Supreme Court will clarify nonfiler refund period
Article Abstract:
The Court of Appeals for the Fourth Circuit judged in 'Lundy' that a taxpayer who filed his return after receiving a deficiency notice should get a refund of overpaid taxes despite the fact that the notice was given over two years after the return due date. Five other circuits take an opposite view, holding that a refund is time constrained in Tax Court if a statutory notice of deficiency was presented over two years after the date of payment and a return had not been filed. The Supreme Court is set to resolve this case in the middle of 1996, thereby clarifying non-filer refund period. If the Supreme Court fails to do this, Congress should take the initiative to correct the problem. Meanwhile, tax professionals should take it upon themselves to ensure the protection of the rights of their clients.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1996
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Undesignated check applied to deny refund
Article Abstract:
The Tax Court denied the request of a taxpayer for refund because the IRS had correctly assigned an undesignated payment to the account of the co-venturer of the taxpayer. The court reasoned that the taxpayer did not have any proof that it instructed the Service how to apply the payment. Evidence instead indicate that the payment was in satisfaction of the account of the co-venturer. The Service was informed that the co-venturer's balance of $75,864 would be fully paid the next day and indeed received a check for the same amount due on the said account. In addition, the check did not even have markings that would indicate the intention of the taxpayer to apply the funds. The court consequently judged that the IRS properly applied the funds to the co-venturer's account.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1996
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Supreme Court puts two-year limit on Tax Court refunds
Article Abstract:
The US Supreme Court has finally settled a conflict among different court circuits regarding tax refunds. On Jan. 1996, it made known its decision not to side with the Fourth Circuit in the 'Lundy' case by asserting that the Tax Court did not have the authority to give taxpayers involved in the case a refund of their overwithheld taxes paid more than two years before the IRS released a notice of deficiency citing. The Supreme Court relied on Sec. 6512(b)(3)(B) to reach on the decision. Based on the interpretation of the Supreme Court, this section holds that the look-back period in this particular case was two years from when the deficiency notice was issued. Guidelines on how to avail of tax refunds are discussed.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1996
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