A Form 3623, Statement of Account, shows each tax year's correct liability, dates and amounts of assessments, overassessments and abatements, and the resulting deficiency in assessment or overassessment. It also shows the dates and amounts of payments, credits and refunds, and the balance due or overpayment.

Secure a current transcript of account before preparing the statement of account. A current transcript is generally one secured within the last two (2) weeks. Request an updated transcript if anything indicates something transpired on the account since the last transcript was secured.

Statements of account are required in docketed cases involving:

A statement of account may also be required in the following cases:

In most cases, the statement of account is part of the settlement computation. Consecutively number Form 3623 as another schedule in the audit statement.

The statement of account consists of an assessment section and a payment section. In each section enter the tax and addition to the tax or penalty liability as finally determined on the line entitled Revised Liability.

In docketed cases, reflect all additions to the tax asserted in the notice of deficiency as finally determined, even if eliminated because of income adjustments or other reasons. Show the code section rather than the name of each addition to the tax or penalty.

In the assessment section, show amounts and dates of assessments and overassessments (including abatements) from the transcript of account and the return.

In the payments section, transcribe all payment dates and amounts from the transcript of account and the return.

A "dash" (-) indicates no prior determination of the specified tax or addition to the tax/penalty.

The word "none" indicates that the tax or an addition to the tax or penalty was previously determined or raised as an issue, and that under the current settlement or Rule 155 computation there is no liability. In the past, a "zero" (-0-) in the statement of account was not used because it was easy to manually insert the word " none" on the Form 3623 to indicate that tax or an addition to the tax or penalty was previously determined or raised as an issue, and that under the current settlement there was no liability. Now that computer software is used to generate the form, it is no longer always practical to use "none" instead of inputting a zero because the programs sometimes do not generate a correct result. In these instances, it is acceptable to use a zero on Form 3623.

Due date of return information:

Do not prepare a statement of account for a Joint Committee case unless it is required for reasons other than Joint Committee status, such as a Rule 155 computation.

In each docketed settlement and Rule 155 computation case, separately identify the assessments and payments of tax and additions to the tax or penalties.

The Tax Court may not have jurisdiction over interest provisions, or certain additions to tax. Therefore, unless an Estate of Smith overpayment situation exists, do not include assessment and payment information for items not under Tax Court jurisdiction.

If payments are designated incorrectly on the transcript of account, notify the Appeals Officer of the error. The Appeals Officer should request a correction by Appeals Processing Services.

Unassessed advance payments designated as deposits under IRC 6603 or as cash bond deposits are not included on the statement of account.

Instead, include a notation at the bottom of the statement of account as discussed in the paragraphs below.

See Exhibit 8.17.3-1 for the wording to use for cash bond payments made under Rev. Proc. 84-58 and not designated as a deposit under IRC 6603.

If the IRS is holding a cash bond deposit on 10/22/2004, treat the deposit as made on 10/23/2004 for purposes of IRC 6603 if the taxpayer provides a written statement before 05/27/2005 which identifies the amount as a deposit under IRC 6603.

In the case of a deposit that is made after October 22, 2004, and before March 28, 2005, treat the deposit as made on the date remitted for purposes of IRC 6603(d) if the taxpayer provides a written statement before 05/27/2005 which identifies the amount as a deposit under IRC 6603.

In the case of a deposit in the nature of a cash bond previously made pursuant to Rev. Proc. 84-58 where the taxpayer’s statement is received on or after 05/27/2005, treat the date the Service receives the written statement as the date the amount is deposited for purposes of IRC 6603(d).

Use the wording similar to the following on deposits made under IRC 6603 on or after the March 28, 2005 effective date of Rev. Proc. 2005-18:

When changes are made to the EIC, the refundable additional child tax credit, or the credit for federal tax paid on fuels previously allowed on the return, use the corrected credit amount rather than the adjustment amount to decrease the corrected income tax liability amount before entering the amount on the Revised Liability line of Form 3623 . Footnote this amount with an asterisk or a number and explain how it was determined at the bottom of Form 3623.

Decrease the actual tax assessment on the return by the amount of credit on the return to compute the amount to be entered on the Assessment (tax on return) line of Form 3623. Show an explanation of how this amount is computed in a footnote at the bottom of Form 3623.

Do not show the EIC, refundable additional child tax credit and credit for federal tax paid on fuels claimed on the return and posted to the taxpayer’s account in the payments section since these amounts are considered in the liability section.

Also include the exact amount refunded to the taxpayer in the payments section regardless of whether the refund included any of these credits.

This IRM section includes the following exhibits:

When preparing decision documents, stipulations, and Rule 155 cover sheets, the Service has followed a long-standing practice of not reducing the amount of an overpayment in tax by the amount of any unpaid interest or penalties.

In Smith v. Commissioner, 123 T.C. 15 (2004), the Tax Court held that the amount of overpayment was the amount by which total payments exceeded tax, including any assessed underpayment interest; and that the Service therefore could not reduce the petitioner’s refund for any outstanding underpayment interest not specified in the entered decision/stipulation.

As a result of the court decision in the Estate of Smith case, the Office of Chief Counsel issued a Notice in September 2004, CC-2004-035, advising Counsel Attorneys that assessed and unassessed underpayment interest should be taken into account when preparing overpayment decision documents and stipulations.

Previously, interest was not shown on the statement of account because it was not included in documents filed with the court. Now, however, if the taxpayer is due a refund of tax or penalties for a docketed case, reduce the overpayment amount on the statement of account by any interest or penalties that the taxpayer owes to determine the overpayment amount to be specified in the court decision. In cases where it is determined that the Estate of Smith applies, compute exact amounts of interest to include on the statement of account.

The Appeals Director of Technical Services issued procedures and guidance in June 2005 for Estate of Smith cases. This guidance included examples of how to prepare the statement of account for Estate of Smith cases. This information is available on the Appeals Tax Computation Specialist web site.

In November of 2005 the decision in the Smith case was reversed by the Court of Appeals for the Fifth Circuit. Chief Counsel advised Appeals in July of 2006 to continue to follow the Chief Counsel Notice with respect to these cases, because of the risk that the Tax Court will apply the rationale in Estate of Smith to cases outside the Court of Appeals for the Fifth Circuit.

Therefore, when preparing a statement of account for a case in which an overpayment would be reduced by unpaid interest or penalties, follow the Estate of Smith procedures when preparing the statement of account. Refer to the Appeals Tax Computation Specialist web site for the latest procedures with respect to the Estate of Smith type cases.