Taxation & Estate Planning

Claims for Refund

By Darrin Mish

If you believe that you have over paid your taxes, you have a different kind of IRS Problem.  It is possible to get money back from the IRS if you follow the correct procedure and have patience.

Timeframe

Claims for refund need to be filed within 3 years from the date the original tax return was filed or 2 years from when you paid the tax, whichever date is later.  If you file your return early, the date will be from the date the return was actually due.  If you fail to file a claim for refund within this timeframe, you will probably lose the opportunity to receive a refund.

Steps to Filing a Claim for Refund

?    Fill out Form 1040X (Amended U.S. Individual Income Tax Return).
?    Use a separate form for each year you want to amend.
?    Determine whether you need to change your state return also.
?    Include the explanation of income, deduction, or credit you base your claim on.
?    Attach a copy of the original return and all attachments.
?    Send via certified mail.  If you have multiple claims, send each one separately.
?    Wait.  It could take 2-3 months for the claim to be processed.

IRS Procedure

The IRS will either deny your claim, accept it as filed, or examine your claim.  If it chooses to examine your claim, it will follow pretty much the same procedure as when it examined your original tax return.

It should be noted that if you file for a refund for more than the allowable amount, a penalty of 20% of the excessive amount might be assessed.

The IRS can deny your claim for a number of reasons:

?    You filed the claim too late.
?    Your claim was based on the unconstitutionality of the revenue acts.
?    You reached a settlement with the IRS so the claim is waived.
?    You claim a year that is now part of a closing agreement or an offer in compromise.
?    Your return was closed by a final court order.

The IRS must send you an explanation of why your claim was denied for any of these or other reasons.  You will have 2 years from the date of this mailing to file a refund suit.

There are also special circumstances that can affect a claim for refund such as disaster area claims, claim for refunds by estates, and injured spouse exception.

With its many complexities, a claim for refund can be more than you can handle alone.  Contact our office for assistance.  Your IRS Problems can be easily solved.  Call us today tollfree at (888) 438-6474.

Full post as published by IRS Problem Solver Blog on February 22, 2008 (boomark / email).