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1040es Form

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1040es Form

1040es form 4. 1040es form   Communications and Air Transportation Taxes Table of Contents Uncollected Tax Report Communications TaxLocal-only service. 1040es form Private communication service. 1040es form Exemptions Credits or Refunds Air Transportation TaxesTransportation of Persons by Air International Air Travel Facilities Transportation of Property by Air Special Rules on Transportation Taxes Excise taxes are imposed on amounts paid for certain facilities and services. 1040es form If you receive any payment on which tax is imposed, you are required to collect the tax, file returns, and pay the tax over to the government. 1040es form If you fail to collect and pay over the taxes, you may be liable for the trust fund recovery penalty. 1040es form See chapter 14, later. 1040es form Uncollected Tax Report A separate report is required to be filed by collecting agents of communications services and air transportation taxes if the person from whom the facilities or services tax (the tax) is required to be collected (the taxpayer) refuses to pay the tax, or it is impossible for the collecting agent to collect the tax. 1040es form The report must contain the name and address of the taxpayer, the type of facility provided or service rendered, the amount paid for the facility or service (the amount on which the tax is based), and the date paid. 1040es form Regular method taxpayers. 1040es form   For regular method taxpayers, the report must be filed by the due date of the Form 720 on which the tax would have been reported. 1040es form Alternative method taxpayers. 1040es form   For alternative method taxpayers, the report must be filed by the due date of the Form 720 that includes an adjustment to the separate account for the uncollected tax. 1040es form See Alternative method in  chapter 11. 1040es form Where to file. 1040es form    Do not file the uncollected tax report with Form 720. 1040es form Instead, mail the report to: Internal Revenue Service Excise Tax Program SE:S:SP:EX MS C9-109 5000 Ellin Rd. 1040es form  Lanham, MD 20706 Communications Tax A 3% tax is imposed on amounts paid for local telephone service and teletypewriter exchange service. 1040es form Local telephone service. 1040es form   This includes access to a local telephone system and the privilege of telephonic quality communication with most people who are part of the system. 1040es form Local telephone service also includes any facility or services provided in connection with this service. 1040es form The tax applies to lease payments for certain customer premises equipment (CPE) even though the lessor does not also provide access to a local telecommunications system. 1040es form Local-only service. 1040es form   Local-only service is local telephone service as described above, provided under a plan that does not include long distance telephone service or that separately states the charge for local service on the bill to customers. 1040es form Local-only service also includes any facility or services provided in connection with this service, even though these services and facilities may also be used with long-distance service. 1040es form Private communication service. 1040es form   Private communication service is not local telephone service. 1040es form Private communication service includes accessory-type services provided in connection with a Centrex, PBX, or other similar system for dual use accessory equipment. 1040es form However, the charge for the service must be stated separately from the charge for the basic system, and the accessory must function, in whole or in part, in connection with intercommunication among the subscriber's stations. 1040es form Teletypewriter exchange service. 1040es form   This includes access from a teletypewriter or other data station to a teletypewriter exchange system and the privilege of intercommunication by that station with most persons having teletypewriter or other data stations in the same exchange system. 1040es form Figuring the tax. 1040es form   The tax is based on the sum of all charges for local telephone service included in the bill. 1040es form However, if the bill groups individual items for billing and tax purposes, the tax is based on the sum of the individual items within that group. 1040es form The tax on the remaining items not included in any group is based on the charge for each item separately. 1040es form Do not include in the tax base state or local sales or use taxes that are separately stated on the taxpayer's bill. 1040es form Exemptions Payments for certain services or payments from certain users are exempt from the communications tax. 1040es form Nontaxable service. 1040es form   Nontaxable service means bundled service and long distance service. 1040es form Nontaxable service also includes pre-paid telephone cards and pre-paid cellular service. 1040es form Bundled service. 1040es form   Bundled service is local and long distance service provided under a plan that does not separately state the charge for the local telephone service. 1040es form Bundled service includes plans that provide both local and long distance service for either a flat monthly fee or a charge that varies with the elapsed transmission time for which the service is used. 1040es form Telecommunications companies provide bundled service for both landlines and wireless (cellular) service. 1040es form If Voice over Internet Protocol service provides both local and long distance service and the charges are not separately stated, such service is bundled service. 1040es form   The method for sending or receiving a call, such as on a landline telephone, wireless (cellular), or some other method, does not affect whether a service is local-only or bundled. 1040es form Long distance service. 1040es form   Long distance service is telephonic quality communication with persons whose telephones are outside the local telephone system of the caller. 1040es form Pre-paid telephone cards (PTC). 1040es form   A PTC will be treated as bundled service unless a PTC expressly states it is for local-only service. 1040es form Generally, the person responsible for collecting the tax is the carrier who transfers the PTC to the transferee. 1040es form The transferee is the first person that is not a carrier to whom a PTC is transferred by the carrier. 1040es form The transferee is the person liable for the tax and is eligible to request a credit or refund. 1040es form For more information, see Regulations section 49. 1040es form 4251-4. 1040es form   The holder is the person that purchases a PTC to use and not to resell. 1040es form Holders are not liable for the tax and cannot request a credit or refund. 1040es form Pre-paid cellular telephones. 1040es form   Rules similar to the PTC rules described above apply to pre-paid cellular telephones. 1040es form The transferee is the person eligible to request the credit or refund. 1040es form Installation charges. 1040es form   The tax does not apply to payments received for the installation of any instrument, wire, pole, switchboard, apparatus, or equipment. 1040es form However, the tax does apply to payments for the repair or replacement of those items incidental to ordinary maintenance. 1040es form Answering services. 1040es form   The tax does not apply to amounts paid for a private line, an answering service, and a one-way paging or message service if they do not provide access to a local telephone system and the privilege of telephonic communication as part of the local telephone system. 1040es form Mobile radio telephone service. 1040es form   The tax does not apply to payments for a two-way radio service that does not provide access to a local telephone system. 1040es form Coin-operated telephones. 1040es form   The tax for local telephone service does not apply to payments made for services by inserting coins in public coin-operated telephones. 1040es form But the tax applies if the coin-operated telephone service is furnished for a guaranteed amount. 1040es form Figure the tax on the amount paid under the guarantee plus any fixed monthly or other periodic charge. 1040es form Telephone-operated security systems. 1040es form   The tax does not apply to amounts paid for telephones used only to originate calls to a limited number of telephone stations for security entry into a building. 1040es form In addition, the tax does not apply to any amounts paid for rented communication equipment used in the security system. 1040es form News services. 1040es form   The tax on teletypewriter exchange service does not apply to charges for the following news services. 1040es form Services dealing exclusively with the collection or dissemination of news for or through the public press or radio or television broadcasting. 1040es form Services used exclusively in the collection or dissemination of news by a news ticker service furnishing a general news service similar to that of the public press. 1040es form This exemption applies to payments received for messages from one member of the news media to another member (or to or from their bona fide correspondents). 1040es form For the exemption to apply, the charge for these services must be billed in writing to the person paying for the service and that person must certify in writing that the services are used for an exempt purpose. 1040es form Services not exempted. 1040es form   The tax applies to amounts paid by members of the news media for local telephone service. 1040es form International organizations and the American Red Cross. 1040es form   The tax does not apply to communication services furnished to an international organization or to the American National Red Cross. 1040es form Nonprofit hospitals. 1040es form   The tax does not apply to telephone services furnished to income tax-exempt nonprofit hospitals for their use. 1040es form Also, the tax does not apply to amounts paid by these hospitals to provide local telephone service in the homes of their personnel who must be reached during their off-duty hours. 1040es form Nonprofit educational organizations. 1040es form   The tax does not apply to payments received for services and facilities furnished to a nonprofit educational organization for its use. 1040es form A nonprofit educational organization is one that satisfies all the following requirements. 1040es form It normally maintains a regular faculty and curriculum. 1040es form It normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on. 1040es form It is exempt from income tax under section 501(a). 1040es form This includes a school operated by an organization exempt under section 501(c)(3) if the school meets the above qualifications. 1040es form Qualified blood collector organizations. 1040es form   The tax does not apply to telephone services furnished to qualified blood collector organizations for their use. 1040es form A qualified blood collector organization is one that is: Described in section 501(c)(3) and exempt from tax under section 501(a), Primarily engaged in the activity of collecting human blood, Registered with the IRS, and Registered by the Food and Drug Administration to collect blood. 1040es form Federal, state, and local government. 1040es form   The tax does not apply to communication services provided to the government of the United States, the government of any state or its political subdivisions, the District of Columbia, or the United Nations. 1040es form Treat an Indian tribal government as a state for the exemption from the communications tax only if the services involve the exercise of an essential tribal government function. 1040es form Exemption certificate. 1040es form   Any form of exemption certificate will be acceptable if it includes all the information required by the Internal Revenue Code and Regulations. 1040es form See Regulations section 49. 1040es form 4253-11. 1040es form File the certificate with the provider of the communication services. 1040es form An exemption certificate is not required for nontaxable services. 1040es form   The following users that are exempt from the communications tax do not have to file an annual exemption certificate after they have filed the initial certificate to claim an exemption from the communications tax. 1040es form The American National Red Cross and other international organizations. 1040es form Nonprofit hospitals. 1040es form Nonprofit educational organizations. 1040es form Qualified blood collector organizations. 1040es form State and local governments. 1040es form   The federal government does not have to file any exemption certificate. 1040es form   All other organizations must furnish exemption certificates when required. 1040es form Credits or Refunds If tax is collected and paid over for nontaxable services, or for certain services or users exempt from the communications tax, the collector or taxpayer may claim a credit or refund if it has repaid the tax to the person from whom the tax was collected or obtained the consent of that person to the allowance of the credit or refund. 