CCA 1036020: Foreign tax credit refund claims receive a special limitations period

Plain-English summary

Chief Counsel advice explained that IRC § 6511(d)(3)(A) provides a special extended limitations period for refund claims attributable to foreign tax credits. The advice states that the claim is generally made through an amended return and is timely if filed within 10 years of the original due date for the year in which the foreign taxes were paid or accrued. It also states that the taxpayer must substantiate the credit and show that it reasonably applied foreign tax rules and took effective and practical steps to minimize foreign tax liability.

Ruling snapshot

• Question: What limitations period and substantiation requirements apply to foreign tax credit refund claims?
• Outcome: Advice given
• Key authorities: IRC §§ 6511, 905, and 901; Treas. Reg. § 1.901-2(e)(5)

Full text (IRS public release)

ID: CCA_2010062515142635 Number: 201036020
Release Date: 9/10/2010
Office: ------------------
UILC: 6511.03-03

From: --------------------
Sent: Friday, June 25, 2010 3:14:28 PM
To: ----------------------------------------------------
Cc:
Subject: Refund statute for foreign tax credit-related claims

Confirming my telephone advice, section 6511(d)(3)(A) provides a special extended statute of limitations
for refund claims attributable to foreign tax credits. Such a refund claim is generally made by filing an
amended return and is timely if filed within 10 years from the original due date (without extensions) of the
return for the year in which the foreign taxes were actually paid or accrued (and not the earlier or later
year to which the taxes are carried and claimed as a credit). Contested taxes, once finally determined,
are considered to "relate back" and to accrue in the tax year to which the taxes relate; that is, the U.S.
taxable year with or within which ends the foreign taxable year for which the creditable foreign tax is
imposed. Rev. Rul. 84-125, 1984-2 C.B. 125; Rev. Rul. 61-93, 1961-1 C.B. 390. The taxpayer must
substantiate its entitlement to the foreign tax credit with appropriate proof that the foreign taxes were
actually owed and paid, including that the taxpayer reasonably applied the foreign tax law rules and took
all effective and practical steps to minimize its foreign tax liability over time. Section 905(b); Treas. Reg.
1.901-2(e)(5).

Please call if you have further questions.

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