Is your refund claim adequate?

• Author: Kelm, Jeffrey N.

Taxpayers filing refund claims need to consider numerous procedural matters. A recent case illustrates the importance of meeting all the technical requirements for a refund claim, and the unfortunate consequences that can result from failing to do so. In Angle, 996 F2d 252 (10th Cir. 1993), the court upheld a district court's dismissal of a taxpayer's refund suit for failure to comply with the jurisdictional prerequisite that a timely refund claim must have been filed. The taxpayer had previously filed timely refund claims (amended returns) in 1984 and 1986 as to the taxpayer's 1982 return. In 1989, the taxpayer filed a third amended return for 1982. The court determined that the 1989 amended return claimed relief on grounds different from those involved in either of the timely filed refund claims. Since the taxpayer's arguments for relief did not relate to the discovery of a mathematical error in the earlier claims, nor were they obviously and necessarily correct as a matter of law, the refund claims timely filed by the taxpayer in earlier years could not support new contentions made in a claim after the statute of limitations (SOL) had expired.

A taxpayer may not sue to recover taxes unless the taxpayer has first filed a timely refund claim. Additionally, a taxpayer may be precluded from arguing alternative grounds of recovery if the grounds are not included in a timely filed refund claim. While there are many technical requirements for a valid refund claim, this analysis discusses two of the least understood requirements--the doctrines of sufficiency and variance.

Sufficient facts for claim

Under Regs. Sec. 301.6402-2(b), refund claims must set forth in detail each ground on which a refund is claimed, including facts sufficient to apprise the IRS of the exact basis of the claim. All grounds on which a taxpayer relies must be stated in the original refund claim so the Service will know what to consider; the IRS can take the claim at face value and examine' only those points to which its attention is necessarily directed by the claim. This provides the Service with adequate information to consider and dispose of claims without the need for litigation, and thus to avoid surprise. Another purpose is to limit litigation to the issues that have been reexamined by the IRS and that it is prepared to defend.

Amount claimed: Refund claims frequently demand or request the return of a specified amount. There is a question as to whether a taxpayer...