Publication 556 |
2001 Tax Year |
Claims for Refund
Once you have paid your tax, you usually have the right to file a
claim for a credit or refund if you believe the tax is too much. You
can claim a credit or refund by filing Form 1040X.
File your claim by mailing it to the Internal Revenue service
center where you filed your original return. File a separate form for
each year or period involved. Include an explanation of each item of
income, deduction, or credit on which you are basing your claim.
Corporations should file Form 1120X, Amended U.S. Corporation
Income Tax Return, or other form appropriate to the type of
credit or refund claimed.
Requesting a copy of your tax return.
You can obtain a copy of the actual return you filed with the IRS
for an earlier year. Use Form 4506 to make your request. You will be
charged a fee, which you must pay when you submit Form 4506.
You may also use Form 4506 to request free copies of a tax return
transcript, verification of nonfiling, or Form(s) W-2
information. The transcript will give you the following information:
- Type of return filed,
- Marital status,
- Tax shown on return,
- Adjusted gross income,
- Taxable income,
- Self-employment tax, and
- Number of exemptions.
Requesting a copy of your tax account information.
You can also obtain a free copy of the tax account information for
your individual income tax return. Tax account information lists
certain items from your return and includes any later changes made by
you or the IRS. To get your tax account information, call or write to
your local Internal Revenue Service office.
Time for Filing a Claim for Refund
Generally, you must file a claim for a credit or refund within 3
years from the date you filed your original return or 2 years from the
date you paid the tax, whichever is later. If you do not file a claim
within this period, you may no longer be entitled to a credit or a
refund.
If the due date to file a return or a claim for a credit or refund
is a Saturday, Sunday, or legal holiday, it is filed on time if it is
filed on the next business day. Returns you filed before the due date
are considered filed on the due date. This is true even when the due
date is a Saturday, Sunday, or legal holiday.
Nonfilers can get refund of overpayments paid within 3-year
period.
The Tax Court can consider taxes paid during the 3-year period
preceding the date of a notice of deficiency for determining any
refund due to a nonfiler. This means that if you do not file your
return, and you receive a notice of deficiency in the third year after
the due date (with extensions) of your return and file suit with the
Tax Court to contest the notice of deficiency, you may be able to
receive a refund of excessive amounts paid within the 3-year period
preceding the date of the notice of deficiency.
Claim for refund by estates electing the installment method
of payment.
The executor does not need to wait until all the installment
payments have been made before filing a suit for refund with a Federal
District Court or the U.S. Court of Federal Claims, for an estate:
- That consists largely of an interest in a closely-held
business, and
- That elected to make tax payments through the installment
method.
However, all the following must be true before a suit can be filed.
- All installment payments due on or before the date the suit
is filed have been made.
- No accelerated installment payments have been made.
- No Tax Court case is pending with respect to any estate tax
liability.
- The time for petitioning the Tax Court has passed if a
notice of deficiency was issued to the estate regarding its liability
for estate tax.
- No proceeding is pending for a declaratory judgment by the
Tax Court on whether the estate is eligible to pay tax in
installments.
In addition, the executor must:
- Not include any previously litigated issues in the current
suit for refund, and
- Not discontinue making installment payments, timely, while
the court considers the suit for refund.
If in its final decision on the suit for refund the court
redetermines the estate's tax liability, the IRS must refund any part
of the estate tax amount that is disallowed. This includes any part of
the disallowed amount previously collected by the IRS.
Limit on Amount of Refund
If you file your claim within 3 years after filing your return, the
credit or refund cannot be more than the part of the tax paid within
the 3 years (plus any extension of time for filing your return) before
you filed the claim.
Example 1.
You made estimated tax payments of $1,000 and got an automatic
extension of time to August 16, 1999, to file your 1998 income tax
return. When you filed your return on that date, you paid an
additional $200 tax. Three years later, on August 16, 2002, you file
an amended return and claim a refund of $700. Because you filed within
the 3 years plus the 4-month extension period, you could get a refund
of $700.
Example 2.
The situation is the same as in Example 1, except that you filed
your return on October 31, 1999, 2 1/2 months after the
extension period ended. You paid an additional $200 on that date.
Three years later, on October 26, 2002, you file an amended return and
claim a refund of $700. Although you filed your claim within 3 years
from the date you filed your original return, the refund is limited to
$200. The estimated tax of $1,000 was paid before the 3 years plus the
4-month extension period.
Claim filed after the 3-year period.
If you file a claim after the 3-year period, but within 2 years
from the time you paid the tax, the credit or refund cannot be more
than the tax you paid within the 2 years immediately before you filed
the claim.
Example.
You filed your 1998 tax return on April 15, 1999. You paid $500 in
tax. On November 3, 2000, after an examination of your 1998 return,
you had to pay $200 in additional tax. On May 2, 2001, you file a
claim for a refund of $300. Your refund will be limited to the $200
you paid during the 2 years immediately before you filed your claim.
Exceptions
The limits on your claim for refund can be affected by the type of
item that forms the basis of your claim.
Special refunds.
If you file a claim for refund based on one of the items listed
below, the limits discussed earlier under Time for Filing a Claim
for Refund may not apply. These special items are:
- A bad debt,
- A worthless security,
- A payment or accrual of foreign tax,
- A net operating loss carryback, and
- A carryback of certain tax credits.
The limits discussed earlier also may not apply if you have signed
an agreement to extend the period of assessment of tax.
Periods of financial disability.
The period of limitations on credits and refunds (3 years from the
time you file your return or 2 years from the time you paid your tax)
can be suspended during periods when you, an individual taxpayer,
cannot manage your financial affairs because of physical or mental
impairment that is medically determinable and either:
- Has lasted or can be expected to last continuously for at
least 12 months, or
- Can be expected to result in death.