1040es form Alternatively, the person who paid the tax may claim a refund. 1040es form For more information on how to file for credits or refunds, see the Instructions for Form 720 or Form 8849. 1040es form Collectors. 1040es form   The collector may request a credit or refund if it has repaid the tax to the person from whom the tax was collected, or obtained the consent of that person to the allowance of the credit or refund. 1040es form These requirements also apply to nontaxable service refunds. 1040es form Collectors using the regular method for deposits. 1040es form   Collectors using the regular method for deposits must use Form 720X to request a credit or refund if the collector has repaid the tax to the person from whom the tax was collected, or obtained the consent of that person to the allowance of the credit or refund. 1040es form Collectors using the alternative method for deposits. 1040es form   Collectors using the alternative method for deposits must adjust their separate accounts for the credit or refund if it has repaid the tax to the person from whom the tax was collected, or obtained the consent of that person to the allowance of the credit or refund. 1040es form For more information, see the Instructions for Form 720. 1040es form Air Transportation Taxes Taxes are imposed on amounts paid for: Transportation of persons by air, Use of international air travel facilities, and Transportation of property by air. 1040es form Transportation of Persons by Air The tax on transportation of persons by air is made up of the: Percentage tax, and Domestic-segment tax. 1040es form Percentage tax. 1040es form   A tax of 7. 1040es form 5% applies to amounts paid for taxable transportation of persons by air. 1040es form Amounts paid for transportation include charges for layover or waiting time and movement of aircraft in deadhead service. 1040es form Mileage awards. 1040es form   The percentage tax may apply to an amount paid (in cash or in kind) to an air carrier (or any related person) for the right to provide mileage awards for, or other reductions in the cost of, any transportation of persons by air. 1040es form For example, this applies to mileage awards purchased by credit card companies, telephone companies, restaurants, hotels, and other businesses. 1040es form   Generally, the percentage tax does not apply to amounts paid for mileage awards where the mileage awards cannot, under any circumstances, be redeemed for air transportation that is subject to the tax. 1040es form Until regulations are issued, the following rules apply to mileage awards. 1040es form Amounts paid for mileage awards that cannot be redeemed for taxable transportation beginning and ending in the United States are not subject to the tax. 1040es form For this rule, mileage awards issued by a foreign air carrier are considered to be usable only on that foreign air carrier and thus not redeemable for taxable transportation beginning and ending in the United States. 1040es form Therefore, amounts paid to a foreign air carrier for mileage awards are not subject to the tax. 1040es form Amounts paid by an air carrier to a domestic air carrier for mileage awards that can be redeemed for taxable transportation are not subject to the tax to the extent those miles will be awarded in connection with the purchase of taxable transportation. 1040es form Amounts paid by an air carrier to a domestic air carrier for mileage awards that can be redeemed for taxable transportation are subject to the tax to the extent those miles will not be awarded in connection with the purchase of taxable transportation. 1040es form Domestic-segment tax. 1040es form   The domestic-segment tax is a flat dollar amount for each segment of taxable transportation for which an amount is paid. 1040es form However, see Rural airports, later. 1040es form A segment is a single takeoff and a single landing. 1040es form The amount of the domestic-segment tax is in the Instructions for Form 720. 1040es form Charter flights. 1040es form    If an aircraft is chartered, the domestic-segment tax for each segment of taxable transportation is figured by multiplying the tax by the number of passengers transported on the aircraft. 1040es form Rural airports. 1040es form   The domestic-segment tax does not apply to a segment to or from a rural airport. 1040es form An airport is a rural airport for a calendar year if fewer than 100,000 commercial passengers departed from the airport by air during the second preceding calendar year (the 100,000 passenger rule), and one of the following is true: The airport is not located within 75 miles of another airport from which 100,000 or more commercial passengers departed during the second preceding calendar year, The airport was receiving essential air service subsidies as of August 5, 1997, or The airport is not connected by paved roads to another airport. 1040es form   To apply the 100,000 passenger rule to any airport described in (3) above, only count commercial passengers departing from the airport by air on flight segments of at least 100 miles. 1040es form   An updated list of rural airports can be found on the Department of Transportation website at www. 1040es form dot. 1040es form gov and enter the phrase “Essential Air Service” in the search box. 1040es form Taxable transportation. 1040es form   Taxable transportation is transportation by air that meets either of the following tests. 1040es form It begins and ends either in the United States or at any place in Canada or Mexico not more than 225 miles from the nearest point on the continental United States boundary (this is the 225-mile zone). 1040es form It is directly or indirectly from one port or station in the United States to another port or station in the United States, but only if it is not a part of uninterrupted international air transportation, discussed later. 1040es form Round trip. 1040es form   A round trip is considered two separate trips. 1040es form The first trip is from the point of departure to the destination. 1040es form The second trip is the return trip from that destination. 1040es form Uninterrupted international air transportation. 1040es form   This means transportation entirely by air that does not begin and end in the United States or in the 225-mile zone if there is not more than a 12-hour scheduled interval between arrival and departure at any station in the United States. 1040es form For a special rule that applies to military personnel, see Exemptions, later. 1040es form Transportation between the continental U. 1040es form S. 1040es form and Alaska or Hawaii. 1040es form   This transportation is partially exempt from the tax on transportation of persons by air. 1040es form The tax does not apply to the part of the trip between the point at which the route of transportation leaves or enters the continental United States (or a port or station in the 225-mile zone) and the point at which it enters or leaves Hawaii or Alaska. 1040es form Leaving or entering occurs when the route of the transportation passes over either the United States border or a point 3 nautical miles (3. 1040es form 45 statute miles) from low tide on the coast line, or when it leaves a port or station in the 225-mile zone. 1040es form Therefore, this transportation is subject to the percentage tax on the part of the trip in U. 1040es form S. 1040es form airspace, the domestic-segment tax for each domestic segment, and the tax on the use of international air travel facilities, discussed later. 1040es form Transportation within Alaska or Hawaii. 1040es form   The tax on transportation of persons by air applies to the entire fare paid in the case of flights between any of the Hawaiian Islands, and between any ports or stations in the Aleutian Islands or other ports or stations elsewhere in Alaska. 1040es form The tax applies even though parts of the flights may be over international waters or over Canada, if no point on the direct line of transportation between the ports or stations is more than 225 miles from the United States (Hawaii or Alaska). 1040es form Package tours. 1040es form   The air transportation taxes apply to “complimentary” air transportation furnished solely to participants in package holiday tours. 1040es form The amount paid for these package tours includes a charge for air transportation even though it may be advertised as “free. 1040es form ” This rule also applies to the tax on the use of international air travel facilities, discussed later. 1040es form Liability for tax. 1040es form   The person paying for taxable transportation is liable for the tax and, ordinarily, the person receiving the payment collects the tax, files the returns, and pays the tax over to the government. 1040es form However, if payment is made outside the United States for a prepaid order, exchange order, or similar order, the person furnishing the initial transportation provided for under that order must collect the tax. 1040es form    A travel agency that is an independent broker and sells tours on aircraft that it charters must collect the transportation tax, file the returns, and pay the tax over to the government. 1040es form However, a travel agency that sells tours as the agent of an airline must collect the tax and remit it to the airline for the filing of returns and for the payment of the tax over to the government. 1040es form An independent third party that is not under the airline's supervision or control, but is acting on behalf of, and receiving compensation from, a passenger, is not required to collect the tax and pay it to the government. 1040es form For more information on resellers of air transportation, see Revenue Ruling 2006-52. 1040es form You can find Revenue Ruling 2006-52 on page 761 of I. 1040es form R. 1040es form B. 1040es form 2006-43 at www. 1040es form irs. 1040es form gov/pub/irs-irbs/irb06-43. 1040es form pdf. 1040es form   The fact that the aircraft does not use public or commercial airports in taking off and landing has no effect on the tax. 1040es form But see Certain helicopter uses, later. 1040es form   For taxable transportation that begins and ends in the United States, the tax applies regardless of whether the payment is made in or outside the United States. 1040es form   If the tax is not paid when payment for the transportation is made, the air carrier providing the initial segment of the transportation that begins or ends in the United States becomes liable for the tax. 1040es form Exemptions. 1040es form   The tax on transportation of persons by air does not apply in the following situations. 1040es form See also Special Rules on Transportation Taxes, later. 1040es form Military personnel on international trips. 1040es form   When traveling in uniform at their own expense, United States military personnel on authorized leave are deemed to be traveling in uninterrupted international air transportation (defined earlier) even if the scheduled interval between arrival and departure at any station in the United States is actually more than 12 hours. 1040es form However, such personnel must buy their tickets within 12 hours after landing at the first domestic airport and accept the first available accommodation of the type called for by their tickets. 1040es form The trip must begin or end outside the United States and the 225-mile zone. 1040es form Certain helicopter uses. 1040es form   The tax does not apply to air transportation by helicopter if the helicopter is used for any of the following purposes. 1040es form Transporting individuals, equipment, or supplies in the exploration for, or the development or removal of, hard minerals, oil, or gas. 1040es form Planting, cultivating, cutting, transporting, or caring for trees (including logging operations). 1040es form Providing emergency medical transportation. 1040es form   However, during a use described in items (1) or (2), the tax applies if the helicopter takes off from, or lands at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise uses services provided under section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code. 1040es form For item (1), treat each flight segment as a separate flight. 1040es form Fixed-wing aircraft uses. 1040es form   The tax does not apply to air transportation by fixed-wing aircraft if the fixed-wing aircraft is used for any of the following purposes. 1040es form Planting, cultivating, cutting, transporting, or caring for trees (including logging operations). 1040es form Providing emergency medical transportation. 1040es form The aircraft must be equipped for and exclusively dedicated on that flight to acute care emergency medical services. 1040es form   However, during a use described in item (1), the tax applies if the fixed-wing aircraft takes off from, or lands at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise uses services provided under section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code. 1040es form Skydiving. 1040es form   The tax does not apply to any air transportation exclusively for the purpose of skydiving. 1040es form Seaplanes. 