CCA 201125034: Equitable recoupment requires a timely claim to offset

Plain-English summary

Chief Counsel considered a situation in which a taxpayer had paid a tax liability twice but did not discover the overpayment until the refund statute had closed. The advice states that equitable recoupment is a defense to a timely claim, such as when the IRS seeks to collect a sufficiently related tax. Without a timely claim to offset, however, the advice sees no way for the doctrine to apply.

Ruling snapshot

• Question: Can equitable recoupment apply after the refund statute has closed and there is no timely claim to offset?
• Outcome: Advice given, with no application of the doctrine identified on the presented facts.
• Key authorities: IRC § 1311; equitable recoupment.

Full text (IRS public release)

ID: CCA_2011053108465247 Number: 201125034
Release Date: 6/24/2011
Office: -------------
UILC: 1311.00-00

From: ---------------------
Sent: Tuesday, May 31, 2011 8:47:00 AM
To: --------------------
Cc:
Subject: Equitable recoupment

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I received the voicemail message you left on Friday. It sounds like you have a case where the taxpayer paid a tax liability twice but didn't realize it until the refund statute had closed. Equitable recoupment is a defense to a timely claim. For instance, if the Service were trying to collect a tax sufficiently related to the paid tax, then the taxpayer could argue equitable recoupment. But without a timely claim to offset, I don't see any way for the doctrine to apply.

Let me know if you need something further,

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