26 U.S.C. § 6402 : US Code - Section 6402: Authority to make credits or refunds

Search 26 U.S.C. § 6402 : US Code - Section 6402: Authority to make credits or refunds

    (a) General rule
      In the case of any overpayment, the Secretary, within the
    applicable period of limitations, may credit the amount of such
    overpayment, including any interest allowed thereon, against any
    liability in respect of an internal revenue tax on the part of the
    person who made the overpayment and shall, subject to subsections
    (c), (d), (e), and (f) (!1) refund any balance to such person.

    (b) Credits against estimated tax
      The Secretary is authorized to prescribe regulations providing
    for the crediting against the estimated income tax for any taxable
    year of the amount determined by the taxpayer or the Secretary to
    be an overpayment of the income tax for a preceding taxable year.
    (c) Offset of past-due support against overpayments
      The amount of any overpayment to be refunded to the person making
    the overpayment shall be reduced by the amount of any past-due
    support (as defined in section 464(c) of the Social Security Act)
    owed by that person of which the Secretary has been notified by a
    State in accordance with section 464 of of (!2) such Act. The
    Secretary shall remit the amount by which the overpayment is so
    reduced to the State collecting such support and notify the person
    making the overpayment that so much of the overpayment as was
    necessary to satisfy his obligation for past-due support has been
    paid to the State. The Secretary shall apply a reduction under this
    subsection first to an amount certified by the State as past due
    support under section 464 of the Social Security Act before any
    other reductions allowed by law. This subsection shall be applied
    to an overpayment prior to its being credited to a person's future
    liability for an internal revenue tax.

    (d) Collection of debts owed to Federal agencies
      (1) In general
        Upon receiving notice from any Federal agency that a named
      person owes a past-due legally enforceable debt (other than past-
      due support subject to the provisions of subsection (c)) to such
      agency, the Secretary shall - 
          (A) reduce the amount of any overpayment payable to such
        person by the amount of such debt;
          (B) pay the amount by which such overpayment is reduced under
        subparagraph (A) to such agency; and
          (C) notify the person making such overpayment that such
        overpayment has been reduced by an amount necessary to satisfy
        such debt.
      (2) Priorities for offset
        Any overpayment by a person shall be reduced pursuant to this
      subsection after such overpayment is reduced pursuant to
      subsection (c) with respect to past-due support collected
      pursuant to an assignment under section 402(a)(26) (!3) of the
      Social Security Act and before such overpayment is reduced
      pursuant to subsections (e) and (f) and before such overpayment
      is credited to the future liability for tax of such person
      pursuant to subsection (b). If the Secretary receives notice from
      a Federal agency or agencies of more than one debt subject to
      paragraph (1) that is owed by a person to such agency or
      agencies, any overpayment by such person shall be applied against
      such debts in the order in which such debts accrued.

      (3) Treatment of OASDI overpayments
        (A) Requirements
          Paragraph (1) shall apply with respect to an OASDI
        overpayment only if the requirements of paragraphs (1) and (2)
        of section 3720A(f) of title 31, United States Code, are met
        with respect to such overpayment.
        (B) Notice; protection of other persons filing joint return
          (i) Notice
            In the case of a debt consisting of an OASDI overpayment,
          if the Secretary determines upon receipt of the notice
          referred to in paragraph (1) that the refund from which the
          reduction described in paragraph (1)(A) would be made is
          based upon a joint return, the Secretary shall - 
              (I) notify each taxpayer filing such joint return that
            the reduction is being made from a refund based upon such
            return, and
              (II) include in such notification a description of the
            procedures to be followed, in the case of a joint return,
            to protect the share of the refund which may be payable to
            another person.
          (ii) Adjustments based on protections given to other
            taxpayers on joint return
            If the other person filing a joint return with the person
          owing the OASDI overpayment takes appropriate action to
          secure his or her proper share of the refund subject to
          reduction under this subsection, the Secretary shall pay such
          share to such other person. The Secretary shall deduct the
          amount of such payment from amounts which are derived from
          subsequent reductions in refunds under this subsection and
          are payable to a trust fund referred to in subparagraph (C).
        (C) Deposit of amount of reduction into appropriate trust fund
          In lieu of payment, pursuant to paragraph (1)(B), of the
        amount of any reduction under this subsection to the
        Commissioner of Social Security, the Secretary shall deposit
        such amount in the Federal Old-Age and Survivors Insurance
        Trust Fund or the Federal Disability Insurance Trust Fund,
        whichever is certified to the Secretary as appropriate by the
        Commissioner of Social Security.
        (D) OASDI overpayment
          For purposes of this paragraph, the term "OASDI overpayment"
        means any overpayment of benefits made to an individual under
        title II of the Social Security Act.
    (e) Collection of past-due, legally enforceable State income tax
      obligations
      (1) In general
        Upon receiving notice from any State that a named person owes a
      past-due, legally enforceable State income tax obligation to such
      State, the Secretary shall, under such conditions as may be
      prescribed by the Secretary - 
          (A) reduce the amount of any overpayment payable to such
        person by the amount of such State income tax obligation;
          (B) pay the amount by which such overpayment is reduced under
        subparagraph (A) to such State and notify such State of such
        person's name, taxpayer identification number, address, and the
        amount collected; and
          (C) notify the person making such overpayment that the
        overpayment has been reduced by an amount necessary to satisfy
        a past-due, legally enforceable State income tax obligation.