1040es form   The tax does not apply to any air transportation by seaplane for any segment consisting of a takeoff from, and a landing on, water if the places where the takeoff and landing occur are not receiving financial assistance from the Airport and Airways Trust Fund. 1040es form Bonus tickets. 1040es form   The tax does not apply to free bonus tickets issued by an airline company to its customers who have satisfied all requirements to qualify for the bonus tickets. 1040es form However, the tax applies to amounts paid by customers for advance bonus tickets when customers have traveled insufficient mileage to fully qualify for the free advance bonus tickets. 1040es form International Air Travel Facilities A tax per person is imposed (whether in or outside the United States) for international flights that begin or end in the United States. 1040es form However, for a domestic segment that begins or ends in Alaska or Hawaii, a reduced tax per person applies only to departures. 1040es form This tax does not apply if all the transportation is subject to the percentage tax, discussed earlier. 1040es form It also doesn't apply if the surtax on fuel used in a fractional ownership program aircraft (discussed earlier) is imposed. 1040es form See the Instructions for Form 720 for the tax rates. 1040es form Transportation of Property by Air A tax of 6. 1040es form 25% is imposed on amounts paid (whether in or outside the United States) for transportation of property by air. 1040es form The fact that the aircraft may not use public or commercial airports in taking off and landing has no effect on the tax. 1040es form The tax applies only to amounts paid to a person engaged in the business of transporting property by air for hire. 1040es form The tax applies only to transportation (including layover time and movement of aircraft in deadhead service) that begins and ends in the United States. 1040es form Thus, the tax does not apply to transportation of property by air that begins or ends outside the United States. 1040es form Exemptions. 1040es form   The tax on transportation of property by air does not apply in the following situations. 1040es form See also Special Rules on Transportation Taxes, later. 1040es form Cropdusting and firefighting service. 1040es form   The tax does not apply to amounts paid for cropdusting or aerial firefighting service. 1040es form Exportation. 1040es form    The tax does not apply to payments for transportation of property by air in the course of exportation (including to United States possessions) by continuous movement, as evidenced by the execution of Form 1363, Export Exemption Certificate. 1040es form See Form 1363 for more information. 1040es form Certain helicopter and fixed-wing air ambulance uses. 1040es form   The tax does not apply to amounts paid for the use of helicopters in construction to set heating and air conditioning units on roofs of buildings, to dismantle tower cranes, and to aid in construction of power lines and ski lifts. 1040es form   The tax also does not apply to air transportation by helicopter or fixed-wing aircraft for the purpose of providing emergency medical services. 1040es form The fixed-wing aircraft must be equipped for and exclusively dedicated on that flight to acute care emergency medical services. 1040es form Skydiving. 1040es form   The tax does not apply to any air transportation exclusively for the purpose of skydiving. 1040es form Excess baggage. 1040es form    The tax does not apply to excess baggage accompanying a passenger on an aircraft operated on an established line. 1040es form Surtax on fuel used in a fractional ownership program aircraft. 1040es form   The tax does not apply if the surtax on fuel used in a fractional ownership program aircraft (discussed earlier) is imposed. 1040es form Alaska and Hawaii. 1040es form   For transportation of property to and from Alaska and Hawaii, the tax in general does not apply to the portion of the transportation that is entirely outside the continental United States (or the 225-mile zone if the aircraft departs from or arrives at an airport in the 225-mile zone). 1040es form But the tax applies to flights between ports or stations in Alaska and the Aleutian Islands, as well as between ports or stations in Hawaii. 1040es form The tax applies even though parts of the flights may be over international waters or over Canada, if no point on a line drawn from where the route of transportation leaves the United States (Alaska) to where it reenters the United States (Alaska) is more than 225 miles from the United States. 1040es form Liability for tax. 1040es form   The person paying for taxable transportation is liable for the tax and, ordinarily, the person engaged in the business of transporting property by air for hire receives the payment, collects the tax, files the returns, and pays the tax over to the government. 1040es form   If tax is not paid when a payment is made outside the United States, the person furnishing the last segment of taxable transportation collects the tax from the person to whom the property is delivered in the United States. 1040es form Special Rules on Transportation Taxes In certain circumstances, special rules apply to the taxes on transportation of persons and property by air. 1040es form Aircraft used by affiliated corporations. 1040es form   The taxes do not apply to payments received by one member of an affiliated group of corporations from another member for services furnished in connection with the use of an aircraft. 1040es form However, the aircraft must be owned or leased by a member of the affiliated group and cannot be available for hire by a nonmember of the affiliated group. 1040es form Determine whether an aircraft is available for hire by a nonmember of an affiliated group on a flight-by-flight basis. 1040es form   For this rule, an affiliated group of corporations is any group of corporations connected with a common parent corporation through 80% or more of stock ownership. 1040es form Small aircraft. 1040es form   The taxes do not apply to transportation furnished by an aircraft having a maximum certificated takeoff weight of 6,000 pounds or less. 1040es form However, the taxes do apply if the aircraft is operated on an established line. 1040es form “Operated on an established line” means the aircraft operates with some degree of regularity between definite points. 1040es form However, it does not include any time an aircraft is being operated on a flight that is solely for sightseeing. 1040es form   Consider an aircraft to be operated on an established line if it is operated on a charter basis between two cities also served by that carrier on a regularly scheduled basis. 1040es form   Also, the taxes apply if the aircraft is jet-powered, regardless of its maximum certificated takeoff weight or whether or not it is operated on an established line. 1040es form Mixed load of persons and property. 1040es form   If a single amount is paid for air transportation of persons and property, the payment must be allocated between the amount subject to the tax on transportation of persons and the amount subject to the tax on transportation of property. 1040es form The allocation must be reasonable and supported by adequate records. 1040es form Credits or refunds. 1040es form   If tax is collected and paid over for air transportation that is not taxable air transportation, the collector may claim a credit or refund if it has repaid the tax to the person from whom the tax was collected or obtained the consent of that person to the allowance of the credit or refund. 1040es form Alternatively, the person who paid the tax may claim a refund. 1040es form For information on how to file for credits or refunds, see the Instructions for Form 720 or Form 8849. 1040es form Prev  Up  Next   Home   More Online Publications
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The 1040es Form

1040es form Publication 556 - Main Content Table of Contents Examination of ReturnsIf Your Return Is Examined Interest Netting Abatement of Interest Due to Error or Delay by the IRS Abatement of Interest for Individuals Affected by Presidentially Declared Disasters or Military or Terrorist Actions Offer in Compromise Appeal RightsAppeal Within the IRS Appeals to the Courts Refund or Credit of Overpayments Before Final Determination Claims for RefundTime for Filing a Claim for Refund Limit on Amount of Refund Processing Claims for Refund Reduced Refund How To Get Tax Help Examination of Returns Your return may be examined for a variety of reasons, and the examination may take place in any one of several ways. 1040es form After the examination, if any changes to your tax are proposed, you can either agree with those changes and pay any additional tax you may owe, or you can disagree with the changes and appeal the decision. 1040es form Examination selection criteria. 1040es form   Your return may be selected for examination on the basis of computer scoring. 1040es form A computer program called the Discriminant Inventory Function System (DIF) assigns a numeric score to each individual and some corporate tax returns after they have been processed. 1040es form If your return is selected because of a high score under the DIF system, the potential is high that an examination of your return will result in a change to your income tax liability. 1040es form   Your return may also be selected for examination on the basis of information received from third-party documentation, such as Forms 1099 and W-2, that does not match the information reported on your return. 1040es form Or, your return may be selected to address both the questionable treatment of an item and to study the behavior of similar taxpayers (a market segment) in handling a tax issue. 1040es form   In addition, your return may be selected as a result of information received from other sources on potential noncompliance with the tax laws or inaccurate filing. 1040es form This information can come from a number of sources, including newspapers, public records, and individuals. 1040es form The information is evaluated for reliability and accuracy before it is used as the basis of an examination or investigation. 1040es form Notice of IRS contact of third parties. 1040es form    The IRS must give you reasonable notice before contacting other persons about your tax matters. 1040es form You must be given reasonable notice in advance that, in examining or collecting your tax liability, the IRS may contact third parties such as your neighbors, banks, employers, or employees. 1040es form The IRS must also give you notice of specific contacts by providing you with a record of persons contacted on both a periodic basis and upon your request. 1040es form    This provision does not apply: To any pending criminal investigation, When providing notice would jeopardize collection of any tax liability, Where providing notice may result in reprisal against any person, or When you authorized the contact. 1040es form Taxpayer Advocate Service. 1040es form   The Taxpayer Advocate Service is an independent organization within the IRS whose goal is to help taxpayers resolve problems with the IRS. 1040es form If you have an ongoing issue with the IRS that has not been resolved through normal processes, or your problems with the IRS are causing financial difficulty, contact the Taxpayer Advocate Service. 1040es form    Before contacting the Taxpayer Advocate Service, you should first discuss any problem with a supervisor. 1040es form Your local Taxpayer Advocate will assist you if you are unable to resolve the problem with the supervisor. 1040es form   For more information, see Publication 1546. 1040es form See How To Get Tax Help , near the end of this publication, for more information about contacting the Taxpayer Advocate Service. 1040es form Comments from small business. 1040es form    The Small Business and Agricultural Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards have been established to receive comments from small business about federal agency enforcement actions. 1040es form The Ombudsman will annually evaluate the enforcement activities of each agency and rate their responsiveness to small business. 1040es form If you wish to comment on the enforcement actions of the IRS, you can take any of the following steps. 1040es form Fax your comments to 1-202-481-5719. 1040es form Write to the following address: Office of the National Ombudsman U. 1040es form S. 1040es form Small Business Administration 409 3rd Street, SW Washington, DC 20416 Call 1-888-734-3247. 1040es form Send an email to ombudsman@sba. 1040es form gov. 1040es form File a comment or complaint online at www. 1040es form sba. 1040es form gov/ombudsman. 1040es form If Your Return Is Examined Some examinations are handled entirely by mail. 1040es form Examinations not handled by mail can take place in your home, your place of business, an Internal Revenue office, or the office of your authorized representative. 1040es form If the time, place, or method is not convenient for you, the examiner will try to work out something more suitable. 