Refund barred after deadline to sue on disallowed claim

Plain-English summary

Chief Counsel advised that a refund was barred when the taxpayer did not sue within two years after the IRS issued a notice disallowing the refund claim. Assuming no waiver or extension applied, section 6532 required the taxpayer to bring suit within that period. Once the period expired, section 6514 prohibited the IRS from refunding or crediting the claimed overpayment. If the IRS had already paid it, the payment was treated as an erroneous refund. The advice clarified that section 6511, which limits refund claims, was not the provision causing the bar in this situation.

Ruling snapshot

• Question: Could the IRS refund or credit an overpayment after the taxpayer's two-year period to sue over the disallowed claim had expired?
• Outcome: Advice given that the refund was barred and any amount already paid was an erroneous refund.
• Key authorities: IRC §§ 6511, 6514, and 6532

Full text (IRS public release)

ID:          CCA_2019061716373457
UILC:        6532.00-00, 6514.00-00

Number: 201927020
Release Date: 7/5/2019
From:
Sent: Monday, June 17, 2019 4:37:34 PM
To:
Cc:
Bcc:
Subject: RE: Chief Counsel Advice - POSTN-138440-10


Hi ----------
The refund is barred.
Assuming there is no waiver/extension of period of limitation for filing suit, a taxpayer
has two years from the issuance of the Notice of Disallowance to file suit to challenge
the disallowance of the claim (on whatever grounds). I.R.C. § 6532. If the taxpayer did
not file suit before the two-year period elapsed, I.R.C. § 6514 prohibits the refund or
credit of the claimed overpayment.

Where the IRS had already refunded the overpayment, it’s treated as an erroneous
refund.

I.R.C. § 6511, which addresses limitations on claims, is not the statute that is barring
the refund.

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