Mo. Code Regs. tit. 12 § 10-2.070

Current through Register Vol. 49, No.12, June 17, 2024

Section 12 CSR 10-2.070 - Interest on Overpayments

PURPOSE: This rule sets forth the circumstances under which a taxpayer who has paid too much tax will receive interest on the amount of the tax refund.

(1) Authority for Rule. This rule is being issued under the general regulatory powers granted to the director of revenue and the specific authority set forth in section 143.811, RSMo.

(2) Applicability and Scope of Rule. This rule shall apply to those instances in which an overpayment of the taxes imposed by sections 143.011-143.996, RSMo has occurred and shall apply only with respect to taxable periods beginning on or after January 1, 1973. It is intended to serve as an interpretive guideline in the application of section 143.811.1., 2., 4. and 5., RSMo as affected by sections 143.601 and 143.801, RSMo.

(3) The term sections 143.011-143.996, RSMo shall mean the Missouri Income Tax Law, which became effective on January 1, 1973.

(4) As used in this rule, the term director shall mean the director of revenue or his/her duly authorized agent or designee.

(5) Subject to the limitations provided in this rule, interest shall be allowed and paid upon any overpayment with respect to the taxpayer's liability for taxes, computed on a daily basis at the rate provided by statute, from the dates of the overpayment to the date shown on the refund check that is issued by the treasurer of Missouri. If the taxpayer elects to have all or a part of the overpayment shown on the return applied to the taxpayer's estimated tax for a succeeding year, the portion of the overpayment that is credited to the estimated tax for the succeeding year or any installment shall be considered to be refunded to the taxpayer on the date that the original return was filed and no interest shall be allowed on the portion of the overpayment so credited or applied.

(6) Time Return Filed. For purposes of this rule, a return filed before the last day prescribed for the filing of the return shall be considered as filed on the last day (determined without regard to any extensions of time for filing the return). For returns filed after the fifteenth day of the fourth month following the close of the taxpayer's taxable year, the time filed shall be the actual time filed.

(7) Time Tax Paid. For purposes of this rule, payment of any portion of the tax made before the fifteenth day of the fourth month following the close of the taxpayer's taxable year shall be considered as paid on the fifteenth day of the fourth month. For payments made after the fifteenth day of the fourth month following the close of the taxpayer's taxable year, whether or not a valid extension of time to pay is in effect, the time paid shall be the actual time paid.

(8) Limitations. If any overpayment is refunded within four (4) months after the last date prescribed (or permitted by extension of time) for filing the original return of the tax or within four (4) months after the return was filed, whichever is later, no interest shall be allowed on the overpayment as provided by section 143.811.4., RSMo. Where the taxpayer's return is not complete, delaying the processing by the director and requiring the director to request additional information from the taxpayer, the four (4)-month period referred to in this rule shall begin at such time as the additional requested information is submitted.

(9) Carrybacks of Net Operating Loss and Corporate Capital Loss. Any overpayment resulting from a carryback, including a net operating loss and a corporate capital loss, shall be deemed not to have been made prior to the close of the taxable year in which the loss arises, per section 143.811.5., RSMo. The carryback will be deemed to be an amended federal income tax return under section 143.601, RSMo which requires that any taxpayer filing an amended federal income tax return shall also file, within ninety (90) days after that, an amended return under sections 143.011-143.996, RSMo.

(10) Examples: The amounts used in any of the following examples for additions to tax and interest are for illustrative purposes only and do not necessarily reflect the actual additions to tax and interest that might be due in those situations. For purposes of these examples, current year returns shall mean returns filed, or required to be filed, for the immediately preceding taxable year for taxes imposed by sections 143.011-143.996, RSMo:

(A) Taxpayer files his/her 1974 calendar year return on January 15, 1975 indicating an overpayment. If the director makes a refund of the overpayment on or before August 15, 1975, no interest shall be allowed on the overpayment. In this example, the return is considered filed on the last day prescribed for the filing (April 15, 1975) and the director has four (4) months in which to make the refund. If the refund is not made by August 15, 1975, interest shall be allowed and paid for the period April 15, 1975 (the date the tax is considered paid) until the date of the refund;

