CCA 1210029: Refund claims for levy payments when no returns were filed

Plain-English summary

Chief Counsel advice addresses an estate's attempt to recover levy payments that the Service applied to tax years for which the taxpayer filed no returns and no assessments were made. Under IRC § 6511(a), the advice states that when no return was filed, a refund claim had to be filed within two years after the tax was paid. It concludes that only payments made or credited during the two years before the executor filed the claim could potentially be refunded, and that the expired period could not be revived by creating assessments or credits. The advice also states that the separate period for recovering amounts under IRC § 6343 had expired.

Ruling snapshot

• Question: Can an estate recover levy payments applied to years with no returns or assessments after the applicable refund periods expired?
• Outcome: Advice given.
• Key authorities: IRC § 6511(a); IRC § 6514; IRC § 6324(d); IRC § 6343; Treas. Reg. § 301.6343-3(c)(4).

Full text (IRS public release)

ID: CCA_2011071815344622 Number: 201210029
Release Date: 3/9/2012
Office: --------------
UILC: 6511.01-02, 6511.01-00

From: ------------------------------
Sent: Monday, July 18, 2011 3:34:47 PM
To: ------------------
Cc: ------------------------------------------
Subject: FW: Request for Guidance --------------------------

We have reviewed the facts in your request for advice. Briefly, we understand that the
executor of the taxpayer’s estate contacted the ----------------------------- -------requesting
help in obtaining a refund of levy payments that posted to the taxpayer’s account for
taxable years in which no return was ever filed and no assessment ever made. The
levy payments were received after the tax liability for which the levy was issued had
been satisfied. --------assisted the executor in filing a claim for refund with respect to
these amounts, but the Campus Service Center denied the claim. ------ has now
requested Counsel’s advice.
The Service applied improperly retained levy payments to taxable years for which no
returns were ever filed nor assessments ever made. Because the taxpayer never filed
income tax returns for these years, however, the expiration date for assessment never
began. In addition, no claim for refund was ever made by the taxpayer for those
amounts. The executor of the estate is now seeking a refund of these payments.
Under section 6511(a), if no return was filed by the taxpayer, a claim for refund must be
filed within two years from the time the tax was paid. Accordingly, the only amounts
now potentially eligible for refund would be amounts either paid by the taxpayer or
credited by the Service during the two-year period preceding the date the executor filed
a claim for refund with the Campus Service Center.
Any suggestion that the Service attempt to revive the expired period of limitation for
filing a claim for refund, such as preparing a substitute for return in order to make
assessments to which credits could be applied and then later refunded, or crediting
amounts from barred years in order to “restart” the period of limitation for which to file a
claim, is fruitless. Section 6514 clearly provides that any credit resulting from an action
by the Service in an attempt to create an “overpayment” is void.
These amounts were arguably eligible for return under section 6324(d) and Treas. Reg.
301.6343-3(c)(4). Unfortunately, the time period for filing a claim for return of such
amounts, within nine months from the date of the improper levy, has long expired.
Thus, section 6343 provides no assistance in returning any amounts to the executor.
This is, simply put, a situation where the taxpayer, never having filed returns for the tax
years at issue, needed to file returns within two years of when the various payments
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were credited in order to establish his right to refunds. Having failed to do so, refunds
are now barred.