Time Limits for Filing a Claim for Refund with IRS

              The federal tax code provides numerous statutes of limitations. These include how long the IRS can question the taxpayer about a filed tax return. This could be three years, six years or forever depending upon the circumstances. There is also a collection statute that limits IRS ability to collect taxes to generally 10 years with appropriate extensions depending upon the tax filing activity of any particular taxpayer. Practitioners and taxpayers alike realize too late that there is also a statute of limitations to claim a refund of taxes erroneously paid. Generally that statute provides that such a refund claim must be filed within two years of payment or three years from the time a tax return was filed whichever expires later. Claims filed after those dates will result in the IRS rejecting any refund claim. When taxpayers or practitioners find themselves in that situation it should be remembered that over the years case law has developed a theory of the “informal” claim. What that amounts to is has the taxpayer properly noticed the IRS of his request for a return of taxes he has paid. While not taking the form of a formal claim like Form 843 or 1040X this may be no more than a letter to the IRS requesting such a refund. Lawyers should never rely on this fuzzy type of refund claim on which to base their case unless there is no other alternative. In a recent IRS Chief Counsel Advice 201540012, the IRS determined that a corporation which merely expressed its intent to file a formal claim in the future did not amount to sufficient notice to the IRS of a refund claim. Therefore the claim was denied and any tax unable to be refunded. A hard lesson to learn.