Current refund not applied to prior installment agreement

[jklcpa]

Taxpayer has an installment agreement from 2008 with a remaining balance of $7,000. The overpayment for 2010 is $2,900. The return efiled successfully, but the ack is not showing a debt code. Any reason why the debt code wouldn't be indicated? The taxpayer wasn't unhappy about the overpayment going toward the prior year's balance.

[JohnH]

I can't see where it matters very much. If he gets the refund he can just be thankful it happened. But if he's unhappy when he receives the refund, he's free to write a check to IRS to apply to the balance. In the end, it's the same net result (other than a week or two of interest+FTP penalty - about $25 on a $7K balance at current rates).

Of course, it's always possible that the system will catch it before he actually gets the money.

[cathyan]

They aren't doing the debt indicator any more, so he will most likely get a letter saying the refund has been applied to his outstanding debt. Even with a payment plan, they usually do that.

[Don in Upstate NY]

... The return efiled successfully, but the ack is not showing a debt code. Any reason why the debt code wouldn't be indicated? ...

Maybe because the debt code was eliminated for this tax filing year. :rolleyes:

[jklcpa]

I didn't realize the debt code indicator was gone, proof that the battery in my brain has died. I have a POA and receive each month's statement but was just curious about the ack. I never took notice of that code until this since I never got involved with RALs or any bank products, and have only had a couple of installment agreements where a refund like this was involved. Thanks for your responses.

[MN2V]

I didn't realize the debt code indicator was gone, proof that the battery in my brain has died. I have a POA and receive each month's statement but was just curious about the ack. I never took notice of that code until this since I never got involved with RALs or any bank products, and have only had a couple of installment agreements where a refund like this was involved. Thanks for your responses.

Check "Where's My Refund" on IRS website. They give a good explanation

indicating where the refund may be going.