Overpayment on EFTPS - question

[omni550]

As I owed the IRS when I filed my 2016 taxes, I had to make Federal estimated income tax payments for tax year 2017. These consisted of quarterly payments of the amount X to the IRS in April, Jun, Sept and Jan 2018.

With the 2018 tax law changes that were announced in late December, I was making prepayments for all sorts of 2018 things in late December hoping to avail myself of any and all possible deductions.

As a result, in late December 2017, via EFTPS, I prepaid the final 2017 quarterly estimated income tax payment of X (which was due Jan 15, 2018) PLUS I made an additional payment of X, marked for 2018.

I have now roughed-out my 2017 taxes. I owe substantially more than the 2017 estimated income tax payments. (I think I fall within the safe harbor definition, so I will not pay a penalty.)

My question is -- can I use the fifth payment of X that I made in December 2017 (which was marked for 2018) towards the taxes I owe for 2017 fiscal year, even though it was earmarked for 2018 when I made the EFTPS payment?

I read the FAQs on EFTPS and didn't see this issue addressed.

omni

 

[audreyh1]

Once long ago I accidentally assigned the wrong year to a Jan estimated payment, and I called them and they said they would fix it.

I must have gotten the phone number off their website.

So I bet you can call them and have them change the tax year assignment.

 

[RunningBum]

Since they asked you which tax year you want the payment applied to, I'd be surprised if there was a way to reassign the 2018 payment to 2017. I don't know that definitively, so maybe there's a place on the site where you an ask.

If it was the other way around, you overpaid in 2017 and wanted to apply it in 2018, you could just apply your 2017 refund to 2018 when you do your taxes, but that's not what you're asking.

You get a deduction for state income taxes paid but not federal. I hadn't thought about making an early state income tax payment in 2018, for a 2017 deduction. Clever, if it's allowed. Kicking myself for not thinking of it. But I don't think making the early federal income tax payment got you any benefit, did it?

 

[omni550]

Update: I spent the last hour getting the 'royal runaround' in phone hell: on the phone with EFTPS, speaking with various clerks, being directed to call several IRS numbers, and waiting in phone queues with the IRS.

In my final call with EFTPS, the clerk said that she could not make a change in their system of the tax period from 2018 to 2017. Instead, I needed to call my bank and have them return the payment (which I made on 12/28/17) to my account as an unauthorized debit. I had her repeat it 3 times, as it seemed like a very arduous means to correct the tax period.

After calling my bank and explaining the situation, the somewhat disbelieving agent said she would attempt this feat of clawing-back my payment, but refused to use the language suggested by the EFTPS clerk as "that would be a lie". So, in 10 days I should see a provisional balance of X restored to my checking account, but it could be up to 45 days before this case is fully investigated and finalized...at which point the amount of X would either remain in my checking account or go back on deposit with EFTPS as a payment for 2018 tax year.

Moral of the story: Don't screw up the tax period when making payments with EFTPS.


omni

 

[Texas Proud]

I would be surprised that you can get the money back....

Plus, I agree with the bank that saying it was unauthorized is a lie... you DID authorize it...


Finally, what did you really accomplish? You still need to pay 2018 taxes... all this work and the money will be going in a month...

 

[omni550]

I would be surprised that you can get the money back....

Plus, I agree with the bank that saying it was unauthorized is a lie... you DID authorize it...


Finally, what did you really accomplish? You still need to pay 2018 taxes... all this work and the money will be going in a month...

The EFTPS clerk was quite confident that this payment could be reversed and should be done exactly in the manner she described.

After explaining this whole situation to the bank, their agent wrote a far better, accurate explanation as to the rationale for returning the funds from EFTPS to my checking account.

As to what did I accomplish?

• X is not a trivial amount. I was hoping to apply the X overpayment to the taxes I still owe for 2017 (Over and above the quarterly estimated tax payments I'd already made towards 2017).
• Recemented my opinion of the practices and employees working for EFTPS and IRS

omni

 

[audreyh1]

Update: I spent the last hour getting the 'royal runaround' in phone hell: on the phone with EFTPS, speaking with various clerks, being directed to call several IRS numbers, and waiting in phone queues with the IRS.

