TN 8 (05-95)
GN 05010.240 Overpayment Refunds
Refund amounts are processed in accordance with normal procedures and posted to the system. The case is alerted when alien taxation is involved for BA review.
Refund of all or part of an overpayment eliminates an unpaid tax liability based on the amount of the refund.
Recovery of the overpayment by withholding in certain cases (as explained in SM 0870.107) also eliminates an unpaid tax liability for the overpayment month(s).
C1 received $500.00 for 2/95. He has an unpaid tax liability of $127.50 for that month because tax should have been, but was not, withheld. In 4/95, it is determined that he should not have received any benefit for 2/95 and is overpaid $500.00. He is asked to repay $500.00.
C1 refunds the $500.00. The case is alerted for BA review and the unpaid tax liability is deleted.
If C1 had only refunded $300.00, $76.50 (25.5 percent of $300.00) of the unpaid tax liability would have been deleted.