trustee on Form 1040X, Amended U.S. Individual Income Tax Return;

2 a Form 1120 has been filed by a corporate debtor, a claim for credit or refund shall be made by the trustee on Form 1120X, Amended U.S. Corporation Income Tax Return;

3 a form other than Form 1040, 1040A, or 1120 has been filed by a debtor (such as Form 1041, U.S. Fiduciary Income Tax Return), a claim for credit or refund shall be made by the trustee on the appropriate amended income tax return.

.03 Pursuant to section 301.6402-2(c) of the regulations and section 601.105(e)(1), in the case of an overpayment of taxes other than income tax for which the debtor has filed a return, a claim for credit or refund shall be made on Form 843, Claim. An exact copy of the return (or returns) that is the subject of the claim should also be submitted, together with a statement of the name and location of the office where the return was filed. See section 301.6402-2(e) of the regulations, relating to proof of representative capacity to accompany the claim.

.04 With regard to an overpayment of taxes of the estate incurred during the administration of the case, a properly executed tax return shall, at the election of the trustee, constitute a claim for credit or refund of the overpayment. The return should be filed by the trustee with the District Director for the district in which the bankruptcy case is pending (marked for the "Personal Attention of the Special Procedures Function. DO NOT OPEN IN MAILROOM").

.05 The Examination Function will examine the appropriate amended return, Form 843, or original return filed by the trustee on an expedite basis, and will complete such examination and notify the trustee of the decision rendered within 120 days from the date of the filing of such claim.