Tax Brake with Robert G. Nath, Esq.

Now the IRS has given you a small break. It has ruled, in a new regulation, that if you file a claim for refund as part of a return, but the return itself was late, the IRS will still consider the refund claim to be timely filed under its “mailbox” rule.

The IRS Code has long provided that if a tax return is timely mailed, it is considered timely filed. That meant the postmark controlled (in most cases). Of course you, the taxpayer, had and still have the burden to show when you mailed the tax return. But for years, the IRS said that this rule applied only to tax returns, not claims for tax refund.

Recently, the IRS lost this issue in a case decided by a United States Court of Appeals located in New York. Often, the IRS will litigate gray area issues like this one all around the country before giving up. But in this case, the kinder, gentler heads prevailed, and the IRS will follow that case and apply its “mailbox” rule to claims for tax refund as well as to the tax returns themselves.

This means that some claims for refund, filed as part of tax returns, are still timely even though the return itself was late. The IRS said it will also try to locate old claims that fit the new rule. If you think you have such a claim (within the last 3 years), better search for it now and pursue it.

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