Free Trial: TheSiteFactory.com

Does sec 6511 limit applications of refunds to next year?

Technical topics regarding tax preparation.
#1
Posts:
56
Joined:
21-Apr-2014 2:33pm
Location:
Iowa
Assume for various reasons the individual tax returns for 2013 did not get filed.....until 2020.

However, an extension payment was made 04/14 for 2013, and that payment was in excess of the ultimate taxes for 2013 by 6000.

When 2014 was filed timely, that return took a credit of 5000 for refunds applied from 2013.........obviously less than the actual, finalized refund.

Will the use of the 5000 from 2013 in 2014 be allowed..........since the "claim" was not really made until 2020.......well beyond the limits allowed by 6511.

Further, 2014 is a closed year, to my knowledge........and I know of nothing that will open it.

Smells to me like the "claim" was not actually made until 2020 (filing of 2013).......with the allocation of payment to 2014 being a mute point, resulting in the use of the refund in 2014 NOT being allowed,....... except 2014 is closed.

What say you? Thanks.
 

#2
Posts:
4118
Joined:
21-Apr-2014 7:21am
Location:
The Land
What say you?


First, I’d say the proper word is “moot” not “mute.”

Second, you said 2014 was timely filed. It appears you’re saying – or at least implying - that 2013 was timely prepared, but for some reason, was not filed until 2020. Thus, it appears that what you’re saying is that the guy thought his 2013 return had been filed, and that 2013 return reflected an overpayment of tax. And that overpayment was applied to 2014. And then the guy timely files 2014, claiming credit for the 2013 overpayment…but lo and behold, we recently learn (in 2020) that the 2013 return was never filed.

If that it was happened, you would already know if you have a problem with your 2014 return, and specifically, with the 2013 overpayment credit claimed thereon. It has been 5-years since the 2014 return was timely filed. In other words, if you timely filed 2014 and that return included a $5k overpayment credit from 2013, the IRS would have denied that overpayment credit on the 2014 return if the 2013 return hadn’t been filed yet and your client would have heard about that a long time ago. Now, if the IRS processed the 2014 return as filed and somehow gave credit for the $5k overpayment applied from 2013 (even though a 2013 return hadn’t been filed yet), then you’re good to go. But I find that prospect highly unlikely. The only way something like that could have happened is if the 2013 “extension payment” your guys says he made was actually a 2014 estimated tax payment. The only other possibility is if your guy actually filed his 2013 return on time and before he filed his 2014 return. This would mean you are simply mistaken in your assertion that 2013 wasn’t filed until 2020.

I’m trying to piece things together here since you’re not doing a great job of explaining the situation. You said the guy timely filed 2014 (in 2015, it must have been). You also said that the guy claimed credit on his 2014 return for the overpayment shown on his 2013 return. How woud he know what that 2013 overpayment would be unless his 2013 return had first been prepared (on time)? I’m piecing together that his 2013 return was timely prepared, but that it just was never sent in (or so you say).

Anyway, Sec 6511 is about “claim for credit” and refunds. Thus, if a guy has an overpayment for 2013 (say from normal withholding) and hasn’t filed 2013 yet, he can’t say, “I have a great idea. Since I haven’t filed 2014 yet either, I’ll just apply my 2013 overpayment to 2014. Since I am not claiming any cash refund for 2013, I should be fine.” That won’t work, since you’re claiming an overpayment credit way late.
 

#3
Posts:
56
Joined:
21-Apr-2014 2:33pm
Location:
Iowa
To poster 2-- thanks for the time taken for the response. However, I find no usable information in it.

I thoroughly apologize for the error in typing "mute" vs "moot"........although apparently you were able to fight thru the dust and comprehend the intention of the phraseology......resulting in there actually being communication. Something like me being able to fight thru the confusion of your "If that it was happened" as compared to "is". Sometimes crap happens.

You were supplied all of the information that you needed to comment on whether or not the use of the 2013 refund in a filed tax return constituted a claim of that amount.........and whether or not IRS could open a return based on such an erroneous use, absent any fraud of required percentage.

All of the circumstances leading up to the existing situation are merely why's and wherefore's without consequence........the situation is what it is......whether you think it should have happened in one way or another is purely wasted conjecture.
 

#4
dave829  
Posts:
941
Joined:
9-Jan-2018 9:28pm
Location:
California
I understand the facts as follows:

2013
* Extension payment made April 2014
* Return filed 2020, $6,000 refund credited to next year's estimated tax

2014
* Timely-filed
* Estimated tax credit from 2013 - $5,000

It appears that the $5,000 credit is barred because the 2013 return wasn’t filed within the 3-year period of 6511. The following cases might help you understand this. They hold that in order to apply a refund from one year’s return to the next year’s return, the taxpayer must have filed the return within the period set forth in 6511, i.e., within 3 years of the due date.

Niski, TCS 2017-33
https://www.ustaxcourt.gov/UstcInOp2/Op ... x?ID=11227

Stephenson, TCM 1995-32
https://www.leagle.com/decision/1995180 ... m173511773
 

#5
Posts:
4118
Joined:
21-Apr-2014 7:21am
Location:
The Land
You were supplied all of the information that you needed to comment on whether or not the use of the 2013 refund in a filed tax return constituted a claim of that amount


You see, the facts in your post are pretty hard to believe. In fact, they’re not even believable at all. This makes your question, which is based on a falsehood, not even a valid question.

You’re telling us that the guy claimed a credit on his 2014 timely filed return for an amount that did not exist when he timely filed that 2014 return – for an overpayment credit from his 2013 return that was never filed. You’re telling us that the IRS processed his 2014 return, back in 2015, like everything was perfectly fine with it. The IRS does not give a credit to anyone for an estimated payment that wasn’t made, for an extension payment that wasn’t made, or for an applied overpayment from a prior year return that was never filed. Thus, I don’t believe your facts.

