Discussion:Amended Returns Statute of Limitation

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Discussion Forum Index --> Tax Questions --> Amended Returns Statute of Limitation


Eric1979 (talk|edits) said:

2 December 2009
What does filing an Amended Return do to your Statute of Limitations for that year?

For example,

You file your 2007 return on April 15, 2008 so your statute of limitations would normally be until April 15, 2011. But lets say that you file an amended return on April 15, 2010. Does your statute of limitations for 2007 expire in 2010 or 2013?

Kevinh5 (talk|edits) said:

2 December 2009
do you mean the ASED?

Irsfixer (talk|edits) said:

2 December 2009
An amended return does not affect the assessment statute. In your example, the SOL for a 2007 return filed on 04/15/08 is up in 2011 - not 2010.

Eric1979 (talk|edits) said:

2 December 2009
What I was thinking about was how long we would have to file a 2nd amended return. So per my above example, does filing the amended return on April 15, 2010 allow me to amend their return again until April 15, 2013.

Kevinh5 (talk|edits) said:

2 December 2009
what would you hope to accomplish by doing that? If you know there are corrections, why not make them all at once?

Kevinh5 (talk|edits) said:

2 December 2009
I guess I'm asking you to state the connection between the assessment statute and the refund statute. Each stands alone.

Eric1979 (talk|edits) said:

2 December 2009
good question kevin. the answer is that the dates I was using were just to show an example. my case is actually for tax year 2005 & first 1040X in 2007. The taxpayer now came to us and we they completely left off a deduction that would really help them. However, I dont know if the statute ran out April 15 of 2009 or if their amended return in 2007 extends the amount of time we have to do a second return.

surprisingly i could find anything when i researched this. this is one of those things that is frustrating bc you know you arent the first one to run across this problem.

Kevinh5 (talk|edits) said:

2 December 2009
I think you need to look at the statute for applying for a refund, and not the statute for assessment. When did he make the last payment on the 2005 tax? How much potential refund is within the refund statute period?

Kevinh5 (talk|edits) said:

2 December 2009
Gosh this TaxAmanac is great training for being a psychologist!!!! What does the questioner really mean by his question? It never means what he says it means in the original post.

Eric1979 (talk|edits) said:

2 December 2009
I see what you are saying (I think). If his taxes were paid as of April 15, 2006 then he may not have any tax to go back and get even if technically we can file a 1040X.

Kevinh5 (talk|edits) said:

2 December 2009
exactly

Kevinh5 (talk|edits) said:

2 December 2009
which is why I asked whether you were asking about the ASED in the first response above. You were, but really you were not.

Taxguy1024 (talk|edits) said:

2 December 2009
I believe that the only time an amended return extends the ASED is if an amended return showing an increase of tax is received within 60 days of the ASED. In that instance, the statute on the original return is extended until 60 after the receipt of that amended return.

Tkelly911 (talk|edits) said:

3 December 2009
In researching the possiblity of filing a subsequent 1040x, keep in mind the government frequently uses a jurisdictional defense call variance (T.R. Reg. § 301.6402-2(b)(1)) which essentially states the Commissioner must be given accurate notice of the nature of the claim. Thus, even when an otherwise late 1040X is attempted to be "piggybacked" onto an original, timely filed 1040X, any substantial variance from the original will probably be challenged by the Justice Department in litigation. Contrast this to the frequent and effective use of a subsequent 1040X when a protective claim is filed. The subsequent 1040X, despite its filing after the statute has run, is usually acceptable because it merely elaborates on an existing and timely filed claim.

Irsfixer (talk|edits) said:

3 December 2009
The IRS routinely accepts amended returns after three years if they reduce a balance due. However a Claim for Refund will have strict statutory limits applied to it.

Harry Boscoe (talk|edits) said:

3 December 2009
>>"...routinely accepts amended returns after three years if they reduce a balance due."<<

Is this result ("reduce a balance due") something other than a credit or a refund? Is it *not* subject to the time limitations on claims for credit or refund found in Section 6511?

