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When Is It Too Late To Claim Your Federal Tax Refund?

Let’s continue the discussion from last week. Let’s assume that the IRS ended up filing substitute returns on your behalf. The substitute returns resulted in balances due; however, you had your tax returns prepared according to the deductions and credits in which you are entitled. Those return resulted in the IRS owing you a refund. You send the returns to the IRS. Six weeks later, you receive a letter from the IRS stating that your claim of refund was disallowed. Heartbroken, you ask yourself, “How is this possible when they owe me money?”

Simply, if you think that you are due a refund, you must file your tax return within 3 years of the original due date. This is the statute of limitations, or expiration date, for claiming your tax refund. For example, if you just recently filed your 2014 tax return you are not entitled to a refund for that return. The original due date for the 2014 tax return was April 15, 2015. Three years from the deadline is April 15, 2018. Since the return was filed after that date, you will not receive a refund for that year.

Now let’s assume that IRS filed a substitute 2014 return for you in 2016. IRS claimed you owed $2,000.00. You paid the $2,000.00, plus penalties and interest, in September of 2017. Then you filed your 2014 tax return in April of 2019. In this situation you are entitled to a refund. According to section 6511 of the Internal Revenue Code, the claim of refund must be filed within 3 years from the original due date of the return, or within two years from the time that the tax was paid, whichever is later. In the scenario above, two years has not elapsed since the tax payment; thus, you would be entitled to a refund.

If you file an extension, this extends the timeframe to claim a refund until October of that year (the extension due date). Thus, the IRS can issue refunds for a year in which you requested an extension and subsequently filed the return within three years from the extension deadline. Always keep in mind that when a refund expires, the federal government pockets the money. The refund is not sent to you nor can it be applied to another tax year. If you have un-filed tax returns and think that you are at risk of losing a refund, immediately contact a tax professional.

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