In a recent technical release, The National Taxpayer Advocate (NTA) has issued a statement that the date a taxpayer files an original return, not the later date of any superseding return, is “the return” that starts the running of the various statutory limitation periods.
A superseding return is a return filed after a taxpayer files a return (“original return”) and before the due date (including extensions) for the original return.
An amended return is a return filed after an original or superseding return is filed and after the expiration of the filing period (including extensions) for the original return.
Under Code Sec. 6501(a), the IRS must assess additional tax for a given tax year within three years after “the return” for that year was filed.
Under Code Sec. 6511(a), if a taxpayer is filing a claim for a refund of any overpayment of tax, the taxpayer must file the claim within three years from the time “the return” was filed or two years from the time the tax was paid, whichever period expires later.
The Office of Chief Counsel has reviewed two issues regarding superseding returns, those being:
- When a taxpayer files an original return and then files a superseding return, which return constitutes “the return” for purposes of Code Sec. 6511 and starts the three-year statutory period for filing a claim?
- When a taxpayer files an original return and then files a superseding return, which return constitutes “the return” for purposes of Code Sec. 6501 and starts the three-year statutory period for assessment?
The Chief Counsel determined that for both issues, the original return, not the superseding return, is “the return” that starts the running of the statutory limitations period.
This past July 2020 the IRS updated the Internal Revenue Manual to reflect the Chief Counsel’s advice.
The NTA points out that once the statutory deadlines for the IRS to assess a tax liability and for a taxpayer to claim a refund have passed, the tax year, in most circumstances, is closed from both the IRS’s and taxpayer’s positions.
The NTA suggests that taxpayers who have filed superseding returns pay close attention to how the Chief Counsel Advice and the IRS’s update to the IRM regarding superseding returns affects these time periods for assessment and filing a refund claim.