Ninth Circuit overturns earlier holding on refund limits.

• Author: Lerman, Jerry L.

In Omohundro, 300 F3d 1065 (9th Cir. 2002), the Ninth Circuit ruled that a refund claim made within three years of a non-timely filed return was valid. In so doing, it overruled its own highly criticized decision in Miller, 38 F3d 473 (1994).

Background

Sec. 6511(a) limits the period in which taxpayers can claim a credit or refund for overpaid taxes. Taxpayers must file a refund claim within three years from the time they filed the return or within two years from the time they paid the tax, whichever period expires later. If taxpayers filed no return, they must file a refund claim within two years from the time they paid the tax or the tax was deemed paid.

Controversy surrounds how these rules apply to taxpayers who file delinquent returns and then claim a refund between two and three years after they paid the tax. According to Rev. Rul. 76-511, Sec. 6511(a) provides that taxpayers must file a claim within three...