In my final call with EFTPS, the clerk said that she could not make a change in their system of the tax period from 2018 to 2017. Instead, I needed to call my bank and have them return the payment (which I made on 12/28/17) to my account as an unauthorized debit. I had her repeat it 3 times, as it seemed like a very arduous means to correct the tax period.

After calling my bank and explaining the situation, the somewhat disbelieving agent said she would attempt this feat of clawing-back my payment, but refused to use the language suggested by the EFTPS clerk as "that would be a lie". So, in 10 days I should see a provisional balance of X restored to my checking account, but it could be up to 45 days before this case is fully investigated and finalized...at which point the amount of X would either remain in my checking account or go back on deposit with EFTPS as a payment for 2018 tax year.

Moral of the story: Don't screw up the tax period when making payments with EFTPS.


omni

Too bad!

I didn't have nearly as much trouble and only talked to one person - but that was over 10 years ago.

I think I had accidentally assigned my Jan 15 estimated tax payment to the current year instead of to the prior year where it was for Q4.

And I didn't discover this until we were working on our taxes around March/April.

But when I called they said were able to reassign it and I hadn't had trouble since.

I am very careful about the tax year being correct from now on.

 

[RunningBum]

The EFTPS clerk was quite confident that this payment could be reversed and should be done exactly in the manner she described.

After explaining this whole situation to the bank, their agent wrote a far better, accurate explanation as to the rationale for returning the funds from EFTPS to my checking account.

As to what did I accomplish?

• X is not a trivial amount. I was hoping to apply the X overpayment to the taxes I still owe for 2017 (Over and above the quarterly estimated tax payments I'd already made towards 2017).
• Recemented my opinion of the practices and employees working for EFTPS and IRS

omni

Yeah, but...

You could possibly just make another EFTPS payment for 2017 now, or pay the balance with your taxes. You already said that you probably have safe harbor, so it doesn't really matter when you make that last payment before April 15.

You still probably need to make a first quarter payment for 2018, don't you? Seems like all you've done is put a lot of doubt as to what payment this eventually gets applied to, if at all. You can't finish your 2017 taxes until you know whether you made that last payment for 2017 or not.

I still wonder what you were accomplishing with that early 2018 payment anyway, given that you don't deduct federal income tax payments. I can't disagree about the IRS/EFTPS employees (though the one call I had with them on a non-EFTPS matter went very well), but you made the mess yourself, and I think you tried to take the hard way to resolve it.

 

[mystang52]

Maybe I'm missing something. Why not just pay the balance due for 2017, and come this April make your 2018 Estimated payment much smaller?

 

[gauss]

Never accept the words of an IRS representative as fact or binding. This is simply not the case and their is no accountability on them.

Court rulings have concluded that you cannot even rely on the Publications when/if they conflict with tax law (or so I have been told).

-gauss

 

[gauss]

So what is your real concern here?

penalty for 2017?
interest for 2017?
having the IRS hold your money longer than they absolutely have to?
personal cash flow issues?

If you need to send in estimated payments for 2018 why would you want to mess with this?

Not clear what the motivation is considering the difficulty/effort to correct and the risk of it getting more screwed up.

I would never even consider the possibility of asking the IRS back for money back, that I have already sent in, via side channels. It will all come out when you do your return.

At this point, I would definitely request a tax "account transcript" for TY17 and TY18 so that you can see how they currently have booked all your payments and if anything has changed.

Once I saw that and it made sense, I would really question the value in trying to mess with it further.

If you do something inconsistent with how they have things booked, it will likely trigger letters to you from the IRS.

If you are still interested in researching and/or pursuing this, I will point out that there are procedures for you the taxpayer to return a "refund" that you received from the IRS via direct deposit or cashed check etc. There are some cases where this may be appropriate. If you look in this area, it may give you clues about possibilities to address your "opposite" problem. There may be a dedicated IRS area for this. Let me know if you need a reference to this info and I could try to look it up again.


-gauss

 

[bingybear]

I would have done the payment for 2017 and then when filing taxes have the refund applied towards 2018. If you file on normal time, it would be on the account for the first payment time.
I've used applying the refund to next year's taxes to reduce the 1st payment. I've never paid as far in advance as you did.