IRC 6603 Deposits

IRC 6603 permits a taxpayer to make a deposit in lieu of a payment to stop the accrual of interest on a potential deficiency. It also allows for the accrual of interest on a deposit returned to the taxpayer to the extent that the deposit is attributable to a disputable tax. Rev. Proc. 2005-18 gives all the requirements for to treat a payment as a 6603 deposit. Taxpayers must include a written statement designating the payment as a deposit, including:

Type(s) of tax

Tax year(s)/tax period(s)

Amount(s) in dispute (enclosing the 30-Day letter is sufficient)

Without the written statement, the you can treat it as a tax payment and the taxpayer can’t contest the determination in Tax Court. The taxpayer can only sue for a refund in federal district court or the Court of Federal Claims. (If the taxpayer pays the full deficiency, there is no deficiency and the Tax Court doesn’t have jurisdiction.)

For more information, see IRM 4.20.1.3.1(4), Request Full Payment, IRM 4.23.11.4(4)(a), Advance Payments - IRC 6603 Deposits, and IRM 20.2.4.8.2, IRC 6603 Deposits.