An overpayment process occurs when the obligation has a credit balance as a result of the payment amount exceeding the liability from the assessment. Another common reason for overpayment is the recalculation of tax, penalty, interest or fee that results in a reduced liability.
An overpayment process can be created in various ways:
As a result of posting a return. This is the most common scenario. The tax form is processed and results in a creation of an assessment. The calculated tax due is evaluated against the total payments made to determine if there is an overpayment.
As a result of the balance of the obligation being reviewed by the account monitor.
Some exceptional cases make it necessary to manually create an overpayment process. For example, if the taxpayer believes he/she is owed tax in multiple jurisdictions and makes a first quarter estimated payments where no tax is actually due. The taxpayer may ask for the payment to be refunded prior to filing a zero tax due return after the fourth quarter.
Regardless of how the overpayment is created, the overpayment process is always associated with a specific obligation.
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