1040es form However, the IRS makes the final determination of when, where, and how the examination will take place. 1040es form Throughout the examination, you can act on your own behalf or have someone represent you or accompany you. 1040es form If you filed a joint return, either you or your spouse, or both, can meet with the IRS. 1040es form The person representing you can be any federally authorized practitioner, including an attorney, a certified public accountant, an enrolled agent (a person enrolled to practice before the IRS), an enrolled actuary, or the person who prepared the return and signed it as the preparer. 1040es form If you want someone to represent you in your absence, you must furnish that person with proper written authorization. 1040es form You can use Form 2848 or any other properly written authorization. 1040es form If you want to consult with an attorney, a certified public accountant, an enrolled agent, or any other person permitted to represent a taxpayer during an interview for examining a tax return or collecting tax, you should make arrangements with that person to be available for the interview. 1040es form In most cases, the IRS must suspend the interview and reschedule it. 1040es form The IRS cannot suspend the interview if you are there because of an administrative summons. 1040es form Third party authorization. 1040es form   If you checked the box in the signature area of your income tax return (Form 1040, Form 1040A, or Form 1040EZ) to allow the IRS to discuss your return with another person (a third party designee), this authorization does not replace Form 2848. 1040es form The box you checked on your return only authorizes the other person to receive information about the processing of your return and the status of your refund during the period your return is being processed. 1040es form For more information, see the instructions for your return. 1040es form Confidentiality privilege. 1040es form   Generally, the same confidentiality protection that you have with an attorney also applies to certain communications that you have with federally authorized practitioners. 1040es form   Confidential communications are those that: Advise you on tax matters within the scope of the practitioner's authority to practice before the IRS, Would be confidential between an attorney and you, and Relate to noncriminal tax matters before the IRS, or Relate to noncriminal tax proceedings brought in federal court by or against the United States. 1040es form   In the case of communications in connection with the promotion of a person's participation in a tax shelter, the confidentiality privilege does not apply to written communications between a federally authorized practitioner and that person, any director, officer, employee, agent, or representative of that person, or any other person holding a capital or profits interest in that person. 1040es form   A tax shelter is any entity, plan, or arrangement, a significant purpose of which is the avoidance or evasion of income tax. 1040es form Recordings. 1040es form    You can make an audio recording of the examination interview. 1040es form Your request to record the interview should be made in writing. 1040es form You must notify the examiner 10 days in advance and bring your own recording equipment. 1040es form The IRS also can record an interview. 1040es form If the IRS initiates the recording, you must be notified 10 days in advance and you can get a copy of the recording at your expense. 1040es form Transfers to another area. 1040es form    Generally, your return is examined in the area where you live. 1040es form But if your return can be examined more quickly and conveniently in another area, such as where your books and records are located, you can ask to have the case transferred to that area. 1040es form Repeat examinations. 1040es form    The IRS tries to avoid repeat examinations of the same items, but sometimes this happens. 1040es form If your tax return was examined for the same items in either of the 2 previous years and no change was proposed to your tax liability, please contact the IRS as soon as possible to see if the examination should be discontinued. 1040es form The Examination An examination usually begins when you are notified that your return has been selected. 1040es form The IRS will tell you which records you will need. 1040es form The examination can proceed more easily if you gather your records before any interview. 1040es form Any proposed changes to your return will be explained to you or your authorized representative. 1040es form It is important that you understand the reasons for any proposed changes. 1040es form You should not hesitate to ask about anything that is unclear to you. 1040es form The IRS must follow the tax laws set forth by Congress in the Internal Revenue Code. 1040es form The IRS also follows Treasury Regulations, other rules, and procedures that were written to administer the tax laws and court decisions. 1040es form However, the IRS can lose cases that involve taxpayers with the same issue and still apply its interpretation of the law to your situation. 1040es form Most taxpayers agree to changes proposed by examiners, and the examinations are closed at this level. 1040es form If you do not agree, you can appeal any proposed change by following the procedures provided to you by the IRS. 1040es form A more complete discussion of appeal rights is found later under Appeal Rights . 1040es form If You Agree If you agree with the proposed changes, you can sign an agreement form and pay any additional tax you may owe. 1040es form You must pay interest on any additional tax. 1040es form If you pay when you sign the agreement, the interest is generally figured from the due date of your return (excluding any extension of time to file) to the date of your payment. 1040es form If you do not pay the additional tax when you sign the agreement, you will receive a bill that includes interest. 1040es form If you pay the amount due within 10 business days of the billing date, you will not have to pay more interest or penalties. 1040es form This period is extended to 21 calendar days if the amount due is less than $100,000. 1040es form If you are due a refund, you will receive it sooner if you sign the agreement form. 1040es form You will be paid interest on the refund. 1040es form If the IRS accepts your tax return as filed, you will receive a letter in a few weeks stating that the examiner proposed no changes to your return. 1040es form You should keep this letter with your tax records. 1040es form If You Do Not Agree If you do not agree with the proposed changes, the examiner will explain your appeal rights. 1040es form If your examination takes place in an IRS office, you can request an immediate meeting with the examiner's supervisor to explain your position. 1040es form If an agreement is reached, your case will be closed. 1040es form If you cannot reach an agreement with the supervisor at this meeting, or if the examination took place outside of an IRS office, the examiner will write up your case explaining your position and the IRS's position. 1040es form The examiner will forward your case for processing. 1040es form Fast track mediation. 1040es form   The IRS offers fast track mediation services to help taxpayers resolve many disputes resulting from: Examinations (audits), Offers in compromise, Trust fund recovery penalties, and Other collection actions. 1040es form   Most cases that are not docketed in any court qualify for fast track mediation. 1040es form Mediation can take place at a conference you request with a supervisor, or later. 1040es form The process involves an Appeals Officer who has been trained in mediation. 1040es form You may represent yourself at the mediation session, or someone else can act as your representative. 1040es form For more information, see Publication 3605. 1040es form 30-day letter and 90-day letter. 1040es form   Within a few weeks after your closing conference with the examiner and/or supervisor, you will receive a package with: A letter (known as a 30-day letter) notifying you of your right to appeal the proposed changes within 30 days, A copy of the examination report explaining the examiner's proposed changes, An agreement or waiver form, and A copy of Publication 5. 1040es form You generally have 30 days from the date of the 30-day letter to tell the IRS whether you will accept or appeal the proposed changes. 1040es form The letter will explain what steps you should take, depending on which action you choose. 1040es form Be sure to follow the instructions carefully. 1040es form Appeal Rights are explained later. 1040es form 90-day letter. 1040es form   If you do not respond to the 30-day letter, or if you later do not reach an agreement with an Appeals Officer, the IRS will send you a 90-day letter, which is also known as a notice of deficiency. 1040es form You will have 90 days (150 days if it is addressed to you outside the United States) from the date of this notice to file a petition with the Tax Court. 1040es form Filing a petition with the Tax Court is discussed later under Appeals to the Courts and Tax Court . 1040es form The notice will show the 90th (or 150th) day by which you must file your petition with the Tax Court. 1040es form Suspension of interest and penalties. 1040es form   Generally, the IRS has 3 years from the date you filed your return (or the date the return was due, if later) to assess any additional tax. 1040es form However, if you file your return timely (including extensions), interest and certain penalties will be suspended if the IRS does not mail a notice to you, stating your liability and the basis for that liability, within a 36-month period beginning on the later of: The date on which you filed your tax return, or The due date (without extensions) of your tax return. 1040es form If the IRS mails a notice after the 36-month period, interest and certain penalties applicable to the suspension period will be suspended. 1040es form   The suspension period begins the day after the close of the 36-month period and ends 21 days after the IRS mails a notice to you stating your liability and the basis for that liability. 1040es form Also, the suspension period applies separately to each notice stating your liability and the basis for that liability received by you. 1040es form    The suspension does not apply to a: Failure-to-pay penalty, Fraudulent tax return, Penalty, interest, addition to tax, or additional amount with respect to any tax liability shown on your return or with respect to any gross misstatement, Penalty, interest, addition to tax, or additional amount with respect to any reportable transaction that is not adequately disclosed or any listed transaction, or Criminal penalty. 1040es form Seeking relief from improperly assessed interest. 1040es form   You can seek relief if interest is assessed for periods during which interest should have been suspended because the IRS did not mail a notice to you in a timely manner. 1040es form   If you believe that interest was assessed with respect to a period during which interest should have been suspended, submit Form 843, writing “Section 6404(g) Notification” at the top of the form, with the IRS Service Center where you filed your return. 1040es form The IRS will review the Form 843 and notify you whether interest will be abated. 1040es form If the IRS does not abate interest, you can pay the disputed interest assessment and file a claim for refund. 1040es form If your claim is denied or not acted upon within 6 months from the date you filed it, you can file suit for a refund in your United States District Court or in the United States Court of Federal Claims. 1040es form   If you believe that an IRS officer or employee has made an unreasonable error or delay in performing a ministerial or managerial act (discussed later under Abatement of Interest Due to Error or Delay by the IRS ), file Form 843 with the IRS Service Center where you filed the tax return. 1040es form If the IRS denies your claim, the Tax Court may be able to review that determination. 1040es form See Tax Court can review failure to abate interest later under Abatement of Interest Due to Error or Delay by the IRS . 1040es form If you later agree. 1040es form    If you agree with the examiner's changes after receiving the examination report or the 30-day letter, sign and return either the examination report or the waiver form. 1040es form Keep a copy for your records. 1040es form You can pay any additional amount you owe without waiting for a bill. 1040es form Include interest on the additional tax at the applicable rate. 1040es form This interest rate is usually for the period from the due date of the return (excluding any extension of time to file) to the date of payment. 1040es form The examiner can tell you the interest rate(s) or help you figure the amount. 1040es form   You must pay interest on penalties and additions to tax for failing to file returns, for overstating valuations, for understating valuations on estate and gift tax returns, and for substantially understating tax liability. 