CCA 1321022: IRS supports refund statute dates based on filing deadlines and extensions

Plain-English summary

Chief Counsel Advice addresses how the IRS should calculate refund statute expiration dates, or RSEDs, under IRC § 6511. It agrees that the ordinary three-year period should run from the statutory filing deadline when there is no filing extension. When an extension exists, the advice supports using the earlier of the extended due date or the date the return was received. The memorandum explains that using the actual filing date alone could cause the IRS to issue refunds barred by the separate limitations in IRC § 6511(b)(2).

Ruling snapshot

• Question: How should the IRS calculate refund statute expiration dates when a taxpayer files before an extended filing deadline?
• Outcome: Advice given. Use the statutory deadline, or when extended, the earlier of the extended due date or the return-received date, subject to the statute's more complicated rules.
• Key authorities: IRC §§ 6511(a), 6511(b)(1), 6511(b)(2), and 6110(k)(3).

Full text (IRS public release)

1

ID: CCA_2013050211465938
Office:
UILC: 6511.00-00
Number: 201321022
Release Date: 5/24/2013
From: -----------------------
Sent: Thursday, May 02, 2013 11:36:00 AM
To: --------------------
Cc: -------------------- ----------------------------------------------------------------------

Subject: RSED ---------

You have asked for our views on your suggestions for computing RSED dates,
specifically

          o    No change to the current three years from the statutory deadline
               for filing the return (generally April 15) when there is no extension
               of time to file.
          o    When there is an extension of time to file, the RSED should be
               three years after THE EARLIER OF the extension due date OR the
               return-received date (currently, the RSED date is set to three years
               after the extended deadline and remains at that date even if the
               taxpayer files prior to the extension date).

We agree with your suggestions. The section 6511 rules are so complicated that the
system cannot currently be programmed to figure out every situation. But the above
suggestion in the second bullet should prevent many erroneous refunds and allow time
for manual computation of more complicated scenarios.

We also thought to explain here why the proposal to refigure the RSED to three years
from the date returns are actually filed could result in barred refunds going out, as you
correctly pointed out in your October 2, 2012 email to --------
--------:

               Secondly, the three years from the date the return was actually
               filed is a problem. If the computer is change [sic] to this
               requirement, IRS computer generated refund will go out any time
               the taxpayer files an original return regardless of the statutory
               deadline. For example, the taxpayer files an original return for the
               2008 tax year on January 1, 2012, the taxpayer would have 3

2

               years (January 1, 2015) to file a timely claim for refund and our
               programming change would allow the refund to go out.

Just to go a bit further with your example, a claim may be jurisdictionally timely under
§ 6511(a), but barred under § 6511(b)(2). In your example, Taxpayer first filed a 2008
return on 1-1-2012; the RSED was set to 1-1-2015 (as it would be if it were set only on
the date of filing). Now let’s assume Taxpayer had withholding, which was deemed paid
on 4-15-2009, and that Taxpayer then filed an amended return on or before 1-1-2015,
say on 7-15-2014. If the RSED were set at 1-1-2015, the IRS computer-generated
refund would go out, and it would, in fact, be timely under § 6511(a). But the claim still
may be barred under § 6511(b)(2), depending on when the taxes Taxpayer is claiming
were paid. If Taxpayer’s 7-15-2014 claim was for withholding paid on 4-15-2009, that
claim would be barred under § 6511(b)(2) (because the taxes were paid more than three
years before the 7-15-2014 claim filing date). This is true EVEN THOUGH THE CLAIM
WOULD BE TIMELY UNDER § 6511(a). A case that discusses the differences between
§ 6511(a) and § 6511(b) is Boeri. I have attached that opinion if you care to read it.

So, to avoid claims barred by 6511(b)(2), it is better not to have claims refigured to three
years from whenever the return was filed, as you rightly suggest. The safest bet, then, is
to keep the RSED 3 years from the statutory deadline or, if that deadline is extended, to
the earlier of the extended due date or the return received date.

During our recent conversation this week, you we worked through a scenario that
involved how § 6511(b)(2) works and you asked me to provide an example in writing. An
example is attached. Please do not hesitate to call ----------------
--------at ------------------- or me if you have further questions.

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ATTACHMENT 1

2009 tax year, return due 4/15/2010.
Withholding of $1,000, deemed paid on 4/15/2010
Taxpayer gets extension to 10/15/2010
Sends $500 with extension.
TP files return on 9/30/2011;
Pays another $600 with return. He still owes $1,800.

On 1/5/2012, he pays $350
On 3/5/2012, he pays $350
On 6/5/2013 he pays the remaining $1,100

TP files amended return on 7/20/2014, requesting the entire
$3,900 back, arguing that he mistakenly reported an inheritance
that he was not required to pay tax on.

IRS agrees that he should not have paid that tax, but we have to
look at § 6511 to see whether he is entitled to refund.

Under § 6511(a), tp has until 9/30/2014 to claim a refund, so
his 7/20/2014 claim is timely.

Under 6511(b)(1), he can get no refund after the expiration of
time under 6511(a), but, as we know now, the 6511(a) period has
not expired.

Under 6511(b)(2), the amount of the credit or refund can’t
exceed the portion of tax paid between the date he filed his
claim (7/20/2014) and going back 3 years (to 7/20/2011), plus
the period of any extension of time for filing (he had a 6-month
extension, so we are now at 1/20/2011).

He can get no tax back if he paid it before 1/20/2011, so he
gets back $2,400:
$600 tax paid on 9/30/11.
$350 paid on 1/5/2012;
$350 paid on 3/5/2012;
$1,100 paid on 6/5/2013

He cannot get back the $1,000 withholding of 4/15/2010 or the
$500 paid on 10/15/2010