If his 2014 return sailed right through, there is no way possible that the credit in question, that was shown on his 2014 return, was an overpayment credit from an unfiled 2013 return. If his 2014 return didn’t sail right through, I think we know why.

Given that your understanding of the facts doesn’t add up, it is legitimate conjecture to try and figure out what happened.

1. If the 2014 return really was filed, and if it was accepted with no issues, then what you think was the overpayment credit he claimed on that 2014 return from 2013 *isn’t* an overpayment credit from 2013. Rather, it is likely what the client says was his 2013 extension payment. Client could be mistaken. That “2013 extension payment” he says he made could very well have been a 1Q 2014 estimated tax payment. In short, the 2013 extension payment the client says he made wasn’t a 2013 extension payment, but rather, a 2014 estimate.
2. Or, it could be that the client made the 2013 extension payment he said he made, but he ALSO made a 1Q 2014 estimated tax payment and is is this 2014 estimated tax payment that the IRS properly posted to his 2014 account, making his 2014 return sail right through with no issues.
3. Or, it could be that the client actually made a 2014 extension payment and the IRS legitimately gave him credit for it on his 2014 return.
4. Or, it could be that the guy actually filed his 2013 return with a legitimate overpayment that legitimately got applied to 2014…despite your belief that his 2013 return has yet to be filed.
5. Or, it could be that the guy never filed his 2014 return, despite your belief that it was timely filed.
6. Finally, given that we can’t trust your facts, the 2014 return might not have sailed through with no issues in the first place. For all we know, if the guy really did try to claim an 2013-to-2014 overpayment credit on his 2014 timely filed return, the IRS rejected that amount, sent the guy correspondence, and the guy then paid what was owed (back in 2015 or so).

There are numerous possibilities here, but the one that makes zero sense is yours – that the IRS gave the guy credit for an overpayment associated with an unfiled tax return.

although apparently you were able to fight thru the dust and comprehend the intention of the phraseology


Barely, but no one else bothered to…

I have more conjecturing I could do…like if this guy is a long-term client or not…if we have evidence of the return that was filed for 2014, etc. But you probably don’t want to go there, even though it would help to actualy resolve some of the outstanding issues here and narrow things down a bit. And if this was me, I’d want all of this resolved before filing a real late 2013 return for this guy only to find that pre-payments we include on that return were never made or were applied to some other tax year…or to find that his 2013 return was already filed.
 

#6
Posts:
4118
Joined:
21-Apr-2014 7:21am
Location:
The Land
dave829 wrote:I understand the facts as follows:

No, I don't think you understand the facts. There is no way possible the IRS would have given the taxpayer credit, on his timely filed return, for an overpayment on his 2013 return.....when the 2013 return was never filed. OP's "facts" are mistaken.
 

#7
dave829  
Posts:
941
Joined:
9-Jan-2018 9:28pm
Location:
California
Jeff-Ohio wrote:No, I don't think you understand the facts. There is no way possible the IRS would have given the taxpayer credit, on his timely filed return, for an overpayment on his 2013 return.....when the 2013 return was never filed. OP's "facts" are mistaken.

I listed the facts that OP gave us. I never said that the IRS allowed the credit.
 

#8
Nilodop  
Posts:
13501
Joined:
21-Apr-2014 9:28am
Location:
Pennsylvania
If the 2013 return really was not filed until 2020, then my guess (yes, a guess) is the next most likely fact is That “2013 extension payment” he says he made could very well have been a 1Q 2014 estimated tax payment..
Last edited by Nilodop on 16-Sep-2020 8:53am, edited 1 time in total.
 

#9
Posts:
4118
Joined:
21-Apr-2014 7:21am
Location:
The Land
I never said tha
t the IRS allowed the credit.

OP did. And that’s why he’s asking the question he’s asking.

He’s all worried that the overpayment credit from the unfiled 2013 return and claimed on his 2014 timely filed return (I know, it makes no sense) will be removed from the 2014 return once he late-files the 2013 return (say next week). His worry, though, is somewhat alleviated because, he notes, “2014 is closed.”

My point is very simple: OP is mistaken. The IRS did not apply any overpayment from an unfiled 2013 return to a timely filed 2014 return. Therefore, OP is further mistaken when he says:

You were supplied all of the information that you needed to comment on whether or not the use of the 2013 refund in a filed tax return constituted a claim of that amount
 

#10
dave829  
Posts:
941
Joined:
9-Jan-2018 9:28pm
Location:
California
I see. Well, if you dig through all of the verbiage of Jeff-Ohio and Jakescia, this boils down to a simple matter --- that in processing the timely-filed 2014 return, the IRS would never allow the $5,000 credit claimed as a refund from the 2013 return credited to next year’s estimated tax. I agree.
 

#11
Soups  
Posts:
12
Joined:
22-May-2019 12:41pm
Location:
Illinois
I have seen something like this before. Lets say in 2014 you took a credit for an over payment that was never filed $5,000. After filing 2014 there is a carryover of $6,000. The client gets a notice that the carryover is reduced to $1,000. In true client fashion TaxPro never gets to lay eyes on this notice. 2015 comes around your report carryover of $6,000. At the end of 2015 you are going to carryover $7,000. Client gets a notice that 2015 carryover is reduced by $5,000(maybe more with penalties). Rinse and repeat until the client owes or the carryover is less than the amount that is still floating. Transcripts would solve this issue one way or the other.
 


Return to Taxation



Who is online

Users browsing this forum: Google [Bot] and 104 guests