1040X filed after SOL date

[BHoffman]

During 2007, the State informed my client that her prior preparer was being investigated and asked her to review her 2003 return. We reviewed and sure enough, there were some....errors. We amended her 2003 State return and satisfied the State.

We also amended her 2003 1040 and mailed it in with payment to IRS in March 2008.

Since it was outside the statute of limitations, the IRS sent her a letter stating:


"The IRS has a legal period in which to charge and collect additional tax on your Form 1040X. This legal period has expired for the tax period(s) shown above. For this reason, we will not charge you for the additional income you reported after the expiration date.

You paid additional tax on Mar. 1, 2008. In order to claim a refund for these taxes, you must file a claim within two years from the date you paid the tax."


The client wants the money back. I advised her to make a voluntary payment, but she says they need the money pretty badly and wants the money refunded. Around $2k.

Can anyone advise on the procedure for getting a refund on the amount she paid with an amended return that was past the statute of limitation date?

[joanmcq]

Never heard of such a thing. Why did they pay?

[BHoffman]

Hi Joan - client amended and paid to avoid any problems from the IRS if they decided to also investigate the prior preparer. Her return showed a lot of ficticious Sch A stuff. At the time, the preparer was facing State felony charges (lots of publicity about it), but I saw where AZ lowered to a misdemeanor and this is a closed matter now.

One of my network buddies is an ex-IRS auditor. He suggested that we file the 1040X in case the IRS also pursued charges against the preparer and all of his clients. Seemed like the right thing to do, since the State return changed for that year.

I'm wondering if asking for a return of the payment will open up a can of worms.

[Kram BergGold]

Form 843

I owuld think the way to go is to file form 843. I don't see how this couldl open a can of worms. You already fessed up to the underpayment of tax.

[Bees Knees]

The letter from the IRS is saying two things:

1) You didn’t need to send in any money because the tax year in question is a closed year.

2) If you want us to send you your money back, you have two years from March 1, 2008 to do so.

File an amended return to claim a refund for the money sent in with the original amended return and attach a copy of the IRS letter as the explanation.

[BHoffman]

Thank you Bees