      If an offset is made pursuant to a joint return, the notice under
      subparagraph (B) shall include the names, taxpayer identification
      numbers, and addresses of each person filing such return.
      (2) Offset permitted only against residents of State seeking
        offset
        Paragraph (1) shall apply to an overpayment by any person for a
      taxable year only if the address shown on the Federal return for
      such taxable year of the overpayment is an address within the
      State seeking the offset.
      (3) Priorities for offset
        Any overpayment by a person shall be reduced pursuant to this
      subsection - 
          (A) after such overpayment is reduced pursuant to - 
            (i) subsection (a) with respect to any liability for any
          internal revenue tax on the part of the person who made the
          overpayment;
            (ii) subsection (c) with respect to past-due support; and
            (iii) subsection (d) with respect to any past-due, legally
          enforceable debt owed to a Federal agency; and

          (B) before such overpayment is credited to the future
        liability for any Federal internal revenue tax of such person
        pursuant to subsection (b).

      If the Secretary receives notice from one or more agencies of the
      State of more than one debt subject to paragraph (1) or
      subsection (f) that is owed by such person to such an agency, any
      overpayment by such person shall be applied against such debts in
      the order in which such debts accrued.
      (4) Notice; consideration of evidence
        No State may take action under this subsection until such State
      - 
          (A) notifies by certified mail with return receipt the person
        owing the past-due State income tax liability that the State
        proposes to take action pursuant to this section;
          (B) gives such person at least 60 days to present evidence
        that all or part of such liability is not past-due or not
        legally enforceable;
          (C) considers any evidence presented by such person and
        determines that an amount of such debt is past-due and legally
        enforceable; and
          (D) satisfies such other conditions as the Secretary may
        prescribe to ensure that the determination made under
        subparagraph (C) is valid and that the State has made
        reasonable efforts to obtain payment of such State income tax
        obligation.
      (5) Past-due, legally enforceable State income tax obligation
        For purposes of this subsection, the term "past-due, legally
      enforceable State income tax obligation" means a debt - 
          (A)(i) which resulted from - 
            (I) a judgment rendered by a court of competent
          jurisdiction which has determined an amount of State income
          tax to be due; or
            (II) a determination after an administrative hearing which
          has determined an amount of State income tax to be due; and

          (ii) which is no longer subject to judicial review; or
          (B) which resulted from a State income tax which has been
        assessed but not collected, the time for redetermination of
        which has expired, and which has not been delinquent for more
        than 10 years.

      For purposes of this paragraph, the term "State income tax"
      includes any local income tax administered by the chief tax
      administration agency of the State.
      (6) Regulations
        The Secretary shall issue regulations prescribing the time and
      manner in which States must submit notices of past-due, legally
      enforceable State income tax obligations and the necessary
      information that must be contained in or accompany such notices.
      The regulations shall specify the types of State income taxes and
      the minimum amount of debt to which the reduction procedure
      established by paragraph (1) may be applied. The regulations may
      require States to pay a fee to reimburse the Secretary for the
      cost of applying such procedure. Any fee paid to the Secretary
      pursuant to the preceding sentence shall be used to reimburse
      appropriations which bore all or part of the cost of applying
      such procedure.
      (7) Erroneous payment to State
        Any State receiving notice from the Secretary that an erroneous
      payment has been made to such State under paragraph (1) shall pay
      promptly to the Secretary, in accordance with such regulations as
      the Secretary may prescribe, an amount equal to the amount of
      such erroneous payment (without regard to whether any other
      amounts payable to such State under such paragraph have been paid
      to such State).
    (f) Collection of unemployment compensation debts
      (1) In general
        Upon receiving notice from any State that a named person owes a
      covered unemployment compensation debt to such State, the
      Secretary shall, under such conditions as may be prescribed by
      the Secretary - 
          (A) reduce the amount of any overpayment payable to such
        person by the amount of such covered unemployment compensation
        debt;
          (B) pay the amount by which such overpayment is reduced under
        subparagraph (A) to such State and notify such State of such
        person's name, taxpayer identification number, address, and the
        amount collected; and
          (C) notify the person making such overpayment that the
        overpayment has been reduced by an amount necessary to satisfy
        a covered unemployment compensation debt.

      If an offset is made pursuant to a joint return, the notice under
      subparagraph (C) shall include information related to the rights
      of a spouse of a person subject to such an offset.
      (2) Priorities for offset
        Any overpayment by a person shall be reduced pursuant to this
      subsection - 
          (A) after such overpayment is reduced pursuant to - 
            (i) subsection (a) with respect to any liability for any
          internal revenue tax on the part of the person who made the
          overpayment;
            (ii) subsection (c) with respect to past-due support; and
            (iii) subsection (d) with respect to any past-due, legally
          enforceable debt owed to a Federal agency; and

          (B) before such overpayment is credited to the future
        liability for any Federal internal revenue tax of such person
        pursuant to subsection (b).

