Loopholes > Federal > Automatic Refund or Abatement of Disallowed Deficiencies
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Automatic Refund or Abatement of Disallowed Deficiencies

IRC §7486

If a taxpayer pays a deficiency (or does not stay collection) and the appeals court later disallows the deficiency, the IRS must automatically credit, refund, or abate the amount without the taxpayer filing a formal claim.

Eligibility

Applies when a Tax Court deficiency is overturned or reduced by a court of review and the amount was not stayed by a bond.

Frequently Asked Questions

Who is eligible for the Automatic Refund or Abatement of Disallowed Deficiencies?

Applies when a Tax Court deficiency is overturned or reduced by a court of review and the amount was not stayed by a bond.

How does the Automatic Refund or Abatement of Disallowed Deficiencies work?

If a taxpayer pays a deficiency (or does not stay collection) and the appeals court later disallows the deficiency, the IRS must automatically credit, refund, or abate the amount without the taxpayer filing a formal claim.

What law authorizes the Automatic Refund or Abatement of Disallowed Deficiencies?

The Automatic Refund or Abatement of Disallowed Deficiencies is authorized under IRC §7486 of the Internal Revenue Code (Title 26, United States Code).

Statutory Text — IRC §7486

Source: Internal Revenue Code, Title 26, United States Code

§ 7486. Refund, credit, or abatement of amounts dis­allowed In cases where assessment or collection has not been stayed by the filing of a bond, then if the amount of the deficiency determined by the Tax Court is disallowed in whole or in part by the court of review, the amount so disallowed shall be credited or refunded to the taxpayer, without the making of claim therefor, or, if collection has not been made, shall be abated. (Aug. 16, 1954, ch. 736, 68A Stat. 891.)

Legal Sources

US Code (Official) — 26 USC §7486 → Cornell Law Institute — 26 USC §7486 → Search IRS.gov for IRC §7486 → Treasury Regulations (26 CFR) →
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