Explanation of Technical Correction to Treas. Reg. 301.7508A-1
Technical Correction to Treas. Reg. 301.7508A-1, Postponement of Certain Tax-Related Deadlines by Reason of a Federally Declared Disaster or Terroristic or Military Action (TD 9443), Pertaining to Amended Returns
A correction to Treas. Reg. 301.7508A-1 (published in the Federal Register on January15, 2009), was issued on December17, 2009. The correction removed Example 8 and re-designated Example 9 as new Example 8. The deleted example incorrectly applied section 6511 of the Internal Revenue Code with respect to filing claims for refund.
The following FAQs provide examples of timely and untimely claims for refund under section 6511 in conjunction with the disaster-related postponement period under section 7508A.
FAQ 1: H and W, individual calendar year taxpayers, intend to file a joint Form 1040 for the 2009 taxable year. The joint return is due on April 15, 2010. After credits for taxes withheld on wages and estimated tax payments, H and W owe taxes for the 2009 taxable year. H and W’s principal residence is in County A in State B.
On April 1, 2010, severe storms strike County A. On April 5, 2010, the President declares certain counties in State B (including County A) to be Federally declared disaster areas within the meaning of IRC § 165(h)(3)(C). The Federally declared disaster areas are eligible for assistance by the Federal government under the Stafford Act. On April 5, 2010, the IRS determines that County A in State B is a covered disaster area and publishes guidance announcing that, pursuant to section 7508A, the time period for affected taxpayers to file returns, pay taxes, and perform other time-sensitive acts falling on or after April1, 2010, and on or before May 31, 2010, has been postponed to May31, 2010.
Because H and W’s principal residence is in County A, H and W are affected taxpayers. April 15, 2010, the due date for filing the 2009 joint return, falls within the postponement period described in the IRS published guidance. Therefore, H and W’s joint return without extension will be timely if filed on or before May 31, 2010. Similarly, H and W’s 2009 income taxes will be timely paid if paid on or before May 31, 2010.
On May 14, 2010, H and W file their 2009 income tax return and pay the tax due. Later, H and W discover additional deductions that would lower their taxable income for 2009. On May 31, 2013, H and W file a claim for refund. The amount of H and W’s overpayment exceeds the amount of taxes paid on May 14, 2010. Section 6511(a) generally requires that a claim for refund be filed within three years from the time the return was filed or two years from the time the tax was paid, whichever period expires later. Section 6513(a) provides that, for purposes of section 6511, any return filed before the last day prescribed for filing shall be considered as filed on such last day. Because section 7508A merely postpones filing and payment obligations, the last day prescribed for filing the return for purposes of section 6513(a) remains April 15, 2010. H and W’s return is not considered an early-filed return under section 6513(a). H and W’s return is considered filed on May 14, 2010, and not May 31, 2010, the last day of the postponement period. H and W’s claim for refund made on May 31, 2013, is not timely under section 6511(a) as it was filed more than three years after H and W’s return was filed. Thus, H and W are not entitled to a refund. The same rule applies to a return filed during an extension period under section 6081, because such a return is not an early-filed return under section 6513(a). Thus the return is filed on the date received for purposes of section 6511(a) and not as of the last day of the extension period.
FAQ 2: Facts are the same as in FAQ 1 except H and W file their 2009 income tax return and pay the tax due on May 31, 2010. Later, H and W discover additional deductions that would lower their taxable income for 2009. On May 31, 2013, H and W file a claim for refund. H and W’s claim for refund was filed within three years from the date the return was filed. Thus, H and W’s claim for refund was timely filed under section 6511(a). The amount of H and W’s overpayment exceeds the amount of taxes paid on May 31, 2010. Section 6511(b)(2)(A) provides that the amount of any claim for refund filed during the three-year period of section 6511(a) is limited to the portion of tax paid within the three-year period (plus any extensions of time to file) preceding the filing of the claim for refund. Thus, payments that H and W made on or after May 31, 2010, would be eligible to be refunded. H and W’s withholding and estimated tax payments are deemed to have been made on April 15, 2010, pursuant to section 6513(b)(1) and (2). Because the period from April15, 2010, to May 31, 2010, is disregarded under section 7508A, the withholding and estimated tax also would be included in the section 6511(b)(2)(A) look back period. H and W are, therefore, entitled to a full refund in the amount of their overpayment.