CCA 200949041: Refund requests may precede an audit in expedited Joint Committee cases

Plain-English summary

Chief Counsel Advice addresses expedited refund questions involving the Joint Committee on Taxation. It states that a taxpayer may request a refund before an audit begins. A general fear of a computational mistake alone should not prevent an examiner from concluding that a substantial part of a claimed refund would be allowed, because the requirement to post security addresses that concern. The examiner and manager should instead consider the substance of the claim, including whether foreign tax credits exist, may be applied in the relevant year, and are supported by sufficient account payments.

Ruling snapshot

• Question: May a taxpayer request a refund before an audit, and how should the examiner evaluate a substantial claimed refund?
• Outcome: Advice given
• Key authorities: IRC § 6405 and IRM Parts 4.36.3.7.1(1)(a) and 4.36.3.7.3(1)(d)

Full text (IRS public release)

ID: CCA-106115-09 Number: 200949041
Release Date: 12/4/2009
Office: -------------
UILC: 6405.00-00

From: ----------------
Sent: Tue 10/6/2009 11:57 AM
To: ------------------
Cc: ---------------------------------------------------------
Subject: RE: Joint Committee Expedited Refund Question ----------

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Here are my thoughts regarding both of your questions, below. First, I don't see any reason why a T/P would be prohibited from requesting a refund before an audit is opened. Indeed, I think that the fair inference from the IRM Part that you cited is that a T/P may do so. See IRM Part 4.36.3.7.1(1)(a) (discussing cases with unagreed issues being reported to the JCT notwithstanding that they are CIC T/Ps). Second, as to your "business decision" question, I would not think that a general fear of a computational mistake alone otherwise would prevent the examiner from concluding that a substantial part of claimed refund would be allowed. Besides being a fair reading of the manual, I think that the provision requiring the posting of security would trump this concern. See IRM Part 4.36.3.7.3(1)(d). Instead, I would imagine that the examiner and manager should consider the substance of the claim (i.e., the existence of FTCs) and then decide whether such claim reasonably would lead to a substantial part of the claimed refund (i.e., is the T/P entitled to the FTCs, may they be applied in the year in question, were sufficient payments posted to the account to sustain the refund, etc.).

Feel free to call me directly if you want to discuss this matter further.

Also, please let me know once you have a number for this matter.

Regards,

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