The period for filing a claim for refund will not be suspended for
any time that someone else, such as your spouse or guardian, was
authorized to act for you in financial matters.
To claim that you were financially disabled, the following
statements are to be submitted with the claim for credit or refund of
tax:
- A written statement signed by a physician, qualified to make
the determination, that sets forth:
- The name and a brief description of your physical or mental
impairment,
- The physician's medical opinion that your physical or mental
impairment prevented you from managing your financial affairs,
- The physician's medical opinion that your physical or mental
impairment resulted in or can be expected to result in death, or that
it has lasted (or can be expected to last) for a continuous period of
not less than 12 months, and
- To the best of the physician's knowledge, the specific time
period during which you were prevented by such physical or mental
impairment from managing your financial affairs, and
- A written statement by you or the person signing the claim
for credit or refund that no person, including your spouse, was
authorized to act on your behalf in financial matters during the
period described in paragraph (1)(d) of this section. Alternatively,
if a person was authorized to act on your behalf in financial matters
during any part of the period described in paragraph (1)(d), the
beginning and ending dates of the period of time the person was so
authorized.
The period of limitations will not be suspended on any claim for
refund that (without regard to this provision) was barred as of July
22, 1998.
Processing Claims for Refund
Claims are usually processed shortly after they are filed. Your
claim may be denied, accepted as filed, or it may be examined. If a
claim is examined, the procedures are almost the same as in the
examination of a tax return.
However, if you are filing a claim for credit or refund based only
on contested income tax or on estate tax or gift tax issues considered
in previously examined returns and you do not want to appeal within
the IRS, you should request in writing that the claim be immediately
rejected. A notice of claim disallowance will then be promptly sent to
you. You have 2 years from the date of mailing of the notice of
disallowance to file a refund suit in the United States District Court
or in the United States Court of Federal Claims.
Explanation of Any Claim for
Refund Disallowance
The IRS must explain to you the specific reasons why your claim for
refund is disallowed or partially disallowed. Claims for refund are
disallowed based on a preliminary review or on further examination.
Some of the reasons your claim may be disallowed include the
following.
- It was filed late.
- It was based solely on the unconstitutionality of the
revenue acts.
- It was waived as part of a settlement.
- It covered a tax year or issues which were part of a closing
agreement or an offer in compromise.
- It was related to a return closed by a final court
order.
If your claim is disallowed for these, or any other reason, the
IRS must send you an explanation.
Reduced Refund
Your refund may be reduced by an additional tax liability. Also,
your refund may be reduced by amounts you owe for past-due child
support, debts you owe to another federal agency, or past-due legally
enforceable state income tax obligations. You will be notified if this
happens. For those reductions, you cannot use the appeal and refund
procedures discussed in this publication, but you may be able to take
action against the other agency.
Offset of past-due state income tax obligations against
overpayments.
Federal tax overpayments can be used to offset past-due, legally
enforceable state income tax obligations. For the offset procedure to
apply, your federal income tax return must show an address in the
state that requests the offset. In addition, the state must first:
- Notify you by certified mail with return receipt that the
state plans to ask for an offset against your federal income tax
overpayment,
- Give you at least 60 days to show that some or all of the
state income tax is not past due or not legally enforceable,
- Consider any evidence from you in determining that income
tax is past due and legally enforceable,
- Satisfy any other requirements to ensure that there is a
valid past-due, legally enforceable state income tax obligation,
and
- Show that all reasonable efforts to obtain payment have been
made before requesting the offset.
Past-due, legally enforceable state income tax obligation.
This is an obligation (debt):
- Established by a court decision or administrative hearing
and no longer subject to judicial review, or
- That is assessed, uncollected, can no longer be
redetermined, and is less than 10 years overdue.
Offset priorities.
The amounts owed by you must be offset against your overpayments in
the following order.
- Federal income tax owed.
- Past-due child support.
- Past-due, legally enforceable debt owed to a federal
agency.
- Past-due, legally enforceable state income tax debt.
- Future federal income tax liability.
Note.
If more than one state agency requests an offset for separate
debts, the offsets apply against your overpayment in the order in
which the debts accrued. In addition, state income tax includes any
local income tax administered by the chief tax administration agency
of a state.
Note.
The Tax Court cannot decide the validity or merits of the credits
or offsets (for example, collection of delinquent child support or
student loan payments) made that reduce or eliminate a refund to which
you were otherwise entitled.
Injured spouse exception.
When a joint return is filed and only one spouse owes past-due
child and spousal support or a federal debt, the other spouse can be
considered an injured spouse. An injured spouse can get a
refund for his or her share of the overpayment that would otherwise be
used to pay the past-due amount.
To be considered an injured spouse, you must have:
- Filed a joint return,
- Received income (such as wages, interest, etc.),
- Made tax payments (such as federal income tax withheld from
wages or estimated tax payments) or claimed a refundable credit (such
as the earned income credit), and
- Reported the income and tax payments on the joint return.
If you are an injured spouse, you can obtain your portion of the
joint refund by completing Form 8379. Follow the instructions on the
form.
Relief from joint and several liability on a joint return.
Generally, joint and several liability applies to all joint
returns. This means that both you and your spouse (or former spouse)
are liable for any tax shown on a joint return plus any understatement
of tax that may become due later. This is true even if a divorce
decree states that a former spouse will be responsible for any amounts
due on previously filed joint returns.
In some cases, a spouse will be relieved of the tax, interest, and
penalties on a joint tax return. Three types of relief are available.
- Innocent spouse relief.
- Separation of liability.
- Equitable relief.
Form 8857.
Each kind of relief is different and has different requirements.
You must file Form 8857 to request relief. See the instructions for
Form 8857 and Publication 971
for more information on these kinds of
relief and who may qualify for them.
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