§6521 — Mitigation of effect of limitation in case of related taxes under different chapters

4 cases·2 followed·2 cited—50% support

Statute Text — 26 U.S.C. §6521

(a)Self-employment tax and tax on wages

In the case of the tax imposed by chapter 2 (relating to tax on self-employment income) and the tax imposed by section 3101 (relating to tax on employees under the Federal Insurance Contributions Act)—

(1)

If an amount is erroneously treated as self-employment income, or if an amount is erroneously treated as wages, and

(2)

If the correction of the error would require an assessment of one such tax and the refund or credit of the other tax, and

(3)

If at any time the correction of the error is authorized as to one such tax but is prevented as to the other tax by any law or rule of law (other than section 7122, relating to compromises),

then, if the correction authorized is made, the amount of the assessment, or the amount of the credit or refund, as the case may be, authorized as to the one tax shall be reduced by the amount of the credit or refund, or the amount of the assessment, as the case may be, which would be required with respect to such other tax for the correction of the error if such credit or refund, or such assessment, of such other tax were not prevented by any law or rule of law (other than section 7122, relating to compromises).

(b)Definitions

For purposes of subsection (a), the terms “self-employment income” and “wages” shall have the same meaning as when used in section 1402(b).

Treasury Regulations

Treas. Reg. §Treas. Reg. §301.6521-1 Mitigation of effect of limitation in case of related employee social security tax and self-employment tax
Treas. Reg. §Treas. Reg. §301.6521-1(a) Section 6521 may be applied in the correction of a certain type of error involving both the tax on self-employment income under section 1401 and the employee tax under section 3101 if the correction of the error as to one tax is, on the date the correction is authorized, prevented in whole or in part by the operation of any law or rule of law other than section 7122, relating to compromises.
Treas. Reg. §Treas. Reg. §301.6521-1(b) If the liability for either tax with respect to which the error was made has been compromised under section 7122, the provisions of section 6521 limiting the correction with respect to the other tax do not apply.
Treas. Reg. §Treas. Reg. §301.6521-1(c) Section 6521 is not applicable if, on the date of the authorization, correction of the effect of the error is permissible as to both taxes without recourse to such section.
Treas. Reg. §Treas. Reg. §301.6521-1(d) If, because an amount of wages, as defined in section 3121(a), is erroneously treated as self-employment income, as defined in section 1402(b), or an amount of self-employment income is erroneously treated as wages, it is necessary in correcting the error to assess the correct tax and give a credit or refund for the amount of the tax erroneously paid, and if either, but not both, of such adjustments is prevented by any law or rule of law (other than section 7122), the amount of the assessment, o
Treas. Reg. §Treas. Reg. §301.6521-1(e) As another example, assume that during 1955 a taxpayer reports wages of $4,200 and net earnings from self-employment of $900.
Treas. Reg. §Treas. Reg. §301.6521-1(f) Another illustration of the operation of section 6521 is the case of a taxpayer who, for 1955, is erroneously taxed on $2,500 as wages, the tax on which is $50, and who reports no self-employment income.
Treas. Reg. §Treas. Reg. §301.6521-2 Law applicable in determination of error

4 Citing Cases

FOLLOWED Ohan Karagozian, Petitioner T.C. Memo. 2013-164 · 2013

We hold that section 6521 is not applicable to this case, and petitioner is not entitled to a credit for 2008 on account oftaxes allegedly overpaid for tax years 2002 through 2007.

John E. & Concetta Lozon, Petitioner T.C. Memo. 1997-250 · 1997

Petitioners finally cite the mitigation provisions of section 6521 for the proposition that they should be credited with Allstate's share of the FICA taxes paid on petitioners' "wages".

Wesley C. & Rhonda A. Wickum, Petitioner T.C. Memo. 1998-270 · 1998

- 22 - section 6521, offset self-employment taxes with taxes paid erroneously under section 3101.

John E. & Concetta Lozon, Petitioner T.C. Memo. 1997-537 · 1997

ns to the plans by Allstate were not taxable, and petitioners could not offset their self-employment tax liability by Allstate's matching portion of the employment taxes but could for their portion of employment tax payments to the extent allowed by section 6521. Discussion Section 7430 provides for the award of administrative and litigation costs to a taxpayer in an administrative or court proceeding brought against the United States involving the determination of any tax, interest, or penalty