NYea (talk|edits) said:

3 December 2009
[start]Is this result ("reduce a balance due") something other than a credit or a refund? Is it *not* subject to the time limitations on claims for credit or refund found in Section 6511? [end]


I believe the authority is contained in §6404(a) which allows the Secretary to ABATE an unpaid portion of an assessment of tax liability which is excessive in amount.

Harry Boscoe (talk|edits) said:

3 December 2009
So, if this is on the up-and-up, a taxpayer who *hasn't* paid his taxes [sort of an oxymoronic use of the term "taxpayer" I suppose] has an opportunity to get his tax reduced that's *not available* to the taxpayer who has paid his taxes.

That sounds very unfair.

Mikex2e7n5 (talk|edits) said:

3 December 2009
From my notes....no cites

The Refund Statute Expiration Date (RSED) is within 3 years from the date the original return was filed, or two years from the date the tax was paid, whichever is later.

HOWEVER, an original delinquent return with prepaid credits (withholding) is considered a timely filed claim if received within 3 years from the due date of the return. If no return was filed and a payment was made, a claim is allowable if filed within two years from the date of payment.

Mikex2e7n5 (talk|edits) said:

3 December 2009
DUH ! the cite would be IRC 6511(a)

Also if they had a "financial" disability" per RRA 1998 which is reflected in 6511(h) the statute may be extended.

Harry Boscoe (talk|edits) said:

3 December 2009
Kevin says "the taxpayer who has it together wouldn't have forgotten the important deduction. Or his together tax pro wouldn't have."

Kevin, you can say that, but you can't really mean it.

Kevinh5 (talk|edits) said:

3 December 2009
come on, the taxpayer that 1) has his $hirt together and 2) hires a competent tax pro would have found the omission within 3 years.

DaveFogel (talk|edits) said:

3 December 2009
Getting back to the question, the time for filing a claim for refund (1040X) for the 2005 return ran out on 4/15/09, unless the 2-years-from-the-time-the-tax-was-paid rule applies. See IRC §6511(a). It doesn't matter whether a previous 1040X was filed unless the 1040X was filed in 2007 to pay additional tax and the 2-year rule applies.

One situation that I can think of where the time limit has not expired is if the deduction left off of the 2005 return creates a net operating loss, which, when carried back is not absorbed in prior years and carries forward to the 2006 year. In that instance, it is not too late to file a 1040X for 2006 to claim the NOL carryover.

Jwebbb (talk|edits) said:

8 November 2011
I have a client that has an NOL for 2007 which I want to carry back to 2005 and 2006 in order to reduce tax liabilities in those years, NOT to receive a refund. If none of those tax returns ('05, '06 or '07) have been filed, the statute of limitations then does not apply here because the 2007 form 1040 has not yet been filed? And therefore would this action be successful?

Kevinh5 (talk|edits) said:

8 November 2011
The statute date for NOLs is that of the NOL year. 2007 was due by 04/15/2011, therefore, unless there is a HUGE NOL which is carried back to 05 and 06 and still has some left over to carry to 08, the taxpayer has an SOL with regards to a refund, but could still reduce the taxes owed, providing the Service accepted the 1040-Xes.

The statute dates for refunds SOLR surely does apply to 05 and 06 (and 07) without regard to the NOL. That's the whole purpose of a 3-years-from-due-date statute date. Look for any taxes paid within the past two years toward those years, though, for the taxes-paid-within-the-past-two-years exception.

DaveFogel (talk|edits) said:

8 November 2011
Jwebbb, your action would be successful, but not for the reasons you state.

IRC §172(b)(1)(A)(i) states that except as otherwise provided, a NOL "shall be" carried back to each of the 2 years preceding the taxable year of the loss, and IRC §172(b)(2) states that the NOL "shall be" carried to the preceding years. That means that the law requires an NOL to be carried back to the prior years. The exception is if the taxpayer makes the election under IRC §172(b)(3) to forego the carryback period.

As a result, the 2007 NOL must be carried back to 2005 and 2006, notwithstanding the fact that the time for filing a claim for refund for those years has expired.