(B) Taxpayer files his/her 1974 calendar year return on June 15, 1975 with a valid sixty (60)-day extension of time to file in effect, indicating an overpayment. All tax payments were made on or before April 15, 1975. If the director makes a refund of the overpayment on or before October 15, 1975, no interest shall be allowed on the overpayment. In this example, even though the tax is considered paid on April 15, 1975, the director has four (4) months in which to make the refund from the date the return is filed. If the refund is not made by October 15, 1975, interest shall be allowed and paid for the period April 15, 1975 until the date of the refund. The result in this example would be the same whether or not a valid extension of time to file or pay the tax had been in effect;

(C) Taxpayer files his/her 1974 calendar year return on June 15, 1975 indicating a balance due of one hundred fifty dollars ($150) which is paid with the return, there being no valid extension of time to file the return or pay the tax in effect. Upon subsequent review of the return, a mathematical error is discovered overstating the taxpayer's 1974 tax liability by two hundred dollars ($200). If the director makes a refund of the overpayment on or before October 15, 1975, no interest shall be allowed on the overpayment. If the refund is not made on or before October 15, 1975, interest shall be allowed and paid on the overpayment in the following manner. On the fifty-dollar ($50) overpayment that would have been shown on the original return, if correctly filed, from April 15, 1975 to the date of the refund; and on the one hundred and fifty dollars ($150) paid with the original return, from June 15, 1975 (the date the tax was paid) to the date of the refund. The result in this example would be the same whether or not a valid extension of time to file or pay the tax had been in effect; and

(D) Taxpayer, a corporation, files its estimated tax declaration for calendar year 1975 with the director and pays the first two installment payments of five hundred dollars ($500) each on April 15, 1975 and June 15, 1975, respectively. Taxpayer incurs a net operating loss for calendar year 1975 and files his/her Missouri income tax return on April 15, 1976, requesting a refund of the resulting overpayment. The taxpayer fails to attach to its Missouri return a copy of the federal form 1120 as required. Upon timely review of the taxpayer's Missouri return, the director requests from the taxpayer a copy of the federal return which is not submitted until December 15, 1976. If the director makes a refund of the overpayment on or before April 15, 1977, no interest shall be allowed on the overpayment. If the refund is made after April 15, 1977, interest shall be allowed and paid from April 15, 1976 to the date of the refund. In this example, the four (4)-month noninterest payment period does not begin until the required information is submitted.

(11) Change in Federal Taxable Income. Section 143.601, RSMo provides that if the amount of the taxpayer's federal taxable income reported on his/her federal income tax return, for any taxable year, is changed or corrected by the United States Internal Revenue Service (IRS) or other competent authority, or as the result of a renegotiation of a contract or subcontract with the United States, the taxpayer shall report the change or correction in federal taxable income within ninety (90) days after the final determination of the change, correction or renegotiation. Any taxpayer filing an amended federal income tax return also shall file, within ninety (90) days after that, an amended return under sections 143.011-143.996, RSMo and shall provide information as the director may require. The examples under this section do not apply where the federal change is on account of a net operating or a corporate capital loss carryback.

(A) On January 15, 1975, taxpayer's federal taxable income for calendar year 1973 is changed by the United States IRS indicating an overpayment. Taxpayer files an amended return with the director on April 15, 1975 (the ninetieth day) reflecting the federal changes and indicating an overpayment of his/her 1973 income tax liability. Taxpayer filed his/her 1973 income tax return and paid the tax on or before April 15, 1974. In this situation, interest shall be allowed and paid from April 15, 1974 until the date of the refund.

(B) On January 15, 1975, taxpayer's federal taxable income for calendar year 1973 is changed by the United States IRS indicating an overpayment. Taxpayer files an amended return with the director on April 30, 1975 (after the ninetieth day) reflecting the federal change and indicating an overpayment of his/her 1973 income tax liability. Taxpayer filed his/her 1973 income tax return and paid the tax prior to April 15, 1974. In this situation, interest shall be allowed and paid from April 15, 1974 until April 15, 1975 (the ninetieth day). Note that in this case, failure to file an amended return within the ninety (90)-day period required by section 143.601, RSMo shall cause the interest to cease to accrue after the ninetieth day.