      If the Secretary receives notice from a State or States of more
      than one debt subject to paragraph (1) or subsection (e) that is
      owed by a person to such State or States, any overpayment by such
      person shall be applied against such debts in the order in which
      such debts accrued.
      (3) Notice; consideration of evidence
        No State may take action under this subsection until such State
      - 
          (A) notifies the person owing the covered unemployment
        compensation debt that the State proposes to take action
        pursuant to this section;
          (B) provides such person at least 60 days to present evidence
        that all or part of such liability is not legally enforceable
        or is not a covered unemployment compensation debt;
          (C) considers any evidence presented by such person and
        determines that an amount of such debt is legally enforceable
        and is a covered unemployment compensation debt; and
          (D) satisfies such other conditions as the Secretary may
        prescribe to ensure that the determination made under
        subparagraph (C) is valid and that the State has made
        reasonable efforts to obtain payment of such covered
        unemployment compensation debt.
      (4) Covered unemployment compensation debt
        For purposes of this subsection, the term "covered unemployment
      compensation debt" means - 
          (A) a past-due debt for erroneous payment of unemployment
        compensation due to fraud or the person's failure to report
        earnings which has become final under the law of a State
        certified by the Secretary of Labor pursuant to section 3304
        and which remains uncollected;
          (B) contributions due to the unemployment fund of a State for
        which the State has determined the person to be liable and
        which remain uncollected; and
          (C) any penalties and interest assessed on such debt.
      (5) Regulations
        (A) In general
          The Secretary may issue regulations prescribing the time and
        manner in which States must submit notices of covered
        unemployment compensation debt and the necessary information
        that must be contained in or accompany such notices. The
        regulations may specify the minimum amount of debt to which the
        reduction procedure established by paragraph (1) may be
        applied.
        (B) Fee payable to Secretary
          The regulations may require States to pay a fee to the
        Secretary, which may be deducted from amounts collected, to
        reimburse the Secretary for the cost of applying such
        procedure. Any fee paid to the Secretary pursuant to the
        preceding sentence shall be used to reimburse appropriations
        which bore all or part of the cost of applying such procedure.
        (C) Submission of notices through Secretary of Labor
          The regulations may include a requirement that States submit
        notices of covered unemployment compensation debt to the
        Secretary via the Secretary of Labor in accordance with
        procedures established by the Secretary of Labor. Such
        procedures may require States to pay a fee to the Secretary of
        Labor to reimburse the Secretary of Labor for the costs of
        applying this subsection. Any such fee shall be established in
        consultation with the Secretary of the Treasury. Any fee paid
        to the Secretary of Labor may be deducted from amounts
        collected and shall be used to reimburse the appropriation
        account which bore all or part of the cost of applying this
        subsection.
      (6) Erroneous payment to State
        Any State receiving notice from the Secretary that an erroneous
      payment has been made to such State under paragraph (1) shall pay
      promptly to the Secretary, in accordance with such regulations as
      the Secretary may prescribe, an amount equal to the amount of
      such erroneous payment (without regard to whether any other
      amounts payable to such State under such paragraph have been paid
      to such State).
    (g) Review of reductions
      No court of the United States shall have jurisdiction to hear any
    action, whether legal or equitable, brought to restrain or review a
    reduction authorized by subsection (c), (d), (e), or (f). No such
    reduction shall be subject to review by the Secretary in an
    administrative proceeding. No action brought against the United
    States to recover the amount of any such reduction shall be
    considered to be a suit for refund of tax. This subsection does not
    preclude any legal, equitable, or administrative action against the
    Federal agency or State to which the amount of such reduction was
    paid or any such action against the Commissioner of Social Security
    which is otherwise available with respect to recoveries of
    overpayments of benefits under section 204 of the Social Security
    Act.
    (h) Federal agency
      For purposes of this section, the term "Federal agency" means a
    department, agency, or instrumentality of the United States, and
    includes a Government corporation (as such term is defined in
    section 103 of title 5, United States Code).
    (i) Treatment of payments to States
      The Secretary may provide that, for purposes of determining
    interest, the payment of any amount withheld under subsection (c),
    (e), or (f) to a State shall be treated as a payment to the person
    or persons making the overpayment.
    (j) Cross reference
      For procedures relating to agency notification of the Secretary,
    see section 3721 of title 31, United States Code.
    (k) Refunds to certain fiduciaries of insolvent members of
      affiliated groups
      Notwithstanding any other provision of law, in the case of an
    insolvent corporation which is a member of an affiliated group of
    corporations filing a consolidated return for any taxable year and
    which is subject to a statutory or court-appointed fiduciary, the
    Secretary may by regulation provide that any refund for such
    taxable year may be paid on behalf of such insolvent corporation to
    such fiduciary to the extent that the Secretary determines that the
    refund is attributable to losses or credits of such insolvent
    corporation.
    (l) Explanation of reason for refund disallowance
      In the case of a disallowance of a claim for refund, the
    Secretary shall provide the taxpayer with an explanation for such
    disallowance.