See IRM 4.36.1.1.1, Background.

See IRM 4.36.1.1.2, Authority.

See IRM 4.36.1.1.3, Roles and Responsibilities.

See IRM 4.36.1.1.4, Program Management and Review.

See IRM 4.36.1.1.5, Program Controls.

See IRM 4.36.1.1.6, Terms/Definitions/Acronyms, for a list of commonly used terms.

See IRM Exhibit 4.36.1-1, Acronyms Used Throughout IRM 4.36, for a list of commonly used acronyms.

See IRM 4.36.1.1.7, Related Resources.

IRC 6405(a) provides that no refund or credit in excess of the jurisdictional threshold of any income, war profits, excess profits, estate, or gift tax, or any tax imposed with respect to public charities, private foundations, operators’ trust funds, pension plans, or real estate investment trusts under chapter 41, 42, 43, or 44, shall be made until after the expiration of 30 days from the date upon which a report giving the name of the person to whom the refund or credit is to be made, the amount of such refund or credit, and the summary of the facts and the decision of the IRS regarding the claim is submitted to the JCT.

If a review of multiple years for which refunds or credits are claimed also shows deficiencies in those same years, the amount of the refund or credit to be reviewed by the JCT is the net of the refunds or credits claimed under IRC 6405(a) less any such deficiencies.

The JCT review of refunds or credits under IRC 6411 (tentative carryback and refund adjustments) is provided for in IRC 6405(b).Under this subsection, tentative allowances are refunded prior to reporting to the JCT. Following a survey-after-assignment or examination, refunds of tentative allowances in excess of the jurisdictional threshold (net of any deficiencies) are reported to the JCT.

IRC 6405(c) provides that refunds in excess of the jurisdictional threshold, which are attributable to a taxpayer’s election under IRC 165(i), are made prior to submitting a report for to the JCT. This section allows a taxpayer to deduct a disaster loss in the taxable year immediately preceding the taxable year in which the disaster occurred. These losses are attributable to a disaster declared by the President under the Disaster Relief & Emergency Assistance Act. A report must be prepared and submitted to the JCT after the correct amount of tax is determined and the net refund or credit is in excess of the jurisdictional threshold.

A refund shown on the return as filed does not qualify as a refund or credit under IRC 6405(a) except as follows:

In determining whether the IRC 6405 jurisdictional threshold is exceeded, proposed refunds of penalties and previously assessed and paid interest are combined with the amount of the refund or credit claim by the taxpayer.
Example:

Any refund of previously assessed and paid interest, even when not made in connection with a redetermination of the underlying deficiency, must be included in the computation of the jurisdictional amount. Therefore, a refund of previously assessed and paid interest in excess of the jurisdictional threshold with no reduction in tax requires a JC report.

Deficiencies are offset against refunds or credits only when proposed for the same tax entity, for the same category of tax, and in the same examination cycle. Accordingly, if an overpayment of one category of tax results in a deficiency in another category of tax with respect to the same taxpayer, the resulting deficiency is not considered in determining whether the jurisdictional threshold is exceeded. Likewise, no offset occurs when adjustments resulting in a deficiency with respect to one taxpayer result in a refund with respect to a related taxpayer.

In multiple-year examinations with a net deficiency (i.e., the sum of deficiencies exceeds the total of all IRC 6405 refunds or credits), no JC report is required.

For cases with net overassessments that include deficiency years, a determination must be made as to which, if any, of the refund years must be reported. For refund types exceeding the jurisdictional threshold, only the years with net refunds after offset by any deficiencies in those years are reported to the JCT.

Determining whether the jurisdictional threshold is exceeded in a multiple-year examination involving deficiencies is a four-step process that is applied separately to each type of refund or credit being sought under IRC 6405(a), 6405(b), or 6405(c). These four steps are as follows:

If the difference falls below the jurisdictional threshold, then that refund type is not required to be reported. Conversely, if the balance is in excess of the jurisdictional threshold, the refund type must be reported. If the aggregate net deficiency against the least of the aggregate IRC 6405 overpayment (refund) types exceeds the least IRC 6405 refund type, then the excess offsets the next least refund type. Where two or more IRC 6405 refund types are of equal amount, the remaining deficiency is first offset against the IRC 6405 (a) amount, then the IRC 6405(b) amount and then the IRC 6405(c) amount, if any.

Only the categories of tax designated by IRC 6405 are subject to netting. Only refunds and deficiencies within the same category of tax can be netted. For example, a deficiency of gift tax cannot be netted against an income tax overpayment.

A spreadsheet that computes jurisdictional amounts is available at: https://irsgov.sharepoint.com/sites/ETD-KMT-KB051/SitePages/GeneralExamProcedures/JointCommitteeCases/JointCommitteeSpreadsheet.aspx. Additional resources may be found at:https://irsgov.sharepoint.com/sites/ETD-KMT-KB051/SitePages/GeneralExamProcedures/JointCommitteeCases/JCCLandingPg.aspx.