Refund on 2012 return after filing amendment

[origun]

Elderly taxpayer never filed 2012 return (illness, family issues). In late 2016 she was contacted by state (never heard from IRS) so, with considerable difficulty, we got together information and filed both state and federal returns in early 2017. She ended up with balances due which she paid. Unfortunately I made a mistake on Federal 1040 and calculated balance due using withholding am't of $500 (which was state w/h) instead of correct am't of $800. So she overpaid about $300. Original return was filed in January 2017 and an amended return filed in March 2017 requesting a refund. I have received first time abatement for failure to file and failure to pay so there is only interest involved as an additional charge to her. One person I spoke to at the IRS says they won't refund the $300 (minus interest) as over 3 years have passed since filing deadline.

Is there any way she can get back her $300? The person I spoke to at the Practitioner Priority line was vague and mentioned that there might be an exception if she filed the original return in 2017...which she did...and she might have 2 more years to request refund. Does anyone have any information about such an exception? I feel really bad as it was my error, doing an old return by hand.

[Roland Slugg]

You should never call the IRS if you want an answer to a tax question.

Yes, she can get the refund. The 3-year SOL starts when the return for the year in question is filed ... March 2017 in her case. Here's a verbatim quote from Code §6511(a):

Claim for credit or refund of an overpayment of any tax imposed by this title in respect of which tax the taxpayer is required to file a return shall be filed by the taxpayer 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, or if no return was filed by the taxpayer, within 2 years from the time the tax was paid.

Btw, the IRS might automatically refund the additional $300. When the OR is processed, the mistake might be caught and the tax due reduced by $300. The IRS, in turn, may either: (A) send the T/P a check for the $300 overpayment, or (B) sent a letter about it. I suggest that your client wait two or three months to allow for this, and then file an amended return if she has heard nothing.

[Clemrick]

Three Year "Rule"

Roland,

I read the code you referred to. There has got to be something else to account for the general belief that there are no refunds for years that are filed more than three years after the original due date.

[TaxGuyBill]

Roland,

I read the code you referred to. There has got to be something else to account for the general belief that there are no refunds for years that are filed more than three years after the original due date.

That is where §6511(b)(2)(A) comes in. The refund is limited to the amount of tax paid within the last three years.

So yes, you technically can file for a refund past 3 years after the due date. But assuming you have paid $0 during that time, your refund is limited to $0.

[New York Enrolled Agent]

TGB is right on target. There are two parts to §6511 relevant to the question.

§6511(a) – timely filing for the claim

§6511(b) – amount of tax refundable if the claim is timely filed

There is a great read on §6511 in Weisbart 222 F.3d 93 (CA2) - good tax law & good prose

[Roland Slugg]

So yes, you technically can file for a refund past 3 years after the due date. But assuming you have paid $0 during that time, your refund is limited to $0.

May I suggest a careful re-reading of the OP? It says that the T/P filed her OR in January 2017 and, thus, paid the tax due at that time. She simply overpaid the amount due by $300, and I believe the IRS will refund that overpayment based on the 1040X that was filed.

[TaxGuyBill]

I agree.

I interpreted the OP's followup comment as a secondary, tangent question about why refunds are usually not available after the 3 year mark. Just reading §6511(a) would make it seem the 3 year expiration would not apply (no return was filed yet), so I pointed out §6511(b). Maybe I misinterpreted the followup comment.

[origun]

Thanks

Thanks for all the helpful information. The IRS did not see the error on the original return although I included all 1099-Rs showing withholding. So they billed her for the total amount due plus penalties and interest. I submitted an amended return in March as they told me to do...but when I called in May, they said they had sent it back to the taxpayer although had no notes as to the reason. Taxpayer says it wasn't received! So I sent another copy, certified mail, in May and when I called this week, it still wasn't scanned into the system although was delivered May 14 by USPS! So...it's a waiting game for now. Meanwhile, I feel better with the assurances from you experts that a refund should eventually be forthcoming and I have tax law citations to use if I need to argue with the IRS.