## Facts

- In April 1994, Barbara and Ronny Deaton submitted Form 4868 requesting an extension to file their 1993 federal income tax return and enclosed a $125,000 check matching the balance due shown on the form.
- The check contained no notation or other contemporaneous indication that the remittance was intended as a “deposit” rather than a tax payment.
- Although the extension allowed filing until October 15, 1995, the Deatons did not file the 1993 return until 2000 (along with delinquent returns for 1994–1996).
- The 1993 return reported an overpayment of $50,221 and requested that it be credited to later-year liabilities.
- The IRS denied the requested credit under I.R.C. § 6511(b)(2)(A)’s look-back limitation and initiated levy action to collect 1994–1996 liabilities.
- In a Collection Due Process hearing, the Deatons argued the $125,000 was a deposit and therefore not subject to the § 6511 look-back; the IRS Appeals Office rejected the argument and sustained the levy.
- The Tax Court held the remittance was a payment (not a deposit) and sustained the levy.
- The Deatons appealed, presenting the sole issue of whether the 1994 remittance was a payment or a deposit.

## Issues

1. Whether a $125,000 remittance sent with a Form 4868 extension request was a tax payment or a deposit.
2. If it was a payment, whether I.R.C. § 6511(b)(2)(A) barred the claimed credit/refund when the return (and claim) was filed in 2000.

## Decision

- The Fifth Circuit affirmed the Tax Court.
- The court held the Form 4868 remittance was a tax payment, not a deposit.
- Because the amount was paid in 1994 and the claim was not made until the 2000 filing, § 6511(b)(2)(A) limited any credit/refund to taxes paid within the statutory look-back period, barring the requested credit.
- The Appeals Office properly sustained the proposed levy to collect later-year liabilities.

## Legal Principles

- The classification of a remittance as a payment or deposit turns on statutory context and the objective character of the remittance; a categorical rule that all pre-assessment remittances are deposits is not controlling after Baral v. United States.
- A remittance submitted with Form 4868 may be treated as a tax payment where it corresponds to the taxpayer’s stated estimated balance due and is not contemporaneously designated as a deposit.
- A taxpayer asserting “deposit” treatment bears the burden of showing contemporaneous intent and objective designation supporting that characterization.
- Under I.R.C. § 6511(b)(2)(A), the amount of any credit or refund is limited to taxes paid within the look-back period measured from the filing of the claim (typically via the return); late-filed returns can render earlier payments nonrefundable/noncreditable.
- Appellate review of the payment-versus-deposit classification was de novo in this case.

## Conclusion

The Fifth Circuit held that the Deatons’ $125,000 remittance sent with a Form 4868 extension request was a tax payment, and because the Deatons filed their return and sought a credit years later, § 6511(b)(2)(A) barred the claimed credit/refund and the IRS levy was sustained.


Deaton v. Commissioner, 440 F.3d 223 (5th Cir. 2006)