CCA 1351019: refund claims after offsets were timely

Plain-English summary

Chief Counsel Advice considers whether a taxpayer timely claimed refunds after the IRS offset overpayments against earlier tax liabilities. The taxpayer submitted Forms 843 and contacted the Service about the offsets, but the IRS did not send a disallowance notice. The advice concludes that the formal claim and later informal written claims were timely under the two-year rule in IRC § 6511(a). It also concludes that the refund amounts were not limited under IRC § 6511(b)(2)(B) because the relevant tax was paid within two years before each claim.

Ruling snapshot

• Question: Were the taxpayer's refund claims after IRS offsets timely?
• Outcome: Advice given
• Key authorities: IRC §§ 6511(a), 6511(b); Treas. Reg. § 301.6402-3; United States v. Kales, 314 U.S. 186 (1941)

Full text (IRS public release)

       Office of Chief Counsel
       Internal Revenue Service
       memorandum
       Number: 201351019
       Release Date: 12/20/2013
       CC:PA:02:HMarx
       POSTN-125262-13

UILC: 6511.09-00

date: August 27, 2013

 to:   Gregory Rickards
       AM Op 1 Dept 3 Team 307
       Intl TAS Liaison

from: Pamela Wilson Fuller
Senior Technician Reviewer
(Procedure & Administration)

subject: Recovery of overpayment offset to tax liability

       This Chief Counsel Advice responds to your request for assistance. This advice may
       not be used or cited as precedent.

                                                 ISSUE

       Whether taxpayer (“TP”) made timely claims for refund.

                                                FACTS

       Taxpayer timely filed returns for tax years 2002-2005 and received refunds for each tax
       year. The Internal Revenue Service later adjusted TP’s income, tax, and credits for
       2002-2005, creating balances due for each of those years. The Service sent TP
       balance due and levy notices. TP filed a Form 843, Claim for Refund and Request for
       Abatement on July 18, 2006. From February 2007 through 2011 the Service then
       credited TP’s overpayments from tax years 2006-2010 to the balances due for 2002-
       2005. TP subsequently filed another Form 843 on March 12, 2007. The Service’s
       records show that TP contacted the Service numerous times between 2007 and 2011
       regarding the balances due and offsets. The Service never sent TP a disallowance
       notice. The Service has now determined that it had erroneously adjusted TP’s income,
       credits and tax due to a miscommunication between the IRS and another federal
       agency.
                                          LAW AND ANALYSIS

POSTN-125262-13 2

Section 6511(a) provides that claims for refund of tax for which a taxpayer is required to
file a return must be filed “within 3 years from the time the return was filed or 2 years
from the time the tax was paid, whichever of such periods expires the later.” Section
6511(b) provides that no refund will be allowed if the taxpayer fails to file a claim within
the period prescribed in 6511(a). Pursuant to section 6511(b)(2), if the claim is filed
within the 3-year period prescribed in 6511(a), the amount of the refund is limited to the
amount paid within 3 years plus extensions of the filing of the claim. If the claim was not
filed within the 3-year period, the refund amount is limited to the amount paid within 2
years preceding the refund claim. I.R.C. § 6511(b)(2)(B).

In general, a taxpayer seeking a refund of income tax must file a timely claim that meets
the requirements of Treas. Reg. § 301.6402-3. However, it is well established that an
informal claim for refund (one that does not comply with the formal requirements of the
statute and regulations) will suffice as long as it requests a refund and fairly advises the
Service of the nature of the taxpayer’s claim. United States v. Kales, 314 U.S. 186, 194
(1941). There are no bright line rules as to what constitutes an informal claim. Turco v.
Commissioner, T.C. Memo. 1997-564. Each case must be decided on its own particular
set of facts. Id. The relevant question is whether the Service knew or should have
known that a refund claim was being made. Id. Also, an informal claim must have some
written component. Id.

In this case, the first offset took place in February 2007. TP filed a Form 843 in March
2007, requesting a refund of the offset amount. The Service’s records indicate that TP
subsequently made informal claims for refund within two years after the additional
offsets were made. Thus, each claim was timely pursuant to the 2-year rule in section
6511(a). The amount of each claim is not subject to limitation under section
6511(b)(2)(B) because, in each instance, the entire amount of the tax was paid within 2
years of the filing of the claim.
POSTN-125262-13 3

                                  CONCLUSION

TP’s claims for refund for the 2002-2005 tax years were timely.

This writing may contain privileged information. Any unauthorized disclosure of this
writing may undermine our ability to protect the privileged information. If disclosure is
determined to be necessary, please contact this office for our views.

Please call (202) 622-4940 if you have any further questions.