Source: IRM 21.8.1.2.16.3 (10-01-2018)

Dealing with tax claims and amended returns can be a complex process, especially for taxpayers who are not well-versed in tax laws. This FAQ aims to present these concepts in a relatable and easy-to-understand manner, with relevant examples to help illustrate the points.

What happens if a claim or amended return is received before the statute expiration date (RSED), and additional information is requested to process the claim or amended return, but the taxpayer submits the information after the RSED but within 45 days (75 days for overseas taxpayers) of the IRS request?

The IRS will allow the claim or amended return as referenced in IRM 25.6.1.10.2.5.2.

What happens if a claim or amended return for a tax decrease is not filed in a timely manner?

The IRS will deny the claim or amended return by sending a formal disallowance Letter 105C, stating that the statute for refund has expired.

What are the general refund limitations based on the timing of filing a claim for refund?

a. If a claim for refund is filed within three years of the date the original return was filed, the refund amount is limited to amounts paid in the three-year period before the filing of the claim for refund plus the period of any extension of time to file the original return.

b. If the claim for refund is not filed within three years of the date the original return was filed but is filed within two years of the date a payment was made, the refund amount is limited to amounts paid within the two-year period before the filing of the claim for refund.

When do prepaid credits expire for refund purposes?

Prepaid credits expire for refund three years after the return due date or extended due date, whichever is later.

What is the refundability period for payments received after the return filing date?

Payments received after the return filing date are refundable for two years from the payment received date.

What is the refundability period for credits transferred to a balance due module?

Credits transferred to a balance due module are refundable for two years from the corresponding date of the cycle in which the transfer occurred. Refer to IRM 25.6.1.10.2.5, Claims for Credit or Refund – Processing Directions, for additional information.

Understanding these procedures will help taxpayers navigate the complexities of tax claims and amended returns, ensuring they are well-equipped to handle their tax-related matters.