Magazine article The CPA Journal

Disallowance of Claim of Timely Filing

Magazine article The CPA Journal

Disallowance of Claim of Timely Filing

Article excerpt

A recent case decided in the New York State Division of Tax Appeals illustrates the importance of following through with taxpayers to ascertain that they have received the refunds they are entitled to, and are aware of when the statute of limitations will expire.

On August 27, 1999, taxpayers David and Joan Marsh received a letter from the Department of Taxation and Finance (DTF) indicating that information revealed they had income for 1994 but had not filed a tax return. On September 14, 1999, the taxpayers mailed the DTF a copy of their 1994 tax return, which had been prepared by their accountants on June 15, 1995, and which the clients signed on September 14, 1999. The return showed an overpayment of $9,673, which the taxpayers requested be refunded to them. On September 22, 2000, the DTF issued a Notice of Disallowance to the taxpayers advising them that the refund claim had been denied in full, as "the deadline for filing for a refund or credit expired three years from the date the return was due."

The taxpayers were required to file a 1994 personal income tax return on or before April 17, 1995, and thus any claim for refund with respect to tax withheld from wages was required to be filed by April 17, 1998. The DTF argued that the taxpayer's 1994 return, submitted on September 14, 1999, was filed well after the statute of limitations for refund had expired. The taxpayers maintained that they filed their return on or about June 15, 1995, a date clearly within the statute of limitations, and that the return submitted on September 14, 1999, was merely a copy of the return previously filed. At issue is the determination as to the date the taxpayers' 1994 return was actually filed.

Reviewing the circumstances of the case would lead one to believe that the taxpayers had filed in 1995 as they claimed. Their accountants stated that they mailed the return to the clients to file in June of 1995. The taxpayers had a record of timely filing for both prior and subsequent years; they were due a substantial refund, and when they did not receive the refund they assumed that the DTF had applied it against an uncontested liability from 1992 and 1993. The DTF contended that it was unable to find any record of the return, even after several searches.

The law is clear in this proceeding. Tax Law section 687 provides that a claim for credit or refund of an over-payment of income tax shall be filed by the taxpayer within three years from the time the return was filed or two years from the time the tax was paid, whichever of such periods expires later. …

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