IRS Revenue Ruling
2001-40

Code Sec. 6407

<<FULL TEXT>>

26 CFR 301.6407-1: Date of allowance of refund or credit

This revenue ruling modifies Revenue Ruling 78-127 by clarifying when
the Internal Revenue Service allows a refund or credit of an overassessed
tax.


REV. RUL. 2001-40

PURPOSE

This revenue ruling modifies the discussion of section 6407 of the
Internal Revenue Code (the Code) in Rev. Rul. 78-127 (1978-1 C.B. 436).
Specifically, this revenue ruling clarifies when the Internal Revenue
Service (the Service) allows a refund or credit of an overassessed tax.


LAW AND ANALYSIS

Section 6407 of the Code states: "The date on which the Secretary first
authorizes the scheduling of an overassessment of any internal revenue tax
shall be considered as the date of allowance of refund or credit in
respect of such tax."

Congress adopted the rule defining the scheduling date as the allowance
date in the Revenue Act of 1926. See section 1116 of the Act, the
predecessor of current section 6407 of the Code. The rule was designed to
reflect Service processing practice. The legislative history explains:

In the case of refunds, interest is allowed "to the date of the allowance
of the refund." In practice, the Commissioner first signs a schedule of
overassessments, which is sent to the collector, in order to determine
whether the overpayment should be credited or refunded. The committee
amendment proposes to fix as the date on which the refund is allowed the
date on which the Commissioner, signs the schedule of overassessments. (S.
Rep. No. 52, 69th Cong., 1st Sess. 38 (1926).)


Section 301.6407-1 of the Regulations on Procedure and Administration
reflects the legislative intent that the Secretary would delegate
authority to allow refunds and credits to Internal Revenue Service
officials. Over the years, different certifying officers have been
authorized to schedule overassessments and allow refunds and credits.

In addition, the Service has revised the method of scheduling
overassessments and allowing refunds and credits, For example, the Service
does not currently use Form 1166 to schedule overassessments. It may use
different paper forms or electronic entries to schedule and allow refunds
and credits. Regardless of processing method, the taxpayer's account will
reflect the date that the certifying officer schedules the overassessment.


HOLDING

Consequently, references to the Form 1166 and other processing forms
are removed from Rev. Rul. 78-127. The two paragraphs beginning "Section
6407 of the Code . . ." are modified to read as follows:

Section 6407 of the Code provides that the date on which the Secretary
first authorizes the scheduling of an overassessment of any internal
revenue tax shall be considered the date of allowance of any refund or
credit of the tax. Section 301.6407-1 of the regulations delegates
scheduling authority to a certifying officer. The certifying officer
authorizes a credit or refund by signing a schedule of overassessments
identifying the taxpayer and the amount of the overassessment.

The date the summary record of assessment is signed, and the date on which
the schedule of overassessments is signed are dates of authorization for
the purpose of section 301.6521-1(c) of the regulations.


EFFECT ON OTHER REVENUE RULING(S)

Rev. Rul. 78-127 is modified.


DRAFTING INFORMATION

The principal author of this revenue ruling is Tiffany P. Smith of the
Office of the Associate Chief Counsel (Procedure and Administration),
Administrative Provisions and Judicial Practice Division. For further
information regarding this revenue ruling, contact Tiffany Smith at (202)
622-4910 (not a toll-free call).

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