1040es form Interest is generally figured from the date (including extensions) the tax return is required to be filed to the date you pay the penalty and/or additions to tax. 1040es form   If you pay the amount due within 10 business days after the date of notice and demand for immediate payment, you will not have to pay any additional penalties and interest. 1040es form This period is extended to 21 calendar days if the amount due is less than $100,000. 1040es form How To Stop Interest From Accruing If you think that you will owe additional tax at the end of the examination, you can stop the further accrual of interest by sending money to the IRS to cover all or part of the amount you think you will owe. 1040es form Interest on part or all of any amount you owe will stop accruing on the date the IRS receives your money. 1040es form You can send an amount either in the form of a deposit in the nature of a cash bond or as a payment of tax. 1040es form Both a deposit and a payment stop any further accrual of interest. 1040es form However, making a deposit or payment will stop the accrual of interest on only the amount you sent. 1040es form Because of compounding rules, interest will continue to accrue on accrued interest, even though you have paid the underlying tax. 1040es form To stop the accrual of interest on both tax and interest, you must make a deposit or payment for both the tax and interest that has accrued as of the date of deposit or payment. 1040es form Payment or Deposit Deposits differ from payments in two ways: You can have all or part of your deposit returned to you without filing for a refund. 1040es form However, if you request and receive your deposit and the IRS later assesses a deficiency for that period and type of tax, interest will be figured as if the funds were never on deposit. 1040es form Also, your deposit will not be returned if one of the following situations applies: The IRS assesses a tax liability. 1040es form The IRS determines that, by returning the deposit, it may not be able to collect a future deficiency. 1040es form The IRS determines that the deposit should be applied against another tax liability. 1040es form Deposits returned to you will include interest based on the Federal short-term rate determined under section 6621(b). 1040es form The deposit returned will be treated as a tax payment to the extent of the disputed tax. 1040es form A disputed tax means the amount of tax specified at the time of deposit as a reasonable estimate of the maximum amount of any tax owed by you, such as the deficiency proposed in the 30-day letter. 1040es form Notice not mailed. 1040es form    If you send money before the IRS mails you a notice of deficiency, you can ask the IRS to treat it as a deposit. 1040es form You must make your request in writing. 1040es form   If, after being notified of a proposed liability but before the IRS mails you a notice of deficiency, you send an amount large enough to cover the proposed liability, it will be considered a payment unless you request in writing that it be treated as a deposit. 1040es form Keep copies of all correspondence you send to the IRS. 1040es form   If the amount you send is at least as much as the proposed liability and you do not request that it be treated as a deposit, the IRS will not send you a notice of deficiency. 1040es form If you do not receive a notice of deficiency, you cannot take your case to the Tax Court. 1040es form See Tax Court , later under Appeal Rights . 1040es form Notice mailed. 1040es form    If, after the IRS mails the notice of deficiency, you send money without written instructions, it will be treated as a payment. 1040es form You will still be able to petition the Tax Court. 1040es form   If you send money after receiving a notice of deficiency and you have specified in writing that it is a “deposit in the nature of a cash bond,” the IRS will treat it as a deposit if you send it before either: The close of the 90-day or 150-day period for filing a petition with the Tax Court to appeal the deficiency, or The date the Tax Court decision is final, if you have filed a petition. 1040es form Using a Deposit To Pay the Tax If you agree with the examiner's proposed changes after the examination, your deposit will be applied against any amount you may owe. 1040es form The IRS will not mail you a notice of deficiency and you will not have the right to take your case to the Tax Court. 1040es form If you do not agree to the full amount of the deficiency after the examination, the IRS will mail you a notice of deficiency. 1040es form Your deposit will be applied against the proposed deficiency unless you write to the IRS before the end of the 90-day or 150-day period stating that you still want the money to be treated as a deposit. 1040es form You will still have the right to take your case to the Tax Court. 1040es form Installment Agreement Request You can request a monthly installment plan if you cannot pay the full amount you owe. 1040es form To be valid, your request must be approved by the IRS. 1040es form However, if you owe $10,000 or less in tax and you meet certain other criteria, the IRS must accept your request. 1040es form Before you request an installment agreement, you should consider other less costly alternatives, such as a bank loan. 1040es form You will continue to be charged interest and penalties on the amount you owe until it is paid in full. 1040es form Unless your income is below a certain level, the fee for an approved installment agreement has increased to $105 ($52 if you make your payments by electronic funds withdrawal). 1040es form If your income is below a certain level, you may qualify to pay a reduced fee of $43. 1040es form For more information about installment agreements, see Form 9465, Installment Agreement Request. 1040es form Interest Netting If you owe interest to the IRS on an underpayment for the same period the IRS owes you interest on an overpayment, the IRS will figure interest on the underpayment and overpayment at the same interest rate (up to the amount of the overpayment). 1040es form As a result, the net rate is zero for that period. 1040es form Abatement of Interest Due to Error or Delay by the IRS The IRS may abate (reduce) the amount of interest you owe if the interest is due to an unreasonable error or delay by an IRS officer or employee in performing a ministerial or managerial act (discussed later). 1040es form Only the amount of interest on income, estate, gift, generation-skipping, and certain excise taxes can be reduced. 1040es form The amount of interest will not be reduced if you or anyone related to you contributed significantly to the error or delay. 1040es form Also, the interest will be reduced only if the error or delay happened after the IRS contacted you in writing about the deficiency or payment on which the interest is based. 1040es form An audit notification letter is such a contact. 1040es form The IRS cannot reduce the amount of interest due to a general administrative decision, such as a decision on how to organize the processing of tax returns. 1040es form Ministerial act. 1040es form    This is a procedural or mechanical act, not involving the exercise of judgment or discretion, during the processing of a case after all prerequisites (for example, conferences and review by supervisors) have taken place. 1040es form A decision concerning the proper application of federal tax law (or other federal or state law) is not a ministerial act. 1040es form Example 1. 1040es form You move from one state to another before the IRS selects your tax return for examination. 1040es form A letter stating that your return has been selected is sent to your old address and then forwarded to your new address. 1040es form When you get the letter, you respond with a request that the examination be transferred to the area office closest to your new address. 1040es form The examination group manager approves your request. 1040es form After your request has been approved, the transfer is a ministerial act. 1040es form The IRS can reduce the interest because of any unreasonable delay in transferring the case. 1040es form Example 2. 1040es form An examination of your return reveals tax due for which a notice of deficiency (90-day letter) will be issued. 1040es form After you and the IRS discuss the issues, the notice is prepared and reviewed. 1040es form After the review process, issuing the notice of deficiency is a ministerial act. 1040es form If there is an unreasonable delay in sending the notice of deficiency to you, the IRS can reduce the interest resulting from the delay. 1040es form Managerial act. 1040es form    This is an administrative act during the processing of a case that involves the loss of records or the exercise of judgment or discretion concerning the management of personnel. 1040es form A decision concerning the proper application of federal tax law (or other federal or state law) is not a managerial act. 1040es form Example. 1040es form A revenue agent is examining your tax return. 1040es form During the middle of the examination, the agent is sent to an extended training course. 1040es form The agent's supervisor decides not to reassign your case, so the work is unreasonably delayed until the agent returns. 1040es form Interest from the unreasonable delay can be abated since both the decision to send the agent to the training class and not to reassign the case are managerial acts. 1040es form How to request abatement of interest. 1040es form    You request an abatement (reduction) of interest on Form 843. 1040es form You should file the claim with the IRS Service Center where you filed the tax return that was affected by the error or delay. 1040es form   If you have already paid the interest and you would like a credit or refund of interest paid, you must file Form 843 within 3 years from the date you filed your original return or 2 years from the date you paid the interest, whichever is later. 1040es form If you have not paid any of the interest, these time limitations for filing Form 843 do not apply. 1040es form   Generally, you should file a separate Form 843 for each tax period and each type of tax. 1040es form However, complete only one Form 843 if the interest is from an IRS error or delay that affected your tax for more than one tax period or for more than one type of tax (for example, where 2 or more tax years were being examined). 1040es form   If your request for abatement of interest is denied, you can appeal the decision to the IRS Appeals Office. 1040es form Tax Court can review failure to abate interest. 1040es form    The Tax Court can review the IRS's refusal to abate (reduce) interest if all of the following requirements are met: You filed a request for abatement of interest (Form 843) with the IRS after July 30,1996. 1040es form The IRS has mailed you a notice of final determination or a notice of disallowance. 1040es form You file a petition with the Tax Court within 180 days of the mailing of the notice of final determination or the notice of disallowance. 1040es form   The following requirements must also be met: For individual and estate taxpayers — your net worth must not exceed $2 million as of the filing date of your petition for review. 1040es form For this purpose, individuals filing a joint return shall be treated as separate individuals. 1040es form For charities and certain cooperatives — you must not have more than 500 employees as of the filing date of your petition for review. 1040es form For all other taxpayers — your net worth must not exceed $7 million, and you must not have more than 500 employees as of the filing date of your petition for review. 1040es form Abatement of Interest for Individuals Affected by Presidentially Declared Disasters or Military or Terrorist Actions If you are (or were) affected by a Presidentially declared disaster occurring after 1996 or a terrorist or military action occurring after September 10, 2001, the IRS may abate (reduce) the amount of interest you owe on certain taxes. 1040es form The IRS may abate interest for the period of any additional time to file or pay that the IRS provides on account of the disaster or the terrorist or military action. 1040es form The IRS will issue a notice or news release indicating who are affected taxpayers and stating the period of relief. 1040es form If you are eligible for relief from interest, but were charged interest for the period of relief, the IRS may retroactively abate your interest. 1040es form To the extent possible, the IRS can take the following actions: Make appropriate adjustments to your account. 1040es form Notify you when the adjustments are made. 1040es form Refund any interest paid by you where appropriate. 1040es form For more information on disaster area losses, see Disaster Area Losses in Publication 547. 1040es form For more information on other tax relief for victims of terrorist attacks, see Publication 3920. 1040es form Offer in Compromise In certain circumstances, the IRS will allow you to pay less than the full amount you owe. 1040es form If you think you may qualify, you should submit your offer by filing Form 656, Offer in Compromise. 