What general filing and payment-lookback limits did SC Revenue Ruling 97-14 apply to state tax refund claims?

Plain-English summary

South Carolina Revenue Ruling 97-14 explained the refund limitation rules enacted effective August 1, 1995. It was later superseded by RR 13-1.

The general filing rule was the later of three years from filing a timely return, including extensions, or two years from payment. When no return was filed—or the return was not timely enough to use the three-year rule—the ruling applied the two-year payment rule.

Filing on time did not guarantee recovery of every payment. A separate lookback limited the refund to payments within three years plus the filing-extension period when the claim qualified for the three-year rule, or payments within the two years before the claim under the two-year rule.

Timing points illustrated

• An early return was treated as filed on the original due date, but a return filed after the original due date and before the extended due date used the Department's actual receipt date.
• Withholding and estimated income-tax payments were treated as paid on the original return due date, without regard to extension.
• An amended return did not restart the limitation period; the original return controlled.
• Later assessment payments could support a refund only to the extent they fell within the applicable two-year payment window.
• A corporation had a special 30-day rule for a refund caused by an IRS taxable-income adjustment under the provision quoted in the ruling.

Common questions

Q: Could a timely claim still recover only part of the overpayment? Yes. The payment lookback could limit the refund even when the claim itself was timely.

Q: Did an amended return restart the clock? No. The ruling treated an amended return as a refund claim or further self-assessment, not a new original return.

Q: Could a barred overpayment simply be moved to another year? The examples said no when the taxpayer was not entitled to a refund under the limitation rule.

Q: Is RR 97-14 current? No. RR 13-1 expressly superseded it.

Citations and references

• S.C. Code Ann. § 12-54-85 (refund filing and payment-lookback rules)
• S.C. Code Ann. § 12-60-470 (refund claims and correction of related errors)
• SC Revenue Procedure #95-5 (correction procedure cited)
• SC Revenue Ruling #13-1 (expressly superseded RR 97-14): https://dor.sc.gov/sites/dor/files/policies/RR13-1.pdf

Subject

Statute of Limitations for Claims for Refunds

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR97-14.pdf

Original ruling text

State of South Carolina

Department of Revenue
301 Gervais Street, P. O. Box 125, Columbia, South Carolina 29214

SC REVENUE RULING #97-14

SUBJECT:

Statute of Limitations for Claims for Refunds

EFFECTIVE DATE: Returns and claims for refund filed after August 1, 1995.
Payments made after August 1, 1995.
SUPERSEDES:

All previous documents and any oral directives in conflict
herewith.

REFERENCES:

S. C. Code Ann. Section 12-54-85 (Supp. 1996)
S. C. Code Ann. Section 12-60-470 (Supp. 1996)

AUTHORITY:

S. C. Code Ann. Section 12-4-320 (Supp. 1996)
SC Revenue Procedure #97-8

SCOPE:

A Revenue Ruling is the Department of Revenue’s official
advisory opinion of how laws administered by the Department are
to be applied to a specific issue or a specific set of facts, and is
provided as guidance for all persons or a particular group. It is
valid and remains in effect until superseded or modified by a
change in the statute or regulations or a subsequent court decision,
Revenue Ruling or Revenue Procedure.

INTRODUCTION
The South Carolina Code sets forth time limits within which the Department of Revenue
must assess and collect taxes and within which taxpayers must file claims for refunds.
Effective August 1, 1995, Code Section 12-54-85, regarding the statute of limitations for
tax matters, and “The South Carolina Revenue Procedures Act,” (“Act”), contained in
Chapter 60 of Title 12, were enacted.
The purpose of this document is to address some frequently asked questions concerning
the statute of limitations for claims for refunds.

