§ 4.6. Overpayment.
The Commonwealth is liable to pay interest on overpayments of tax originally due and payable on or after January 1, 1982 at the rate established for underpayments of the same tax for the same period. The overpayment will accrue interest at the rate in effect on the date the overpayment is deemed by the act to have occurred as described by the following paragraphs, subject to adjustments of the rate on January 1 of each succeeding year as in the case of underpayments under section 806.1(b) of the FC (72 P. S. § 806.1(b)). Interest will cease to accrue under § 4.7 (relating to termination of interest).
(1) Overpayment of tax. An overpayment is a payment of tax which is determined in the manner provided by statute not to be legally due.
(2) Overpayment of interest or penalty. An overpayment of interest or penalty may not bear interest under section 806.1(a)(7) of the FC (72 P. S. § 806.1(a)(7)).
(3) Date of overpayment. Interest will be allowed and paid for the period during which the Commonwealth retained the overpayment, beginning with the date of overpayment, except that the following applies:
(i) Withheld taxes. Taxes which are actually deducted and withheld at the source are deemed to be overpaid by the employe on the last day prescribed by law for filing the return for the taxable year, determined without regard to an extension of time for filing. Taxes withheld by the employer are deemed overpaid by the employer on the last day prescribed by statute for filing the return for the taxable period or the actual payment date, whichever is later under section 806.1(a)(1) of the FC (72 P. S. § 806.1(a)(1)).
(ii) Installments. An amount of tax overpaid as an installment payment, tentative tax or estimated tax is deemed to be overpaid on the last day prescribed by statute for filing the final return or report for the taxable year determined without regard for an extension of time for filing, or the actual payment date, whichever is later, under section 806.1(a)(2) of the FC (72 P. S. § 806.1(a)(2)).
(iii) Payments before due date. An overpayment made before the due date prescribed by statute for payment of the tax is deemed to have been made on the due date under section 806.1(a)(3) of the FC (72 P. S. § 806.1(a)(3)).
(iv) Taxes collected. Taxes collected by an officer, licensee or collector will be deemed to have been overpaid on the first date that the tax is required by statute to be reported and transmitted to the Department by the officer, licensee or collector, or on the date the tax is actually reported and transmitted to the Commonwealth, whichever is later, under section 806.1(a)(6) of the FC (72 P. S. § 806.1(a)(6)).
(v) Administrative or appellate review procedure. If a taxpayer commences an administrative or appellate review procedure by claiming to have made an overpayment, or contesting the Department’s refusal or denial of its claim, the claimed overpayment is deemed to have been made on the 60th day following the date of initiation of the review or appellate procedure.
Example. A corporation files its 1982 annual corporate tax report on April 15, 1983, reporting and paying its capital stock tax liability at $5,000. No tentative tax payment was made or required to be made. Settlement of this liability as reported is made on July 15, 1983.
Taxpayer files a petition for resettlement with the Board of Appeals on August 15, 1983, claiming an exemption for certain assets. The Board of Appeals refuses the petition on December 20, 1983.
Taxpayer files a petition for review with the Board of Finance and Revenue on December 31, 1983. The Board of Finance and Revenue resettles the tax liability at $4,000, granting a tax credit of $1,000. The initiation date of the administrative review procedure is August 15, 1983—the filing date of the petition for resettlement with the Board of Appeals—not December 31, 1983. Therefore, interest accrues on the $1,000 tax credit beginning October 14, 1983, the 60th day following the initiation of the administrative review.
(4) Period of overpayment for a final return or report. The following applies to the period of overpayment for a final return:
(i) Tax return or report. If an overpayment of tax is refunded or credited within 6 months after the last date prescribed for filing the final return or report of the tax, no interest will be allowed on the overpayment notwithstanding the initiation of an administrative or appellate review procedure. In case the final return or report is filed after the last day, and the overpayment is refunded or credited within 6 months after the date the final return or report is actually filed, no interest will be allowed on the overpayment under section 806.1(a)(5) of the FC (72 P. S. § 806.1(a)(5)). A final return or report is one filed in processible form which means that it shall be filed on a prescribed form containing the taxpayer’s name, address, and taxpayer’s identification number, where applicable, and have the required signature and required information sufficient to permit verification of the tax liability shown on the return. Where a credit or payment is to be applied against a reported tax liability, required information sufficient to verify the credit or payment shall be supplied. If a return or report is not received in processible form, the 6-month period will commence on the date the required additional information is received by the Department.