1040es form The IRS may accept your offer for any of the following reasons: There is doubt about the amount you owe (or whether you owe it). 1040es form There is doubt as to whether you can pay the amount you owe based on your financial situation. 1040es form An economic hardship would result if you had to pay the full amount owed. 1040es form Your case presents compelling reasons that the IRS determines are a sufficient basis for compromise. 1040es form If your offer is rejected, you have 30 days to ask the Appeals Office of the IRS to reconsider your offer. 1040es form The IRS offers fast track mediation services to help taxpayers resolve many issues including a dispute regarding an offer in compromise. 1040es form For more information, see Publication 3605. 1040es form Generally, if you submit an offer in compromise, the IRS will delay certain collection activities. 1040es form The IRS usually will not levy (take) your property to settle your tax bill during the following periods: While the IRS is evaluating your offer in compromise. 1040es form The 30 days immediately after the offer is rejected. 1040es form While your timely-filed appeal is being considered by Appeals. 1040es form Also, if the IRS rejects your original offer and you submit a revised offer within 30 days of the rejection, the IRS generally will not levy your property while it considers your revised offer. 1040es form For more information about submitting an offer in compromise, see Form 656. 1040es form Appeal Rights Because people sometimes disagree on tax matters, the IRS has an appeals system. 1040es form Most differences can be settled within this system without expensive and time-consuming court trials. 1040es form However, your reasons for disagreeing must come within the scope of the tax laws. 1040es form For example, you cannot appeal your case based only on moral, religious, political, constitutional, conscientious, or similar grounds. 1040es form In most instances, you may be eligible to take your case to court if you do not reach an agreement at your appeals conference, or if you do not want to appeal your case to the IRS Office of Appeals. 1040es form See Appeals to the Courts , later, for more information. 1040es form Appeal Within the IRS You can appeal an IRS tax decision to a local Appeals Office, which is separate from and independent of the IRS office taking the action you disagree with. 1040es form The Appeals Office is the only level of appeal within the IRS. 1040es form Conferences with Appeals Office personnel are held in an informal manner by correspondence, by telephone, or at a personal conference. 1040es form If you want an appeals conference, follow the instructions in the letter you received. 1040es form Your request will be sent to the Appeals Office to arrange a conference at a convenient time and place. 1040es form You or your representative should be prepared to discuss all disputed issues at the conference. 1040es form Most differences are settled at this level. 1040es form If agreement is not reached at your appeals conference, you may be eligible to take your case to court. 1040es form See Appeals to the Courts , later. 1040es form Protests and Small Case Requests When you request an Appeals conference, you may also need to file either a formal written protest or a small case request with the office named in the letter you received. 1040es form Also, see the special appeal request procedures in Publication 1660. 1040es form Written protest. 1040es form   You need to file a written protest in the following cases: All employee plan and exempt organization cases without regard to the dollar amount at issue. 1040es form All partnership and S corporation cases without regard to the dollar amount at issue. 1040es form All other cases, unless you qualify for the small case request procedure, or other special appeal procedures such as requesting Appeals consideration of liens, levies, seizures, or installment agreements. 1040es form   If you must submit a written protest, see the instructions in Publication 5 about the information you need to provide. 1040es form The IRS urges you to provide as much information as you can, as it will help speed up your appeal. 1040es form That will save you both time and money. 1040es form    Be sure to send the protest within the time limit specified in the letter you received. 1040es form Small case request. 1040es form   If the total amount for any tax period is not more than $25,000, you may make a small case request instead of filing a formal written protest. 1040es form In figuring the total amount, include a proposed increase or decrease in tax (including penalties), or claimed refund. 1040es form If you are making an offer in compromise, include total unpaid tax, penalty, and interest due. 1040es form For a small case request, follow the instructions in our letter to you by sending a letter: Requesting Appeals consideration, Indicating the changes you do not agree with, and Indicating the reasons why you do not agree. 1040es form Representation You can represent yourself at your appeals conference, or you can be represented by any federally authorized practitioner, including an attorney, a certified public accountant, an enrolled actuary, or an enrolled agent. 1040es form If your representative attends a conference without you, he or she can receive or inspect confidential information only if you have filed a power of attorney or a tax information authorization. 1040es form You can use a Form 2848 or any other properly written power of attorney or authorization. 1040es form You can also bring witnesses to support your position. 1040es form Confidentiality privilege. 1040es form   Generally, the same confidentiality protection that you have with an attorney also applies to certain communications that you have with federally authorized practitioners. 1040es form See Confidentiality privilege under If Your Return Is Examined , earlier. 1040es form Appeals to the Courts If you and the IRS still disagree after the appeals conference, you may be entitled to take your case to the United States Tax Court, the United States Court of Federal Claims, or a United States District Court. 1040es form These courts are independent of the IRS. 1040es form If you elect to bypass the IRS's appeals system, you may be able to take your case to one of the courts listed above. 1040es form However, a case petitioned to the United States Tax Court will normally be considered for settlement by an Appeals Officer before the Tax Court hears the case. 1040es form If you unreasonably fail to pursue the IRS's appeals system, or if your case is intended primarily to cause a delay, or your position is frivolous or groundless, the Tax Court may impose a penalty of up to $25,000. 1040es form See Appeal Within the IRS, earlier. 1040es form Prohibition on requests to taxpayers to give up rights to bring civil action. 1040es form   The Government cannot ask you to waive your right to sue the United States or a Government officer or employee for any action taken in connection with the tax laws. 1040es form However, your right to sue can be waived if: You knowingly and voluntarily waive that right, The request to waive that right is made in writing to your attorney or other federally authorized practitioner, or The request is made in person and your attorney or other representative is present. 1040es form Burden of proof. 1040es form   For court proceedings resulting from examinations started after July 22, 1998, the IRS generally has the burden of proof for any factual issue if you have met the following requirements: You introduced credible evidence relating to the issue. 1040es form You complied with all substantiation requirements of the Internal Revenue Code. 1040es form You maintained all records required by the Internal Revenue Code. 1040es form You cooperated with all reasonable requests by the IRS for information regarding the preparation and related tax treatment of any item reported on your tax return. 1040es form You had a net worth of $7 million or less and not more than 500 employees at the time your tax liability is contested in any court proceeding if your tax return is for a corporation, partnership, or trust. 1040es form    The burden of proof does not change on an issue when another provision of the tax laws requires a specific burden of proof with respect to that issue. 1040es form Use of statistical information. 1040es form   In the case of an individual, the IRS has the burden of proof in court proceedings based on any IRS reconstruction of income solely through the use of statistical information on unrelated taxpayers. 1040es form Penalties. 1040es form   The IRS has the burden of initially producing evidence in court proceedings with respect to the liability of any individual taxpayer for any penalty, addition to tax, or additional amount imposed by the tax laws. 1040es form Recovering litigation or administrative costs. 1040es form   These are the expenses that you pay to defend your position to the IRS or the courts. 1040es form You may be able to recover reasonable litigation or administrative costs if all of the following conditions apply: You are the prevailing party. 1040es form You exhaust all administrative remedies within the IRS. 1040es form Your net worth is below a certain limit (see Net worth requirements , later). 1040es form You do not unreasonably delay the proceeding. 1040es form You apply for administrative costs within 90 days of the date on which the final decision of the IRS Office of Appeals as to the determination of the tax, interest, or penalty was mailed to you. 1040es form You apply for litigation costs within the time frames provided by Tax Court Rule 231, found at http://www. 1040es form ustaxcourt. 1040es form gov  www. 1040es form ustaxcourt. 1040es form gov . 1040es form   Prevailing party, reasonable litigation costs, and reasonable administrative costs are explained later. 1040es form Note. 1040es form If the IRS denies your award of administrative costs, and you want to appeal, you must petition the Tax Court within 90 days of the date on which the IRS mails the denial notice. 1040es form Prevailing party. 1040es form   Generally, you are the prevailing party if: You substantially prevail with respect to the amount in controversy or on the most significant tax issue or set of issues in question, and You meet the net worth requirements, discussed later. 1040es form   You will not be treated as the prevailing party if the United States establishes that its position was substantially justified. 1040es form The position of the United States is presumed not to be substantially justified if the IRS: Did not follow its applicable published guidance (such as regulations, revenue rulings, notices, announcements, private letter rulings, technical advice memoranda, and determination letters issued to the taxpayer) in the proceeding (This presumption can be overcome by evidence. 1040es form ), or Has lost in courts of appeal for other circuits on substantially similar issues. 1040es form   The court will generally decide who is the prevailing party. 1040es form Reasonable litigation costs. 1040es form   These include the following costs: Reasonable court costs. 1040es form The reasonable costs of studies, analyses, engineering reports, tests, or projects found by the court to be necessary for the preparation of your case. 1040es form The reasonable costs of expert witnesses. 1040es form Attorney fees that generally may not exceed $125 maximum hourly rate as set by statute and indexed for inflation. 1040es form See Attorney fees , later. 1040es form Reasonable administrative costs. 1040es form   These include the following costs: Any administrative fees or similar charges imposed by the IRS. 1040es form The reasonable costs of studies, analyses, engineering reports, tests, or projects. 1040es form The reasonable costs of expert witnesses. 1040es form Attorney fees that generally may not exceed $125 per hour. 1040es form See Attorney fees , later. 1040es form Timing of costs. 1040es form    Administrative costs can be awarded for costs incurred after the earliest of: The date the first letter of proposed deficiency is sent that allows you an opportunity to request administrative review in the IRS Office of Appeals, The date you receive notice of the IRS Office of Appeals' decision, or The date of the notice of deficiency. 1040es form Net worth requirements. 1040es form   An individual taxpayer may be able to recover litigation or administrative costs if the following requirements are met: For individuals — your net worth does not exceed $2 million as of the filing date of your petition for review. 1040es form For this purpose, individuals filing a joint return are treated as separate individuals. 1040es form For estates — your net worth does not exceed $2 million as of the date of the decedent's death. 1040es form For charities and certain cooperatives — you do not have more than 500 employees as of the filing date of your petition for review. 