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GENERAL RULE FOR CLAIM FOR REFUND
Code Section 12-54-85, the general statutory rule for filing a claim for refund for all fees
and all taxes administered and collected by the Department of Revenue, provides for the
time periods within which to timely file a claim for refund. The section provides, in part:
(F)(1) Except as provided in subsection (D) 1 above, claims for credit or refund
must be filed within three years of the time the timely filed return, including
extensions, was filed, or two years from the date of payment, whichever is later.
If no return was filed, a claim for refund must be filed within two years from
the date of payment.
(2) If the claim was filed by the taxpayer during the three-year period
prescribed in item (1), the amount of the credit or refund may not exceed the
portion of the tax paid within the period, immediately preceding the filing of the
claim, equal to three years plus the period of any extension of time for filing the
return.
(3) If the claim was not filed within the three-year period, the amount of the
credit or refund may not exceed the portion of the tax paid during the two years
immediately preceding the filing of the claim.
(4) If no claim was filed, the credit or refund may not exceed the amount which
would be allowable under items (2) or (3), as the case may be, as if a claim
were filed on the date the credit or refund is allowed.
(6) For the purposes of this subsection:
(a) Any return filed before the last day prescribed for the filing is
considered as filed on the last day. Payment of any portion of the tax
made before the last day prescribed for the payment of tax is considered
made on the last day. The last day prescribed for filing the return or
paying the tax must be determined without regard to any extension of
time.

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Every corporation shall notify the department in writing of all changes in taxable income reported
to the Internal Revenue Service when the taxable income is changed by the Internal Revenue Service.
Notification to the department must be made within thirty days after a final determination is received from the
Internal Revenue Service. Notification of adjustments made by the Internal Revenue Service must be made
under separate cover from any return filed or due to be filed with the department.
Notwithstanding any restrictions on filing a claim for refund provided in subsection (F), subsection
(D) allows a corporation to file a claim for refund resulting from an overpayment due to changes in taxable
income made by the Internal Revenue Service within thirty days from the date the Internal Revenue Service
changes the taxable income.

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(b) Any tax actually withheld at the source in respect of the recipient of
income, is considered to have been paid by the recipient on the last day
prescribed for filing his return for the taxable year, determined without
regard to any extension of time for filing the return, with respect to
which the taxpayer would be allowed a credit for the amount withheld.
(c) Any amount paid as estimated income tax for any taxable year is
considered to have been paid on the last day prescribed for filing the
return for the taxable year, determined without regard to any extension
of time for filing the return.

EXAMPLES ARE PROVIDED IN THIS DOCUMENT TO ILLUSTRATE THE
ABOVE STATUTORY PROVISIONS. FOR EASE OF DISCUSSION, THE
EXAMPLES ARE DIVIDED INTO TWO CATEGORIES - (1) INDIVIDUAL TAX
RETURNS AND (2) CORPORATE TAX RETURNS.
UNLESS OTHERWISE NOTED, ALL EXAMPLES APPLY TO ANY TYPE OF
TAXPAYER AND ANY TYPE OF TAX.

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EXAMPLES FOR INDIVIDUAL TAX RETURNS
For purposes of the following examples it is assumed that:

1. the taxpayer is an individual, calendar year, taxpayer required to file a South
   Carolina individual income tax return;
2. the original due date of the return is April 15;
3. no dates fall on weekends or holidays;
4. the refund is proper if it is within the statute of limitations; and
5. all dates are after August 1, 1995.
   1.

Q. A taxpayer’s individual income tax return for Year 1 is due April 15, Year 2.
The taxpayer had $500 of South Carolina income tax withheld from wages. The
taxpayer timely files an extension of time to file until August 15, Year 2. On
August 15, Year 2, the taxpayer files a timely tax return showing and paying an
additional tax liability of $200. On August 15, Year 5, the taxpayer files a claim
for refund of $700. Is the taxpayer entitled to a refund?
A. Yes. The claim for refund was timely filed within 3 years of filing the timely
original return, including the extension of time. As a result, the taxpayer is
entitled to a refund of $700, the $500 tax paid within the 3 year period
immediately preceding the filing the return (the amount withheld from wages is
deemed paid April 15, Year 2) and the $200 since the 4 month extension period
used to file the return is added to the 3 year statute of limitation.