(C) Assume the same fact as in subsection (11)(A) of this rule except taxpayer filed his/her original 1973 income tax return on June 15, 1974, with a valid extension of time to file attached, and all taxes were paid on or before April 15, 1974 until the date of the refund. Note that an extension of time to file has no bearing on the interest payment period if all taxes were paid before April 15, 1974. In this situation, interest shall be allowed and paid from April 15, 1974. If the amended return was filed with the director after the ninetieth day, the interest would cease to accrue on the ninetieth day.

(D) On January 15, 1975, taxpayer's federal taxable income for calendar year 1973 is changed by the United States IRS indicating an overpayment. Taxpayer files an amended return with the director on April 10, 1975 (before the ninetieth day) reflecting the federal change and indicating an overpayment of his/her 1973 income tax liability. Taxpayer filed his/her 1973 income tax return on July 1, 1974 indicating a balance due, indicating additions to tax and interest, and paid the liability on that date. In this situation, interest shall be allowed and paid from July 1, 1974, the date the tax was actually paid, until the date of the refund. If the taxpayer's amended return was not filed on or before the ninetieth day, interest would be allowed and paid only until the ninetieth day (July 1, 1974 through April 15, 1975). Note that interest will be paid not only with respect to the taxes previously paid by the taxpayer but also with respect to the additions to tax and interest previously paid.

(E) On April 15, 1976, taxpayer's federal taxable income for calendar year 1973 is changed by the United States IRS resulting in an overpayment of his/her 1973 tax liability. On April 16, 1977, taxpayer files an amended return with the director, reflecting the federal changes, and also indicating an overpayment. Taxpayer filed his/her original 1973 income tax return on April 15, 1974 and all taxes were paid on that date. In this example, the taxpayer has filed his/her claim for credit or refund within one (1) year from the time the amended return was required to be filed (within one (1) year after ninety (90) days after April 15, 1976). Note that even though the three (3)-year limitation of section 143.801.1., RSMo, and the two (2)-year limitation of section 143.801.2., RSMo have elapsed, section 143.801.4., RSMo allows the claim to be filed within one (1) year. Interest shall be allowed and paid in this situation from April 15, 1974 until the ninetieth day after April 15, 1976.

(12) Carrybacks-Example 1: In calendar year 1976, taxpayer incurs a net operating loss, or a corporate capital loss, which is allowable as a carryback to calendar year 1973. Taxpayer's original 1973 Missouri income tax return was filed on April 15, 1974, and all tax payments were made prior to that date. Taxpayer files an amended 1973 federal income tax return on January 1, 1977, and an amended 1973 Missouri income tax return on the same day requesting refund of the resulting overpayment for 1973. In this situation, interest shall be allowed and paid from January 1, 1977 to the date of the refund. In this example, the overpayment is deemed not to have been made prior to the close of the taxable year in which the loss arises.

(13) Carrybacks-Example 2: Assume the same facts as in section (12) of this rule except the taxpayer does not file his/her amended Missouri income tax return until April 2, 1977, which is after the ninetieth day after January 1, 1977. In this situation, interest shall be allowed and paid for the period January 1, 1977 until the ninetieth day (March 31, 1977). Note that the failure of the taxpayer to file within the ninety (90)-day period required under section 143.601, RSMo caused the interest to cease to accrue on the ninetieth day.

(14) Amended Returns-Example 1: On January 15, 1975, taxpayer files an amended Missouri income tax return for calendar year 1973 correcting an error or omission on his/her original 1973 return. The original return for 1973 was filed on March 3, 1974 with a balance due that was paid on that date. The amended return indicates an overpayment for 1973. In this situation, interest shall be allowed and paid for the period April 15, 1974 until the date of the refund.

(15) Amended Returns-Example 2: On January 15, 1975, taxpayer files an amended Missouri income tax return for calendar year 1973 correcting an error or omission on the 1973 return. The original return for 1973 was filed on June 15, 1974 (with no valid extension of time to file or pay the tax) indicating a balance due of two hundred dollars ($200) which was paid on that date. On November 15, 1974, taxpayer was assessed additions to tax and interest of twenty-five dollars ($25) under sections 143.731 and 143.741, RSMo which s/he remitted on that date. The amended return indicates an overpayment for 1973 of three hundred dollars ($300). Interest shall be allowed and paid in the following manner: on the one hundred dollar ($100) overpayment that would have been shown on the original return, if correctly filed, from April 15, 1974 to the date of the refund; on the two hundred dollars ($200) paid with the original return, from June 15, 1974 to the date of the refund; and on the twenty-five dollar ($25) additions to tax and interest, from November 15, 1974 to the date of the refund. The interest payments begin from the time the tax was paid or considered paid. Note that the interest payment dates would not have been affected if a valid extension of time to file the return or pay the tax had been in effect.