1040es form For all other taxpayers — as of the filing date of your petition for review, your net worth does not exceed $7 million, and you must not have more than 500 employees. 1040es form Qualified offer rule. 1040es form    You can also receive reasonable costs and fees and be treated as a prevailing party in a civil action or proceeding if: You make a qualified offer to the IRS to settle your case, The IRS does not accept that offer, and The tax liability (not including interest, unless interest is at issue) later determined by the court is equal to or less than the amount of your qualified offer. 1040es form You must also meet the remaining requirements, including the exhaustion of administrative remedies and the net worth requirement, discussed earlier, to get the benefit of the qualified offer rule. 1040es form Qualified offer. 1040es form    This is a written offer made by you during the qualified offer period. 1040es form It must specify both the offered amount of your liability (not including interest) and that it is a qualified offer. 1040es form   To be a qualified offer, it must remain open from the date it is made until the earliest of: The date it is rejected, The date the trial begins, or 90 days from the date it is made. 1040es form Qualified offer period. 1040es form    This period begins on the day the IRS mails you the first letter of proposed deficiency that allows you to request review by the IRS Office of Appeals. 1040es form It ends 30 days before your case is first set for trial. 1040es form Attorney fees. 1040es form   Attorney fees generally may not exceed $125 maximum hourly rate as set by statute and indexed for inflation. 1040es form However, this amount can be higher in certain limited circumstances depending on the level of difficulty of the issues in the case and the local availability of tax expertise. 1040es form See IRS. 1040es form gov for more information. 1040es form    Attorney fees include the fees paid by a taxpayer for the services of anyone who is authorized to practice before the Tax Court or before the IRS. 1040es form In addition, attorney fees can be awarded in civil actions for unauthorized inspection or disclosure of a taxpayer's return or return information. 1040es form   Fees can be awarded in excess of the actual amount charged if: You are represented for no fee, or for a nominal fee, as a pro bono service, and The award is paid to your representative or to your representative's employer. 1040es form Jurisdiction for determination of employment status. 1040es form    The Tax Court can review IRS employment status determinations (for example, whether individuals hired by you are in fact your employees or independent contractors) and the amount of employment tax under such determinations. 1040es form Tax Court review can take place only if, in connection with an audit of any person, there is a controversy involving a determination by the IRS that either: One or more individuals performing services for that person are employees of that person, or That person is not entitled to relief under Section 530(a) of the Revenue Act of 1978 (discussed later). 1040es form   The following rules also apply to a Tax Court review of employment status: A Tax Court petition to review these determinations can be filed only by the person for whom the services are performed, If you receive a Notice of Determination by certified or registered mail, you must file a petition for Tax Court review within 90 days of the date of mailing that notice (150 days if the notice is addressed to you outside the United States), If during the Tax Court proceeding, you begin to treat as an employee an individual whose employment status is at issue, the Tax Court will not consider that change in its decision, Assessment and collection of tax is suspended while the Tax Court review is taking place, Payment of the asserted employment tax deficiency is not required to petition the U. 1040es form S. 1040es form Tax Court for a determination of employment status. 1040es form There can be a de novo review by the Tax Court (a review which does not consider IRS administrative findings), and At your request and with the Tax Court's agreement, small tax case procedures (discussed later) are available to simplify the case resolution process when the amount at issue (including additions to tax and penalties) is $50,000 or less for each tax period involved. 1040es form   For further information, see Publication 3953, Questions and Answers About Tax Court Proceedings for Determination of Employment Status Under IRC Section 7436. 1040es form Section 530(a) of the Revenue Act of 1978. 1040es form   This section relieves an employer of certain employment tax responsibilities for individuals not treated as employees. 1040es form It also provides relief to taxpayers under audit or involved in administrative or judicial proceedings. 1040es form Tax Court review of request for relief from joint and several liability on a joint return. 1040es form    As discussed later, at Relief from joint and several liability on a joint return under Claims for Refund, you can request relief from liability for tax you owe, plus related penalties and interest, that you believe should be paid by your spouse (or former spouse). 1040es form You also can petition (ask) the Tax Court to review your request for innocent spouse relief or separation of liability if either: The IRS sends you a determination notice denying, in whole or in part, your request, or You do not receive a determination notice from the IRS within 6 months from the date you file Form 8857. 1040es form   If you receive a determination notice, you must petition the Tax Court to review your request during the 90-day period that begins on the date the IRS mails the notice. 1040es form See Publication 971 for more information. 1040es form Note. 1040es form Your spouse or former spouse may file a written protest and request an Appeals conference to protest your claim of innocent spouse relief or separation of liability. 1040es form See Rev. 1040es form Proc. 1040es form 2003-19, which is on page 371 of the Internal Revenue Bulletin 2003-5 at  www. 1040es form irs. 1040es form gov/pub/irs-irbs/irb03-05. 1040es form pdf. 1040es form Tax Court You can take your case to the United States Tax Court if you disagree with the IRS over: Income tax, Estate tax, Gift tax, Employment tax involving IRS employment status determinations, or Certain excise taxes of private foundations, public charities, qualified pension and other retirement plans, or real estate investment trusts. 1040es form For information on Tax Court review of a determination of employment status, see Jurisdiction for determination of employment status, earlier. 1040es form For information on Tax Court review of an IRS refusal to abate interest, see Tax Court can review failure to abate interest, earlier under Examination of Returns. 1040es form For information on Tax Court review of Appeals determinations with respect to lien notices and proposed levies, see Publication 1660. 1040es form You cannot take your case to the Tax Court before the IRS sends you a notice of deficiency. 1040es form You can only appeal your case if you file a petition within 90 days from the date the notice is mailed to you (150 days if it is addressed to you outside the United States). 1040es form The notice will show the 90th (or 150th) day by which you must file your petition with the Tax Court. 1040es form Withdrawal of notice of deficiency. 1040es form If you consent, the IRS can withdraw a notice of deficiency. 1040es form A notice of deficiency may be rescinded if the notice was issued as a result of an administrative error; the taxpayer submits information establishing the actual tax due is less than the amount shown in the notice; the taxpayer specifically requests a conference with the appropriate Appeals office for the purpose of entering into settlement negotiations. 1040es form However, the notice may be rescinded only if the appropriate Appeals office first decides that the case is susceptible to agreement. 1040es form See Revenue Procedure 98-54 for a more detailed explanation of the requirements. 1040es form Once withdrawn, the limits on credits, refunds, and assessments concerning the notice are void, and you and the IRS have the rights and obligations that you had before the notice was issued. 1040es form The suspension of any time limitation while the notice of deficiency was issued will not change when the notice is withdrawn. 1040es form After the notice is withdrawn, you cannot file a petition with the Tax Court based on the notice. 1040es form Also, the IRS can later issue a notice of deficiency in a greater or lesser amount than the amount in the withdrawn deficiency. 1040es form Generally, the Tax Court hears cases before any tax has been assessed and paid; however, you can pay the tax after the notice of deficiency has been issued and still petition the Tax Court for review. 1040es form If you do not file your petition on time, the proposed tax will be assessed, a bill will be sent, and you will not be able to take your case to the Tax Court. 1040es form Under the law, you must pay the tax within 21 days (10 business days if the amount is $100,000 or more). 1040es form Collection can proceed even if you think that the amount is excessive. 1040es form Publication 594 explains IRS collection procedures. 1040es form If you filed your petition on time, the court will schedule your case for trial at a location convenient to you. 1040es form You can represent yourself before the Tax Court or you can be represented by anyone admitted to practice before that court. 1040es form Small tax case procedure. 1040es form   If the amount in your case is $50,000 or less for any 1 tax year or period, you can request that your case be handled under the small tax case procedure. 1040es form If the Tax Court approves, you can present your case to the Tax Court for a decision that is final and that you cannot appeal. 1040es form You can get more information regarding the small tax case procedure and other Tax Court matters from the United States Tax Court, 400 Second Street, N. 1040es form W. 1040es form , Washington, DC 20217. 1040es form More information can be found on the Tax Court's website at www. 1040es form ustaxcourt. 1040es form gov. 1040es form Motion to request redetermination of interest. 1040es form   In certain cases, you can file a motion asking the Tax Court to redetermine the amount of interest on either an underpayment or an overpayment. 1040es form You can do this only in a situation that meets all of the following requirements: The IRS has assessed a deficiency that was determined by the Tax Court. 1040es form The assessment included interest. 1040es form You have paid the entire amount of the deficiency plus the interest claimed by the IRS. 1040es form The Tax Court has found that you made an overpayment. 1040es form You must file the motion within one year after the decision of the Tax Court becomes final. 1040es form District Court and Court of Federal Claims Generally, the District Courts and the Court of Federal Claims hear tax cases only after you have paid the entire tax and penalties, and filed a claim for a credit or refund. 1040es form The taxpayer may litigate certain types of employment tax cases in either the United States District Court or the United States Court of Federal Claims. 1040es form Before taxpayers can initiate suit in either of these courts with respect to certain employment taxes, they will have to pay, at a minimum, the employment tax assessment attributable to one employee for any one quarter and file a claim for refund of the tax. 1040es form Once the claim for refund is denied or 6 months elapse without any action by the IRS, the taxpayer may initiate suit. 1040es form As explained later under Claims for Refund, you can file a claim with the IRS for a credit or refund if you think that the tax you paid is incorrect or excessive. 1040es form If your claim is totally or partially disallowed by the IRS, you should receive a notice of claim disallowance. 1040es form If the IRS does not act on your claim within 6 months from the date you filed it, you can then file suit for a refund. 1040es form You generally must file suit for a credit or refund no later than 2 years after the IRS informs you that your claim has been rejected. 1040es form However, you can file suit if it has been 6 months since you filed your claim and the IRS has not yet delivered a decision. 1040es form You can file suit for a credit or refund in your United States District Court or in the United States Court of Federal Claims. 1040es form However, you cannot appeal to the United States Court of Federal Claims if your claim is for credit or refund of a penalty that relates to promoting an abusive tax shelter or to aiding and abetting the understatement of tax liability on someone else's return. 1040es form For information about procedures for filing suit in either court, contact the Clerk of your District Court or of the United States Court of Federal Claims. 