2.

Q. A taxpayer’s individual income tax return for Year 1 is due April 15, Year 2.
The taxpayer had $500 of South Carolina income tax withheld from wages. The
taxpayer timely files an extension of time to file until August 15, Year 2. On
August 1, Year 2, the taxpayer files a timely tax return showing and paying an
additional tax liability of $200. This return was received by the Department on
August 3, Year 2. On August 15, Year 5, the taxpayer files a claim for refund of
$700. Is the taxpayer entitled to a refund?
A. No. The taxpayer does not meet the requirements of South Carolina Code §1254-85(F)(1). Although the taxpayer filed a timely return, the claim for refund
was filed more than three years after the original return was filed and more than
two years after the tax payments. Since the three-year limitation period that
applies to a timely filed return began on August 3, Year 2, the taxpayer’s claim
for refund filed on August 15, Year 5 was not timely filed. The taxpayer’s claim
for refund should have been filed by August 3, Year 5 in order to receive a
refund of all amounts claimed.

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NOTE: If a return is filed after the original due date but before the extended due
date, the period of limitations for filing a claim for refund begins to run from the
date the return was actually received by the Department and not from the
extended due date.
3.

Q. A taxpayer’s individual income tax return for Year 1 is due April 15, Year 2.
The taxpayer timely files an extension of time to file until August 15, Year 2.
The taxpayer files a delinquent tax return on May 18, Year 5 and claims a refund
of South Carolina income tax withheld from wages for Year 1. Is the taxpayer
entitled to a refund?
A. No. The taxpayer does not meet the requirements of South Carolina Code §1254-85(F)(1). The three-year limitation period in this section applies to a timely
filed return. Since the taxpayer did not file a timely return, the only refund
limitation rule that can apply is the two-year rule. The tax overpayment cannot
be refunded because the income tax withheld from wages is deemed paid on the
due date of the return without regard to extensions; i.e., April 15, Year 2. This
deemed payment was made more than two years before the claim was filed. The
taxpayer’s claim for refund should have been filed by April 15, Year 4 in order
to receive a refund of all amounts claimed.

4.

Q. A taxpayer files a tax return for Year 1 on April 15, Year 2 and pays a tax
liability of $400. On April 1, Year 4, the taxpayer files an amended return
showing and paying an additional tax liability of $200. On June 1, Year 5, the
taxpayer files a claim for refund of $300, stating that the correct liability for Year
1 was $300. Is the taxpayer entitled to a refund?
A: Yes, but the refund amount is limited as provided in South Carolina Code §1254-85(F)(3). Although the taxpayer filed a timely return, the claim for refund
was filed more than three years after the original return was filed. As a result,
the taxpayer is not entitled to a refund of any part of the tax paid with the Year 1
return. The refund amount is measured by and limited to the tax paid within two
years before the taxpayer filed the claim. The taxpayer is entitled to a refund of
$200.
NOTE: Where a taxpayer files an original return and then an amended return,
the “return” referred to in Code Section 12-54-85 is the original return. An
amended return is a claim for refund or a further self assessment and does not
affect the running of the limitations period on the filing of a refund claim.

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5.

Q. A taxpayer’s Year 1 individual income tax return is timely filed on April 15,
Year 2. The return is audited by the Department and an assessment of $500 is
issued on April 1, Year 5. The taxpayer pays the assessment on May 1, Year 5.
On July 15, Year 5, the taxpayer files a claim for refund for $600. Is the
taxpayer entitled to a refund?
A. Yes, but the refund is limited to $500 - the amount of the assessment paid. The
taxpayer is entitled to a refund providing the claim for refund is filed by May 1,
Year 7, the later of two years from date of payment or three years from the time
the return is filed. The taxpayer must have filed a claim for refund on or before
April 15, Year 5 to obtain a refund of the tax paid on the due date of the original
return.

6.

