Application of Extension Payment

[BulldogTom]

Corporation has a little bit of a mess on its hands.  Corporation is a fiscal year filer with a YE on 6/30.  Amended 2011 and 2012 returns, 2011 with a balance due of approx 110K  and 2012 with a refund of approx 125K.  The issue on the amended returns is a timing issue between the years and a minor error on the revenue recognition.  IRS accepted the 2011 return with the amount due, and sent the 2012 refund return for review.  That was 5 months ago.  I have made 2 calls to the IRS and explained the issue, and was told that there would be no collections on the account until the review was done on the second return.  

 

Corporation sent in a payment with the extension on 9/15/14 of 100K via EFTPS and designated it for the 2013 return.  The 2013 return shows a balance due of 45K paid by the extension payment, 45K to be applied to the estimated taxes for 2014, and a refund of 10K.  The 2013 return was e-filed on 9/22.

 

Got a notice yesterday that the IRS took the 100K for the 2011 amended return.

 

Before I call and express my displeasure at the IRS, is what they did correct?  Can they take a payment that was clearly designated for one tax year to pay a tax due in another year?

 

Thanks for your help.

 

Tom

Hollister, CA

[ILLMAS]

Stuff happens, I had a similar issue not so long ago and the IRS took the liberty of moving a payroll tax payment to a different quarter to cover a balance due, why because of timing.  TP had not filed the 1st and 2nd quarter 941's for 2013, the 3rd quarter was amended with a small balance of $4K, we submitted all the returns at the same time and paid the 3rd quarter balance in full via EFTPS, the IRS processed the 1st and 2nd quarter fast and it took almost three months for them to process the amended 941, in the mean while they applied the 3rd quarter payment to the 1st quarter.  I was able to resolve it after the TP received a letter stating the 3rd had a $4K balance due.