1040es form Refund or Credit of Overpayments Before Final Determination Any court with proper jurisdiction, including the Tax Court, can order the IRS to refund any part of a tax deficiency that the IRS collects from you during a period when the IRS is not permitted to assess that deficiency, or to levy or engage in any court proceeding to collect that deficiency. 1040es form In addition, the court can order a refund of any part of an overpayment determined by the Tax Court that is not at issue on appeal to a higher court. 1040es form The court can order these refunds before its decision on the case is final. 1040es form Taxpayers should thoroughly review IRS settlement offers before signing a Tax Court Decision document to ensure that all adjustments are correct, including the inclusion of any tax credits that the taxpayer is allowed to claim. 1040es form Note. 1040es form The court may no longer order a refund of an overpayment after the case is final. 1040es form Generally, the IRS is not permitted to take action on a tax deficiency during: The 90-day (or 150-day if outside the United States) period that you have to petition a notice of deficiency to the Tax Court, or The period that the case is under appeal if a bond is provided. 1040es form Claims for Refund If you believe you have overpaid your tax, you have a limited amount of time in which to file a claim for a credit or refund. 1040es form You can claim a credit or refund by filing Form 1040X. 1040es form See Time for Filing a Claim for Refund , later. 1040es form File your claim by mailing it to the IRS Service Center where you filed your original return. 1040es form File a separate form for each year or period involved. 1040es form Include an explanation of each item of income, deduction, or credit on which you are basing your claim. 1040es form Corporations should file Form 1120X, Amended U. 1040es form S. 1040es form Corporation Income Tax Return, or other form appropriate to the type of credit or refund claimed. 1040es form See Publication 3920 for information on filing claims for tax forgiveness for individuals affected by terrorist attacks. 1040es form Requesting a copy of your tax return. 1040es form   You can obtain a copy of the actual return and all attachments you filed with the IRS for an earlier year. 1040es form This includes a copy of the Form W-2 or Form 1099 filed with your return. 1040es form Use Form 4506 to make your request. 1040es form You will be charged a fee, which you must pay when you submit Form 4506. 1040es form Requesting a copy of your tax account information. 1040es form   Use Form 4506-T, Request for Transcript of Tax Return, to request free copies of your tax return transcript, tax account transcript, record of account, verification of nonfiling, or Form W-2, Form 1099 series, Form 1098 series, or Form 5498 series transcript. 1040es form The tax return transcript contains most of the line items of a tax return. 1040es form A tax account transcript contains information on the financial status of the account, such as payments, penalty assessments, and adjustments. 1040es form A record of account is a combination of line item information and later adjustments to the account. 1040es form Form W-2, Form 1099 series, Form 1098 series, or Form 5498 series transcript contains data from these information returns. 1040es form Penalty for erroneous claim for refund. 1040es form   If you claim an excessive amount of tax refund or credit relating to income tax (other than a claim relating to the earned income credit), you may be liable for a penalty of 20% of the amount that is determined to be excessive. 1040es form An excessive amount is the amount of the claim for refund or credit that is more than the amount of claim allowable for the tax year. 1040es form The penalty may be waived if you can show that you had a reasonable basis for making the claim. 1040es form Time for Filing a Claim for Refund Generally, you must file a claim for a credit or refund within 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later. 1040es form If you do not file a claim within this period, you may no longer be entitled to a credit or a refund. 1040es form If the due date to file a return or a claim for a credit or refund is a Saturday, Sunday, or legal holiday, it is filed on time if it is filed on the next business day. 1040es form Returns you filed before the due date are considered filed on the due date. 1040es form This is true even when the due date is a Saturday, Sunday, or legal holiday. 1040es form Disaster area claims for refund. 1040es form   If you live in a Presidentially declared disaster area or are affected by terroristic or military action, the deadline to file a claim for a refund may be postponed. 1040es form This section discusses the special rules that apply to Presidentially declared disaster area refunds. 1040es form    A Presidentially declared disaster is a disaster that occurred in an area declared by the President to be eligible for federal assistance under the Disaster Relief and Emergency Assistance Act. 1040es form Postponed refund deadlines. 1040es form   The IRS may postpone for up to 1 year the deadlines for filing a claim for refund. 1040es form The postponement can be used by taxpayers who are affected by a Presidentially declared disaster. 1040es form The IRS may also postpone deadlines for filing income and employment tax returns, paying income and employment taxes, and making contributions to a traditional IRA or Roth IRA. 1040es form For more information, see Publication 547. 1040es form   If any deadline is postponed, the IRS will publicize the postponement in your area and publish a news release, revenue ruling, revenue procedure, notice, announcement, or other guidance in the Internal Revenue Bulletin. 1040es form A list of the areas eligible for assistance under the Disaster Relief and Emergency Assistance Act is available at the Federal Emergency Management Agency (FEMA) website at www. 1040es form fema. 1040es form gov and at the IRS website at www. 1040es form irs. 1040es form gov. 1040es form Nonfilers can get refund of overpayments paid within 3-year period. 1040es form   The Tax Court can consider taxes paid during the 3-year period preceding the date of a notice of deficiency for determining any refund due to a nonfiler. 1040es form This means that if you do not file your return, and you receive a notice of deficiency in the third year after the due date (with extensions) of your return and file suit with the Tax Court to contest the notice of deficiency, you may be able to receive a refund of excessive amounts paid within the 3-year period preceding the date of the notice of deficiency. 1040es form The IRS may postpone for up to 1 year certain tax deadlines, including the time for filing claims for refund, for taxpayers who are affected by a terrorist attack occurring after September 10, 2001. 1040es form For more information, see Publication 3920. 1040es form Claim for refund by estates electing the installment method of payment. 1040es form   In certain cases where an estate has elected to make tax payments through the installment method, the executor can file a suit for refund with a U. 1040es form S. 1040es form District Court or the U. 1040es form S. 1040es form Court of Federal Claims before all the installment payments have been made. 1040es form However, all the following must be true before a suit can be filed: The estate consists largely of an interest in a closely-held business. 1040es form All installment payments due on or before the date the suit is filed have been made. 1040es form No accelerated installment payments have been made. 1040es form No Tax Court case is pending with respect to any estate tax liability. 1040es form If a notice of deficiency was issued to the estate regarding its liability for estate tax, the time for petitioning the Tax Court has passed. 1040es form No proceeding is pending for a declaratory judgment by the Tax Court on whether the estate is eligible to pay tax in installments. 1040es form The executor has not included any previously litigated issues in the current suit for refund. 1040es form The executor does not discontinue making installment payments timely, while the court considers the suit for refund. 1040es form    If in its final decision on the suit for refund the court redetermines the estate's tax liability, the IRS must refund any part of the estate tax amount that is disallowed. 1040es form This includes any part of the disallowed amount previously collected by the IRS. 1040es form Protective claim for refund. 1040es form   If your right to a refund is contingent on future events and may not be determinable until after the time period for filing a claim for refund expires, you can file a protective claim for refund. 1040es form A protective claim can be either a formal claim or an amended return for credit or refund. 1040es form Protective claims are often based on current litigation or expected changes in the tax law, other legislation, or regulations. 1040es form A protective claim preserves your right to claim a refund when the contingency is resolved. 1040es form A protective claim does not have to state a particular dollar amount or demand an immediate refund. 1040es form However, to be valid, a protective claim must: Be in writing and be signed, Include your name, address, social security number or individual taxpayer identification number, and other contact information, Identify and describe the contingencies affecting the claim, Clearly alert the IRS to the essential nature of the claim, and Identify the specific year(s) for which a refund is sought. 1040es form   Generally, the IRS will delay action on the protective claim until the contingency is resolved. 1040es form Once the contingency is resolved, the IRS may obtain additional information necessary to process the claim and then either allow or disallow the claim. 1040es form   Mail your protective claim for refund to the address listed in the instructions for Form 1040X, under Where To File. 1040es form Exceptions The limits on your claim for refund can be affected by the type of item that forms the basis of your claim. 1040es form Special refunds. 1040es form   If you file a claim for refund based on one of the items listed below, the limits discussed earlier under Time for Filing a Claim for Refund may not apply. 1040es form These special items are: A bad debt, A worthless security, A payment or accrual of foreign tax, A net operating loss carryback, and A carryback of certain tax credits. 1040es form   The limits discussed earlier also may not apply if you have signed an agreement to extend the period of assessment of tax. 1040es form For information on special rules on filing claims for an individual affected by a terrorist attack, see Publication 3920. 1040es form Periods of financial disability. 1040es form   If you are an individual (not a corporation or other taxpaying entity), the period of limitations on credits and refunds can be suspended during periods when you cannot manage your financial affairs because of physical or mental impairment that is medically determinable and either: Has lasted or can be expected to last continuously for at least 12 months, or Can be expected to result in death. 1040es form    The period for filing a claim for refund will not be suspended for any time that someone else, such as your spouse or guardian, was authorized to act for you in financial matters. 1040es form   To claim financial disability, you generally must submit the following statements with your claim for credit or refund: A written statement signed by a physician, qualified to make the determination, that sets forth: The name and a description of your physical or mental impairment, The physician's medical opinion that your physical or mental impairment prevented you from managing your financial affairs, The physician's medical opinion that your physical or mental impairment was or can be expected to result in death, or that it has lasted (or can be expected to last) for a continuous period of not less than 12 months, and To the best of the physician's knowledge, the specific time period during which you were prevented by such physical or mental impairment from managing your financial affairs, and A written statement by the person signing the claim for credit or refund that no person, including your spouse, was authorized to act on your behalf in financial matters during the period described in paragraph (1)(d) of the physician's statement. 1040es form Alternatively, if a person was authorized to act on your behalf in financial matters during any part of the period described in that paragraph, the beginning and ending dates of the period of time the person was so authorized. 1040es form    The period of limitations will not be suspended on any claim for refund that (without regard to this provision) was barred as of July 22, 1998. 1040es form Limit on Amount of Refund If you file your claim within 3 years after filing your return, the credit or refund cannot be more than the part of the tax paid wi