Rev. Rul. 69-196

Advice has been requested whether a report to the Joint Committee on Internal Revenue Taxation, as provided by section 6405 of the Internal Revenue Code of 1954, is required in a case where a refund in excess of $100,000, attributable to a credit allowed under section 826(e) of the Code, is to be made to a mutual insurance company that is an interinsurer or reciprocal underwriter (hereinafter referred to as a "reciprocal").

Section 826(e) of the Code provides that any reciprocal electing to be subject to the limitation provided in section 826(b) of the Code shall be credited with the tax pair by the attorney-in-fact with respect to income received by the attorney-in-fact from the reciprocal in such taxable year.

Section 6405 of the Code provides that, except for credits or refunds resulting from tentative carryback adjustments made under section 6411 of the Code, no refund or credit of income tax in excess of $100,000 shall be made until after the expiration of 30 days from the date upon which a report is submitted to the Joint Committee on Internal Revenue Taxation.

Section 301.6402-4 of the Regulations on Procedure and Administration provides that section 6405 of the Code is not applicable to cases in which a taxpayer's payments in respect of his tax liability, made before the filing of his return, exceed the amount of tax shown on his timely return. The regulations cite as examples of such payments, payments of estimated tax, tax withheld at source on wages, and installment payments of income tax made by a corporation during the period of an extension of time to file its return.

The credit allowable under section 826(e) of the Code does not fall within the exception provided in section 6405 of the Code, nor does it constitute a prepayment of tax within the meaning of section 301.6402-4 of the regulations.

Accordingly, in the instant case the refund in excess of $100,000, attributable to the credit allowed under section 826(e) of the Code, cannot be made before submitting a report to the Joint Committee on Internal Revenue Taxation in accordance with the provisions of section 6405.