Could an Illinois S corporation redirect its 2009 overpayment to its 2010 estimated tax after not making the election on its original return?

Plain-English summary

The S corporation could not later direct its 2009 overpayment to its 2010 estimated tax because it had not made that election on its timely original 2009 return.

Section 909(b) authorized IDOR to prescribe rules for crediting an earlier year's overpayment against estimated tax. The cited regulation allowed the taxpayer to elect, on the Department's prescribed form, to apply an overpayment shown on a timely original return to estimated tax for the immediately following taxable year. Once made, the election was irrevocable.

What this means for you

Decide how to use an overpayment when preparing the timely original return. Under the rule applied here, a later request could not substitute for the required original-return election.

Common questions

Q: Could the taxpayer apply the 2009 overpayment to 2010 just by asking IDOR later?
A: No. The election had to appear on the timely original 2009 return.

Q: Could an elected overpayment be applied to any future year?
A: The cited rule limited the election to estimated tax for the taxable year immediately following the return year.

Citations and references

• 35 ILCS 5/909(b)
• 86 Ill. Adm. Code 100.9400(b)

Subject

Estimated Tax

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/income-tax/2011.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/income-tax/2011/it-11-0004.pdf

Original ruling text

IT 11-0004-GIL 03/02/2011 ESTIMATED TAX
General Information Letter: Taxpayers may elect to apply overpayments against their
estimated income tax obligations only on original returns, and only to apply the
overpayment against the following year’s obligations.
March 2, 2011
Dear:
This is in response to your letter to Director of Revenue Brian Hamer, dated February 25, 2011, which
was forwarded to me for response. The nature of your request and the information you have
provided require that we respond with a General Information Letter, which is designed to provide
general information, is not a statement of Department policy and is not binding on the Department.
See 86 Ill. Adm. Code 1200.120(b) and (c), which may be found on the Department's web site at
www. tax.illinois.gov.
In your letter you have stated the following:
This letter is in reply to your department’s Error Notification Response dated February 3,
2011, copy of which is enclosed.
The taxpayer, COMPANY, Inc., has an overpayment in the amount of $1327.00 towards
2009 Form IL-1120-ST.
In a conversation with Revenue Tax Specialist Ms. Z, we were told it was not known
when the taxpayer will receive a refund of his 2009 overpayment. Having already
waited a year, a verbal request was made to apply the overpayment toward the 2010
Form IL-1120-ST liability for COMPANY, Inc. According to Ms. Z, the overpayment was
already set for a refund check to be issued, it was no possible to apply the overage to
the 2010 tax year.
The taxpayer DEMANDS his 2009 IL-1120-ST overpayment be applied to his 2010 tax
liability. If your department is unable to do so, please provide the taxpayer with a copy
of the State of Illinois code stating refunds cannot be applied to a future tax year.
As the March 15 deadline is rapidly approaching, please expedite the above as the
taxpayer will be claiming this credit on his 2010 tax return.
Response
Section 909(b) of the Illinois Income Tax Act (35 ILCS 5/909) provides:
The Department may prescribe regulations providing for the crediting against the
estimated tax for any taxable year of the amount determined by the taxpayer or the
Department to be an overpayment of the tax imposed by this Act for a preceding taxable
year.
Pursuant to the authority granted by this statute, the Department has adopted 86 Ill. Adm. Code
Section 100.9400(b), which provides in part:
A taxpayer may elect to have any portion of any overpayment shown on a timely original

IT 11-0004-GIL
March 2, 2011
Page 2
return applied against the taxpayer's estimated tax liability for the taxable year
immediately following the taxable year for which the return is filed. (See IITA Section
909(b).) Such election shall be made on the form prescribed by the Department and,
once made, shall be irrevocable.
Because the regulation allows the 2009 overpayment of the taxpayer to be applied against its 2010
estimated tax obligation only if the taxpayer has elected to do so on a timely original return for 2009,
the taxpayer’s request may not be honored.
As stated above, this is a general information letter which does not constitute a statement of policy
that applies, interprets or prescribes the tax laws, and it is not binding on the Department. If you are
not under audit and you wish to obtain a binding Private Letter Ruling regarding your factual situation,
please submit all of the information set out in items 1 through 8 of Section 1200.110(b). If you have
any further questions, you may contact me at (217) 782-7055.
Sincerely,

Paul S. Caselton
Deputy General Counsel – Income Tax