Q. A taxpayer’s individual income tax return for Year 1 is due April 15, Year 2.
The taxpayer makes quarterly estimated payments of $2000 on April 15, June
15, and September 15, Year 1, and January 15, Year 2. The return is filed on
March 1, Year 2. When must a claim for refund be filed by the taxpayer for it to
be considered timely?
A. A claim filed on or before April 15, Year 5 would be timely as to all estimated
payments. Estimated payments made for the taxable Year 1 are deemed made on
April 15, Year 2. A claim filed on or after April 16, Year 5 would be filed more
than 3 years from the last day prescribed for filing the return (the return is
deemed to be filed on April 15, Year 2), and no portion of the $8000 estimated
tax paid could be claimed.

7.

Q. A taxpayer’s individual income tax return for Year 1 is due April 15, Year 2.
The return is filed on March 1, Year 2. On April 1, Year 4, the Department issues
a $6000 assessment. The taxpayer pays the assessment in $2000 installments on
May 1, August 1, and November 1, Year 4. The taxpayer files a claim for
refund more than three years after the filing period of the return. Is the taxpayer
entitled to a refund?
A. Since the claim for refund was more than three years after the original return was
filed, the refund amount is measured by and limited to the tax paid within two
years before the taxpayer filed the claim. The taxpayer is entitled to a refund of
the $6000 paid on May 1, August 1, and November 1, Year 4 if the claim is filed
on or before May 1, Year 6. Any claim filed more than 2 years after each $2000
payment would be untimely as to that payment(s). For example, a claim filed
August 5, Year 6 would be timely as to the $2000 payment made on November
1, Year 4, but would be untimely as to each of the $2000 payments made on
May, 1 and August 1, Year 4. A claim filed November 2, Year 6 or thereafter
would be untimely as to all payments.

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EXAMPLES FOR CORPORATE TAX RETURNS
For purposes of the following examples it is assumed that:

1. the taxpayer is a corporate, calendar year, taxpayer required to file a South
   Carolina corporate income tax return;
2. the original due date of the return is March 15;
3. no dates fall on weekends or holidays;
4. the refund is proper if it is within the statute of limitations; and
5. all dates are after August 1, 1995.
   8.

Q. A taxpayer’s corporate income tax return for Year 1 is due March 15, Year 2.
No income tax is due with the return, but a $325 license fee is due and paid. The
taxpayer timely files an extension of time to file until September 15, Year 2. On
September 15, Year 2, the taxpayer files a timely tax return showing and paying
no additional tax liability. On August 15, Year 5, the taxpayer files a claim for
refund for $300 of the license fee. Is the taxpayer entitled to a refund?
A. Yes. The claim for refund was timely filed within 3 years of filing the timely
original return, including the extension of time. As a result, the taxpayer is
entitled to a refund of $300.

9.

Q. A taxpayer’s corporate income tax return for Year 1 is due on March 15, Year 2.
The taxpayer does not request an extension of time to file the return. The return
is filed August 1, Year 2 showing and paying an additional tax liability of $200.
A claim for refund is filed August 1, Year 5. Is the claim for refund timely?
A. No. Since the taxpayer did not file a timely return, the only refund limitation rule
that can apply is the two-year rule. The payment was made on August 1, Year 2 more than two years before the claim was filed. The taxpayers claim for refund
should have been filed by August 1, Year 4 in order to receive a refund of all
amounts claimed. Further, since the taxpayer is not due a refund, the statute does
not permit the amount to be credited to another year’s tax liability.

10. Q. A taxpayer’s corporate income tax return for Year 1 is due on March 15, Year 2.
    An extension of time to file the return is granted until September 15, Year 2. No
    return is filed by the extended due date. On January 15, Year 3, the Department
    makes an estimate of the tax liability and issues a proposed assessment. The
    taxpayer does not protest the proposed assessment and pays the assessment of
    $1500 on March 15, Year 3. The taxpayer files the original return on June 15,
    Year 5 showing no tax due. Is the taxpayer entitled to a refund or application of
    the $1500 payment to another tax?

