Paying 2014 Debt with Late 2015 Refund

Technical topics regarding tax preparation.
#1
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Had a guy stop in the office today who has not filed since 2014. Will not file 2015 return before deadline (missing docs). He had balance due in 2014 that has not been paid. If he files 2015 after deadline, and assuming a refund for 2015, he will not be entitled to receive the refund but would the denied refund be used to pay down the 2014 debt if he files after the deadline for 2015 returns?
 

#2
Doug M  
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The 2015 refund is barred. Unless he filed an extension for 2015.
 

#3
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What "deadline" are you referring to, Joe? According to an IRS publication about the statute of limitations,
Claim [for a refund] must be filed within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever of such periods expires the later, or if no return was filed by the taxpayer, within 2 years from the time the tax was paid.
 

#4
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Thanks Doug.

Harry, he has to file his 2015 return by tomorrow to claim any refund. He will not be able to do so but was wondering if any surrendered refund could still be applied against the 2014 debt if he files 2015 at a later date.
 

#5
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"...would the denied refund be used to pay down the 2014 debt[?]"
Seems to me that the same rules in Section 6511 apply to credits as apply to refunds.
 

#6
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he will not be entitled to receive the refund but would the denied refund be used to pay down the 2014 debt if he files after the deadline for 2015 returns?

Ah, so many words here “refund” and then “denied refund” (and later, “surrendered refund”)…the one thing this one amount is, is an “overpayment.”

Sec 6511 speaks to “overpayments,” quite clearly, and treats a physical refund identically to a “claim for credit” (and that’s because they pretty much amount to the same thing – the taxpayer getting some benefit from it). Unfortunately, if you’re out of luck on one altogether, you’re out of luck on the other altogether. Take a look-see for yourself:

https://www.law.cornell.edu/uscode/text/26/6511
 

#7
lucyko  
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You have not indicated whether the taxpayer filed an extension for 2015 which would provide additional time up to October 15. If no extension filed and you anticipate a significant refund for 2015, I would make every reasonable effort to file a tax return tomorrow even if you have to estimate some numbers.
 

#8
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You have not indicated whether the taxpayer filed an extension for 2015 which would provide additional time up to October 15.


Then what does this mean:

Thanks Doug. Harry, he has to file his 2015 return by tomorrow to claim any refund.


He also did not specifically indicate when the 2015 taxes were actually paid, as Harry hinted at in Post #3, but I think the above statement covers that too…

I would make every reasonable effort to file a tax return tomorrow even if you have to estimate some numbers.


Of course we should do that, assuming he pays (up front) the 2x fee we should charge him, but we’re dealing with a deadbeat non-filer here, who walked into an accountant’s office 3-years late…and who still owes on 2014…and probably can’t remember where he worked in 2015, nonetheless come up with a W2 from that year. I’d wager that the “missing docs” referred to in Post #1 didn’t go missing last week. They “went missing” a long time ago. And consistent with everything else we know about this guy, with respect to the importance he places on tax filings, he hasn’t bothered to look for them. But don’t worry, he’ll be back soon to get caught up…
 

#9
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Lucyko, he did not file an extension for 2015. I do not know whether he may be entitled to a refund for 2015 either. He stated he worked for at least four different employers that year but has only one W2 in his possession. Apparently during this time he had an addiction issue and does not remember who he worked for in which years. He did state that a few days ago he requested transcripts for the unfiled years. And to boot, he had to leave town today for work and will be gone all week. The plan is when he gets back to file all four years but unfortunately, 2015 will be lost.

He is now getting his life back together and wants to get his tax situation resolved but I just don't have the time or info to unwind this with one day to do it for 2015.

Jeff, thanks for the 6511 info.

Happy deadline day everyone!
 


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