Bloomberg Bloomberg
Comprehensive Tax Research. Practitioner to Practitioner. ®

Internal Revenue Code, § 6425. Adjustment Of Overpayment Of Estimated Income Tax By Corporation

I.R.C. § 6425(a) Application Of Adjustment
I.R.C. § 6425(a)(1) Time For Filing
A corporation may, after the close of the taxable year and on or before the 15th day of the fourth month thereafter, and before the day on which it files a return for such taxable year, file an application for an adjustment of an overpayment by it of estimated income tax for such taxable year. An application under this subsection shall not constitute a claim for credit or refund.
I.R.C. § 6425(a)(2) Form Of Application, Etc.
An application under this subsection shall be verified in the manner prescribed by section 6065 in the case of a return of the taxpayer, and shall be filed in the manner and form required by regulations prescribed by the Secretary. The application shall set forth—
I.R.C. § 6425(a)(2)(A)
the estimated income tax paid by the corporation during the taxable year,
I.R.C. § 6425(a)(2)(B)
the amount which, at the time of filing the application, the corporation estimates as its income tax liability for the taxable year,
I.R.C. § 6425(a)(2)(C)
the amount of the adjustment, and
I.R.C. § 6425(a)(2)(D)
such other information for purposes of carrying out the provisions of this section as may be required by such regulations.
I.R.C. § 6425(b) Allowance Of Adjustment
I.R.C. § 6425(b)(1) Limited Examination Of Application
Within a period of 45 days from the date on which an application for an adjustment is filed under subsection (a), the Secretary shall make, to the extent he deems practicable in such period, a limited examination of the application to discover omissions and errors therein, and shall determine the amount of the adjustment upon the basis of the application and the examination; except that the Secretary may disallow, without further action, any application which he finds contains material omissions or errors which he deems cannot be corrected within such 45 days.
I.R.C. § 6425(b)(2) Adjustment Credited Or Refunded
The Secretary, within the 45-day period referred to in paragraph (1), may credit the amount of the adjustment against any liability in respect of an internal revenue tax on the part of the corporation and shall refund the remainder to the corporation.
I.R.C. § 6425(b)(3) Limitation
No application under this section shall be allowed unless the amount of the adjustment equals or exceeds (A) 10 percent of the amount estimated by the corporation on its application as its income tax liability for the taxable year, and (B) $500.
I.R.C. § 6425(b)(4) Effect Of Adjustment
For purposes of this title (other than section 6655), any adjustment under this section shall be treated as a reduction, in the estimated income tax paid, made on the day the credit is allowed or the refund is paid.
I.R.C. § 6425(c) Definitions
For purposes of this section and section 6655(h) (relating to excessive adjustment)—
I.R.C. § 6425(c)(1)
The term “income tax liability" means the excess of—
I.R.C. § 6425(c)(1)(A)
the sum of—
I.R.C. § 6425(c)(1)(A)(i)
the tax imposed by section 11, or subchapter L of chapter 1, whichever is applicable, plus
I.R.C. § 6425(c)(1)(A)(ii)
the tax imposed by section 59A, over
I.R.C. § 6425(c)(1)(B)
the credits against tax provided by part IV of subchapter A of chapter 1.
I.R.C. § 6425(c)(2)
The amount of an adjustment under this section is equal to the excess of—
I.R.C. § 6425(c)(2)(A)
the estimated income tax paid by the corporation during the taxable year, over
I.R.C. § 6425(c)(2)(B)
the amount which, at the time of filing the application, the corporation estimates as its income tax liability for the taxable year.
I.R.C. § 6425(d) Consolidated Returns
If the corporation seeking an adjustment under this section paid its estimated income tax on a consolidated basis or expects to make a consolidated return for the taxable year, this section shall apply only to such extent and subject to such conditions, limitations, and exceptions as the Secretary may by regulations prescribe.
(Added by Pub. L. 90-364, title I, 103(d)(1), June 28, 1968, 82 Stat. 262, and amended by Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 99-499, title V, 516(b)(4)(C), Oct. 17, 1986, 100 Stat. 1771; Pub. L. 99-514, title VII, 701(d)(2), Oct. 22, 1986, 100 Stat. 2342; Pub. L. 100-203, title X, 10301(b)(4), Dec. 22, 1987, 101 Stat. 1330-429 Pub. L. 113-295, Div. A, title II, Sec. 221(a)(12)(J), Dec. 19, 2014, 128 Stat. 4010; Pub. L. 114-41, title II, Sec. 2006(a)(2)(E), July 31, 2015, 129 Stat. 443; Pub. L. 115-97, title I, Secs. 12001(b)(17), 13001(b)(2)(P), 14401(d)(3), Dec. 22, 2017, 131 Stat. 2054; Pub. L. 115-141, Div. U, title IV, Sec. 401(a)(293), Mar. 23, 2018, 132 Stat. 348.)
BACKGROUND NOTES
AMENDMENTS
2018--Subsec. (c)(1)(A). Pub. L. 115-141, Div. U, Sec. 401(a)(293), amended subpar. (A) by substituting “the sum” for “The sum”.
2017--Subsec. (c)(1)(A). Pub. L. 115-97, Sec. 12001(b)(17), amended subpar. (A). Before amendment, it read as follows:
“(A) The sum of—
“(i) the tax imposed by section 11 or 1201(a), or subchapter L of chapter 1, whichever is applicable, plus
“(ii) the tax imposed by section 55, over”.
Subsec. (c)(1)(A). Pub. L. 115-97, Sec. 13001(b)(2)(P), amended subpar. (A) by striking “or 1201(a),”.
