For many years, Jim Smith embezzled money from his employer. He finally got caught and eventually died in jail. Before he died, Smith sent what was left of the embezzled money to the IRS as an estimated tax payment. Hill Corporation, the victim (Smith’s employer), asked the IRS to return the stolen money. In Chief Counsel Advice, the IRS told Hill Corporation that the law prevents the IRS from returning the embezzler’s (Smith’s) estimated tax payments. The IRS noted that the embezzlement produces sympathetic facts, but the law contains no sympathy when it comes to the source of a tax payment.
The law requires that the IRS deal with the person who makes tax payments. In this instance, that’s Smith, the now-dead embezzler. Hill Corporation, the victim, has no standing.