Example. A corporation files its 1982 annual corporate tax report on April 15, 1983, reporting and paying its capital stock tax liability at $5,000. No tentative tax payment was made or required to be made. Settlement of this liability as reported is made on July 15, 1983.
Taxpayer files a petition for resettlement with the Board of Appeals on July 30, 1983. The Board of Appeals resettles the tax liability at $4,000 by resettlement mailed on October 10, 1983. Although the 60th day following the initiation of the administrative review in this example is September 28, 1983, interest does not begin to accrue on September 28 because the notice of the final determination of the $1,000 credit was mailed on October 10, 1983, within 6 months of the filing of the final report on April 15, 1983.
(ii) Amended return or report. If a taxpayer claims an amount of tax to be overpaid, and the basis for the claimed overpayment consists of additional information that constitutes an amendment of the taxpayer’s prior return or report, the date of receipt by the Department of the additional information will be deemed to be the date of filing of the final return or report under section 806.1(a)(5) of the FC (72 P. S. § 806.1(a)(5)). Interest will be allowed and paid from the date of the overpayment on any portion of the claimed overpayment that is not credited or refunded within 6 months of the date of the Department’s receipt of the additional information.
(iii) Federal report of change. If the amount of taxable income, as returned by a corporation to the Federal government, is finally changed or corrected by the Commissioner of Internal Revenue, or by another agency or court of the United States, the corporation shall make a corrected report to the Department under section 406(a) of the TRC (72 P. S. § 7406(a)). The corrected report will be deemed a final return or report for purposes of section 806.1(a)(5) of the FC (72 P. S. § 806.1(a)(5)).
(5) Unidentified payments. The Department will not recognize as an overpayment of tax a payment which is made without an accompanying statement for the application of the payment. The payment may not bear interest.
(6) Superseding provision. If an administrative review or appellate procedure is initiated under paragraph (3)(v), the overpayment date is determined under section 806.1(a)(4) of the FC (72 P. S. § 806.1(a)(4)), except where paragraph (4)(i) applies.
Example 1. A taxpayer files his 1984 personal income return on April 15, 1985, claiming a refund of $100 of withheld taxes. Taxpayer’s Schedule C reports a loss, but claims apparently excessive deductions. Taxpayer fails to respond to the Department’s request for verification of the deductions. Therefore, the Department disallows the deductions and denies the refund.
Taxpayer files a petition for refund with the Board of Finance and Revenue on September 15, 1985. Taxpayer submits verification of the deductions to the Board of Finance and Revenue. The Board of Finance and Revenue grants the taxpayer a cash refund of $100 by order mailed December 15, 1985.
Interest does not begin to accrue April 15, 1985 on the $100 cash refund under paragraphs (3)(i) and (4)(i). Interest begins to accrue under paragraph (3)(v) on November 14, 1985, the 60th day following the initiation of the administrative review on September 15, 1985 by the filing of a petition for refund with the Board of Finance and Revenue.
Example 2. An employer files four quarterly returns during calendar year 1985, each return reporting $2,500 tax withheld from compensation. In February 1986 the employer discovers a bookkeeping error which overstated the amount of tax withheld as reported on the first quarterly return due April 30, 1985. On March 15, 1986 the employer files a petition for refund with the Board of Finance and Revenue, providing the Board with documentation establishing the employer’s right to the refund. Board of Finance and Revenue orders a cash refund on June 30, 1986. On August 15, 1986, the employer receives the cash refund check dated August 10, 1986. Interest does not begin to accrue on the cash refund beginning April 30, 1985 under paragraph (3)(i). Interest begins to accrue under paragraph (3)(v) on May 14, 1986, the 60th day following the initiation of the administrative review on March 15, 1986 by the filing of a petition for refund with the Board of Finance and Revenue.
Cross References This section cited in 61 Pa. Code § 35.2 (relating to interest, additions, penalties, crimes and offenses).
No part of the information on this site may be reproduced for profit or sold for profit.
This material has been drawn directly from the official Pennsylvania Code full text database. Due to the limitations of HTML or differences in display capabilities of different browsers, this version may differ slightly from the official printed version.
