Identity-theft refund claim is limited to two years from payment

Plain-English summary

Taxpayers affected by identity theft sought a refund after the IRS offset one refund against a balance connected to a return filed by the thief. Because the taxpayers had no filing requirement, Chief Counsel concluded that Section 6511(a)'s three-year period from filing a return did not apply. Their claim instead had to be filed within two years after the tax was paid, which occurred when the offset was made. Counsel advised checking whether the taxpayers had made a timely informal written claim. IRS records documenting that they requested return of the offset could potentially satisfy the writing requirement.

Ruling snapshot

• Question: Was the refund claim timely when taxpayers with no filing requirement sought recovery of an offset associated with identity theft?
• Outcome: Advice given; the claim was barred unless the taxpayers made a timely informal claim within two years after the offset.
• Key authorities: IRC § 6511(a)

Full text (IRS public release)

ID: CCA_2018050715193154
UILC: 6511.00-00

Number: 201822027
Release Date: 6/1/2018
From:
Sent: Monday, May 07, 2018 3:19:31 PM
To:
Cc:
Bcc:
Subject: advice in #6358477 (identity theft, offset, and claim for refund)

Hi ------- Thanks for your patience. I’ve closely studied this case, as well as discussed the facts
with several of my Counsel colleagues who have extensive experience with ID theft cases.
Unfortunately, we agree with SBSE Counsel that the taxpayers are not entitled to a refund.
Because they had no filing requirement, the “3 years from the time the return was filed”
timeframe in section 6511(a)” isn’t applicable. Consequently, their claim must have been filed
within 2 years from the date the tax was paid. In this case, the tax was paid on ----------------------
-------------------------------------------------------------------------------------------------------------------, when
the IRS offset their ------ refund to the ------ balance due. So any claim for refund would have
had to be filed by ---------------------.

Two points of clarification: (1) The last paragraph in the SB/SE Counsel opinion is perhaps a
little confusing, as it assumes that the return filed by the thief was really the taxpayers’ return
and applies the section 6511 analysis accordingly. Yet it is my understanding that these
taxpayers did not have a filing requirement. In addition, SB/SE Counsel doesn’t explain that the
taxpayers get the longer of the 3-year/2-year timeframe in section 6511(a). (2) Before you
close out this case, be sure you have explored with the taxpayers whether there is anything
that could be a timely informal claim for refund. Did the taxpayers contact the IRS between the
date of the offset and --------------------, to indicate they wanted a refund of the amount offset?
There needs to be something in writing; the writing requirement can be satisfied in certain
circumstances by IRS records (e.g., suppose the taxpayers called the IRS and any case history
documented by the IRS reflects the taxpayers wanted the offset amount back – that could be
sufficient – I would want to see the documentation).

I’m sorry this isn’t the result for which you were hoping, but section 6511 bars relief for these
taxpayers unless you can advocate that they filed a timely informal claim for refund by --------- --
-----------.

Please let me know if you have any questions.