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A. No. Under Code Section 12-54-85, claims for credit or refund must be filed
within three years of the time the return was timely filed, or two years from the
date of payment, whichever is later. Since the taxpayer did not file a timely
return, the only refund limitation rule that can apply is the two-year rule. The
payment was made on March 15, Year 3 - more than two years before the claim
was filed. The taxpayers claim for refund should have been filed by March 15,
Year 5 in order to receive a refund of all amounts claimed. Further, since the
taxpayer is not due a refund, the statute does not permit the amount to be credited
to another year’s tax liability.

11. Q. A taxpayer’s corporate income tax return for Year 1 is due March 15, Year 2.
    The taxpayer timely files an extension of time to file until September 15, Year 2.
    The return is filed on August 1, Year 6. The taxpayer takes credit for estimated
    tax payments made timely on March, June, September and December Year 1 and
    an extension payment made on March 1, Year 2. Can the overpayment shown on
    the return be refunded or applied to another tax year?
    A. No. Any amount paid as estimated income tax for any taxable year is deemed
    paid on the due date of the return without regard to extensions. The March, June,
    September, and December Year 1 estimated tax payments are deemed made on
    March 15, Year 2. Further, payment of any portion of the tax made before the
    last day prescribed for the payment of the tax is deemed paid on the due date of
    the return without regard to extensions. The tax paid on March 1, Year 2 with
    the extension is deemed made on March 15, Year 2. Since the taxpayer did not
    file a timely return, the only refund limitation rule that can apply is the two-year
    limitation rule. All payments are deemed made on March 15, Year 2 - more than
    two years before the claim was filed in August 1, Year 6. Since the taxpayer is
    not due a refund, the statute does not permit the overpayment amount shown on
    the return to be refunded or applied to another tax year.
12. Q. The Internal Revenue Service issues a final determination of tax adjustment on
    May 1, Year 13 to a corporation for Year 1. As a result of the adjustment, the
    taxpayer files a claim for refund with the Department on May 25, Year 13. Is the
    taxpayer entitled to a refund?
    A. Yes. Code Section 12-54-85(D) provides that notwithstanding any restrictions
    on filing a claim for refund under Code Section 12-54-85(F), a corporation may
    file a claim for refund resulting from an overpayment due to changes in taxable
    income by the IRS within 30 days from the date the IRS changes the taxable
    income. A claim filed on or before May 31, Year 13 would be a timely claim for
    refund. A claim filed June 1, Year 13 or after, however, would not be a timely
    claim for refund. (NOTE, this example only applies to a corporate taxpayer.)

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13. Q. A taxpayer timely files an amended return. After the statute of limitations for
filing a claim for refund expires, the taxpayer discovers a refund greater than that
originally reported on the claim should have been claimed. This additional
amount is based upon issues already raised in the timely claim for refund. Is the
taxpayer entitled to the greater refund?
A. Yes, providing the adjustment is based upon issues raised in a timely filed claim
for refund and providing the claim for refund is still being considered. Although
Code Section 12-60-470(H) provides that a claim for refund can be amended
prior to, but not after, the expiration of the time for filing the claim for refund
under Code Section 12-54-85(F), the Department will allow under Code Section
12-60-470(G) correction of errors that may otherwise be barred by the statute of
limitations in certain circumstances outlined in SC Revenue Procedure #95-5. It
provides that when the Department is considering a timely filed claim for refund,
it will also consider an additional claim for refund outside of the statute of
limitations only if the adjustment is based upon issues raised in the timely filed
claim for refund. No additional refund will be allowed if a taxpayer raises new
issues after the statute of limitations has expired or after the Department has
completed work on the timely filed refund request.
SOUTH CAROLINA DEPARTMENT OF REVENUE

s/Burnet R. Maybank III
Burnet R. Maybank III, Director

October 13
, 1997
Columbia, South Carolina

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