Subsec. (c)(1)(A). Pub. L. 115-97, Sec. 14401(d)(3), amended subpar. (A). Before amendment, it read as follows:
“(A) the tax imposed by section 11, or subchapter L of chapter 1, whichever is applicable, over’’.
2015--Subsec. (a)(1). Pub. L. 114-41, Sec. 2006(a)(2)(E), amended par. (1) by substituting “fourth month” for “third month”.
2014--Subsec. (c)(1)(A). Pub. L. 113-295, Div. A, Sec. 221(a)(12)(J), amended subpar. (A) by inserting “plus” at the end of clause (i), by substituting “over” for “plus” at the end of clause (ii), and by striking clause (iii). Before being struck, clause (iii) read as follows:
“(iii) the tax imposed by section 59A, over”.
1987--Subsec. (c). Pub. L. 100-203 substituted “section 6655(h)” for “section 6655(g)”.
1986--Subsec. (c)(1)(A). Pub. L. 99-514 amended subpar. (A) generally, restating existing provisions as cl. (i) and adding cl. (ii).
Pub. L. 99-499 amended subsec. (c)(1)(A), as amended by the Tax Reform Act of 1986 (Pub. L. 99-514), by striking out “plus” at end of cl. (i), substituting “plus” for “over” at end of cl. (ii), and adding cl. (iii).
1976--Subsecs. (a), (b), (d). Pub. L. 94-455 struck out “or his delegate” after “Secretary” wherever appearing.
EFFECTIVE DATE OF 2018 AMENDMENT
Amendment by Pub. L. 115-141, Div. U, Sec. 401(a)(293), effective March 23, 2018.
EFFECTIVE DATE OF 2017 AMENDMENTS
Amendments by Pub. L. 115-97, Sec. 12001(b)(17) and 13001(b)(2)(P), effective for taxable years beginning after December 31, 2017.
Amendment by Pub. L. 115-97, Sec. 14401(d)(3), effective for base erosion payments (as defined in section 59A(d) of the Internal Revenue Code of 1986) paid or accrued in taxable years beginning after December 31, 2017.
EFFECTIVE DATE OF 2015 AMENDMENT
Amendment by Pub. L. 114-41, Sec. 2006(a)(2)(E), effective for returns for taxable years beginning after December 31, 2015. Section 2006(a)(3)(B), provided the following special rule:
“(B) SPECIAL RULE FOR C CORPORATIONS WITH FISCAL YEARS ENDING ON JUNE 30.—In the case of any C corporation with a taxable year ending on June 30, the amendments made by this subsection shall apply to returns for taxable years beginning after December 31, 2025.”
EFFECTIVE DATE OF 2014 AMENDMENTS
Amendments by Pub. L. 113-295, Div. A, Sec. 221(a)(12)(J), effective on the date of the enactment of this Act [Enacted: Dec. 19, 2014].
Section 221(b)(2) of Pub. L. 113-295, Div. A, provided the following Savings Provision:
“(2) SAVINGS PROVISION.—If—
“(A) any provision amended or repealed by the amendments made by this section applied to—
“(i) any transaction occurring before the date of the enactment of this Act [Enacted: Dec. 19, 2014],
“(ii) any property acquired before such date of enactment, or
“(iii) any item of income, loss, deduction, or credit taken into account before such date of enactment, and
“(B) the treatment of such transaction, property, or item under such provision would (without regard to the amendments or repeals made by this section) affect the liability for tax for periods ending after date of enactment, nothing in the amendments or repeals made by this section shall be construed to affect the treatment of such transaction, property, or item for purposes of determining liability for tax for periods ending after such date of enactment.”
EFFECTIVE DATE OF 1987 AMENDMENT
Amendment by Pub. L. 100-203 applicable to taxable years beginning after Dec. 31, 1987, see section 10301(c) of Pub. L. 100-203, set out as a note under section 585 of this title.
EFFECTIVE DATE OF 1986 AMENDMENTS
Amendment by Pub. L. 99-514 applicable to taxable years beginning after Dec. 31, 1986, with certain exceptions and qualifications, see section 701(f) of Pub. L. 99-514, set out as an Effective Date note under section 55 of this title.
Amendment by Pub. L. 99-499 applicable to taxable years beginning after Dec. 31, 1986, see section 516(c) of Pub. L. 99-499, set out as a note under section 26 of this title.
EFFECTIVE DATE
Section applicable with respect to taxable years beginning after Dec. 31, 1967, except as provided by section 104 of Pub. L. 90-364, set out as notes under sections 6154 and 51 of this title, see section 103(f) of Pub. L. 90-364, set out as an Effective Date of 1968 Amendment note under section 6154 of this title.
APPLICABILITY OF CERTAIN AMENDMENTS BY PUB. L. 99-514 IN RELATION TO TREATY OBLIGATIONS OF UNITED STATES
For applicability of amendment by Pub. L. 99-514 notwithstanding any treaty obligation of the United States in effect on Oct. 22, 1986, see section 1012(aa)(2) of Pub. L. 100-647, set out as a note under section 861 of this title.
[6426. Repealed. Pub. L. 97-248, title II, 280(c)(2)(G), Sept. 3, 1982, 96 Stat. 564]
Section, added Pub. L. 91-258, title II, 206(c), May 21, 1970, 84 Stat. 245, and amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834, provided for a refund of aircraft use tax where plane transports for hire in foreign air commerce.
Effective Date of Repeal
Repeal applicable with respect to transportation beginning after Aug. 31, 1982, see section 280(d) of Pub. L. 97-248, set out as an Effective Date of 1982 Amendment note under section 4261 of this title.