Jwebbb (talk|edits) said:

8 November 2011
It is a huge NOL and there will be enough to carry forward to 2008. There have been no taxes paid on any of those years ('05, '06 or '07). I was just trying to reduce the client's tax liabilities for 2005 and 2006. It appears I have my answer. Thank you very much.

Mejiar2 (talk|edits) said:

11 December 2012
I have a client who filed an amended return for tax year 2008 on April 13, 2012. The amended return was filed to reduce the FTHBC to $0 for the 2008 Tax Year, with the idea he qualified for the 2009 FTHBC. So, along with the 2008 1040X, he filed a 2009 1040X. (These amendments were against my advice.) The statement for explanations of changes for both amended returns were written together on a separate letter and explained his stance, including how the two returns were contingent upon one another. The IRS accepted the amended 2008 return, rejected the 2009 return, and sent a bill for $9k (including interest and penalties). Now he has come back and asked if I can reverse the 2008 1040X. I have exausted research as best I understand; now I'm looking for some advice on any part of the code to extend his SOL or disregard the amended return (like possibly 6501(c)(1)False Return). Thanks for any advice.

DaveFogel (talk|edits) said:

12 December 2012
More information is needed:
  • When did the IRS accept the amended 2008 return?
  • When did the IRS reject the 2009 return, and what kind of rejection letter did the IRS send?
  • Was it a claim disallowance letter sent by certified mail?
  • Did it provide for appeal rights?
  • What is the status of the $9K bill?
  • Has the IRS sent a letter offering a Collection Due Process hearing?

Mejiar2 (talk|edits) said:

12 December 2012
The IRS accepted the 2008 1040X some time shortly after April 13, 2012, the date it was filed 2 days prior to the SOL. On or around the same date the 2008 1040X was accepted, the 2009 1040X was denied claim for refund. Yes the denial letter provided appeal rights. However, now the client is nervous thinking he's stuck with the whole bill and possible lein or levy coming soon. I tried to send another 1040X for 2008 to reinstate the orginal FTHBC. That was denied and appeal rights provided. Currently, I am working on the appeal letter, trying to find some avenue to extend the SOL for the 2008 tax year with the goal of reinstating his FTHBC. I have not requested a CDP, and no, they did not provide the option. No notices of levy or lien have been issued at this time. Thank you for taking time to read this mess.

Kbairtax (talk|edits) said:

12 December 2012
Mejiar...

I wonder if the amended 2009 was rejected because the 2008 amended had not been fully processed. Since the original 2008 return showed a FTHBC already claimed, he was not going to get it again. I would have responded to the 2009 amended rejection letter with the information that the 2008 return was amended to reflect the change and also included the letter stating it was accepted and balance due has been issued. I think by sending another amended return for 2008 undoing that has really confused the situation.

How much time elapsed between all this?? I know you stated that the 2008 and 2009 1040-x were accepted within days of each other. Did you try to respond to any of this or talk to anyone at the IRS before submitting the second 2008 1040-x???

Remember that sometimes the process moves slowly. The letter the client sent with the returns was probably thrown out (my experience) so a chain of letters from you was probably necessary to get the situation worked out. I just had a case from 2010 that took 4 letters from me, all with documentation provided before it was resolved. (almost 9 months in total time)

DaveFogel (talk|edits) said:

12 December 2012
When the 2008 amended return was filed to disallow the FTHBC, the IRS got 60 days after 4/15/2012 to assess the tax. See IRC §6501(c)(7). If your client hasn't paid the assessment, there's no clock running on filing a claim for refund. Once your client pays the additional amount owed, IRC §6501(a) provides 2 years in which to file a claim for refund.

As for the 2009 amended return, if the time period hasn't already expired, an appeal should be filed, but if the IRS sent a letter shortly after 4/13/2012 disallowing the claim, and no appeal was filed within 30 days, the appeal period has expired. You'll have to file a new amended return.

Kevinh5 (talk|edits) said:

13 December 2012
This discussion is being locked. Mejiar2 had not yet completed his tax pro profile, as requested numerous times to do.

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