(16) Amended Returns-Example 3: On May 15, 1977, taxpayer files an amended Missouri income tax return for calendar year 1973 indicating an overpayment. Taxpayer filed his/her original 1973 return on April 15, 1974. In this example, no credit or refund shall be allowed or paid. A claim for credit or refund of an overpayment of any tax imposed by sections 143.011-143.996, RSMo shall be filed by the taxpayer within three (3) years from the time the return was filed, or two (2) years from the time the tax was paid, whichever of those periods expires the later; or if no return was filed by the taxpayer, within two (2) years from the time the tax was paid. Nor credit or refund shall be allowed or made after the expiration of the period of limitation prescribed for the filing of a claim for credit or refund, unless the claim for credit or refund is filed by the taxpayer within that period.

(17) Amended Returns-Example 4: On May 15, 1977, taxpayer files an amended Missouri income tax return for calendar year 1973 indicating an overpayment of one thousand dollars ($1,000). Taxpayer filed his/her original 1973 return on May 14, 1974 showing a balance due of five hundred dollars ($500) which the taxpayer did not pay until June 15, 1975. Taxpayer was assessed and paid additions to tax and interest in the amount of fifty dollars ($50) on August 15, 1975. In this example, taxpayer has not filed a claim within three (3) years of the date the return was filed (which would expire on May 14, 1977) but has filed within two (2) years from the time some (but not all) of the tax was paid. In this situation, the refund shall not exceed the portion of the tax paid during the two (2) years immediately preceding the filing of the claim, section 143.801.2., RSMo. In this example, interest shall be allowed and paid in the following manner: on the five hundred dollar ($500) overpayment from June 15, 1975 to the date of the refund; and on the fifty dollars ($50) from August 15, 1975 until the date of the refund.

(18) Flood Loss. If the taxpayer elects under the Disaster Relief Act of 1974 to deduct a disaster loss in the taxable year immediately preceding the taxable year in which the loss occurs, the overpayment will deemed to have occurred in the taxable year for which the deduction is claimed on the federal return.

(A) Example: On January 15, 1975, taxpayer files an amended federal income tax return and an amended Missouri income tax return for calendar year 1973 as the result of a flood loss which occurred in 1974, indicating an overpayment for 1973. Taxpayer's original 1973 income tax return was filed before April 15, 1974, with all taxes paid by that date. In this example, interest shall be allowed and paid from April 15, 1974 until the date of the refund. The interest calculation date begins on April 15, 1974, because the overpayment on account of the 1974 flood loss is deemed to have occurred in the 1973 taxable year (the taxable year immediately preceding the taxable year in which the loss actually did occur).

(B) Example: On January 15, 1975, taxpayer files an amended federal income tax return and an amended Missouri income tax return for calendar year 1973 as the result of a flood loss which occurred in 1974. Taxpayer's original 1973 income tax return was filed on June 1, 1974 showing a balance due of five hundred dollars ($500) which was paid on that date. On November 15, 1974, taxpayer was assessed additions to tax and interest in the amount of fifty dollars ($50) under sections 143.731 and 143.741, RSMo which was paid by the taxpayer on that date. Taxpayer's amended 1973 income tax return indicates an overpayment of his/her 1973 income tax liability of seven hundred dollars ($700). In this situation, interest shall be allowed and paid in the following manner: on the two hundred dollar ($200) overpayment that would have been shown on the original return had the amount of the disaster loss been shown on the original return from April 15, 1974 to the date of the refund; on the five hundred dollars ($500) paid with the original return from June 1, 1974 to the date of the refund; and on the fifty dollars ($50) additions to tax and interest from November 15, 1974 to the date of the refund.

12 CSR 10-2.070

AUTHORITY: section 143.811, RSMo 1986.* Regulation 1.811 was originally filed Dec. 22, 1975, effective Jan. 2, 1976.

*Original authority: 143.811, RSMo 1972, amended 1982, 1988.