47.2 When To File a Refund Claim

You may file a refund claim on Form 1040X within three years from the time your return was filed, or within two years from the time you paid your tax, whichever is later. However, a refund claim on a late-filed return may be barred under a three-year “look back” rule; see below. A return filed before its due date is treated as having been filed on the due date. If you had a filing extension and filed before the extension deadline, your return is considered filed on the actual filing date. The filing deadlines are suspended if you are unable to manage your finacial affairs; see the Planning Reminder on the next page.

A refund claim based on a bad debt or worthless securities may be made within seven years of the due date of the return for the year in which the debt or security became worthless.

Caution

Time Limits Must Be Observed

Failure to file a timely refund claim is fatal, regardless of its merits. Even if you expect that your claim will have to be pursued in court, you must still file a timely refund claim with the IRS. Mailing a refund claim so that it is postmarked by the due date (including extensions) qualifies as a timely filing if you use the U.S. Postal Service. The timely mailing rule also applies to refund claims that are timely deposited with private delivery services that have been designated by the IRS.

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The time for filing refund claims based on carrybacks of net operating losses or general business credits is within three years of the due date (including extensions) of the return for the year the loss or credit arose.

If you filed an agreement giving the IRS an extended period of time in which to assess a tax against you, you are allowed an additional period in which to file a claim for refund. The claim, up to certain amounts, may be filed through the extension period and for six months afterwards.

Refund claim for withholdings and estimated tax on late-filed original return.

A refund for withheld income taxes or estimated tax installments can be lost if you delay filing your original return too long. The Supreme Court agrees with the IRS that the withholdings and estimated tax are considered to be paid on the original due date of the return. To obtain a refund of these taxes, you must file the return within three years of the due date, or within three years plus any extension period if a filing extension was obtained for the year the taxes were withheld or paid. If the return is filed after the end of this three-year (plus extension) “look-back” period, the withholdings and estimated taxes cannot be refunded. For example, if taxes were withheld from your 2009 wages and you are due a refund but have not yet filed your 2009 return, you must do so by April 15, 2013, to obtain a refund of the withholdings. If you had obtained an extension until October 15, 2010, to file your 2009 return, the deadline for filing the refund claim for the 2009 taxes would be October 15, 2013. Where such a refund is claimed on an original return mailed and postmarked on or slightly before the last day of the “three years plus extension” period, the IRS at one time argued that the timely mailing/timely filing rule did not apply. But following a contrary appeals decision, the IRS now allows a refund in this situation. The IRS treats refund claims included on delinquent original returns as filed on the date of mailing for purposes of applying the “three years plus extension” look-back rule.

Armed Forces service members and veterans.

In determining the time limits within which a refund claim may be filed, you disregard intervening periods of service in a combat zone or in a contingency operation, plus periods of continuous hospitalization outside the United States as a result of combat zone injury, and the next 180 days thereafter (35.5).

Planning Reminder

Disability Suspends Limitation

The limitations period for filing a refund claim is suspended during any period in which a person is unable to manage his or her financial affairs due to a physical or mental impairment that has lasted or is expected to last for at least one year or to result in death. The suspension does not apply during a period in which a guardian is authorized to handle the individual’s financial affairs.

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Claiming refund for deceased taxpayer.

If you are a surviving spouse filing an amended joint return to claim a refund for you and your deceased spouse, you only need to file Form 1040X. A court-appointed personal representative must attach Form 1310 to Form 1040X to claim the refund.