IF YOU FILE YOUR TAXES TOO LATE YOU MAY LOSE YOUR REFUND

The Court of Appeals for the Fifth Circuit has denied an employer's refund claim, even through the employer had overpayments in certain quarters that were not applied to its withholding tax liability [Nicholas Acoustics & Specialty Company, Inc. v., CAS, 107 AFTR 2d ||2011-950,6/15/11].

Between 1999 and 2003, Nicholas Acostics & Specialty Company, Inc. (Nicholas) remitted payroll taxes to the IRS, but failed to file any tax returns.  The funds remitted were not for the exact amount owed, but were instead an estimate of the amount due.  The company occasionally paid taxes in excess of its liability.  Nicholas erroneously assumed that the IRS could apply all of its overpayments to other quarters in which it had underpaid its tax liability.

In 2003, the IRS audited Nicholas due to its failure to file its tax returns.  After the audit, Nicholas filed returns for the missing quarters, which allowed the IRS to refund overpayments or credit the overpayments to certain quarters in which a deficit had occurred.  The IRS said that it could only refund or credit Nicholas's overpayments for returns due within the past three years because of the statute of limitations.  Nicholas still owed taxes for the period in question, even after the IRS made the adjustments.  The IRS filed a lien against Nicholas, which Nicholas paid before seeking a refund.  Nicholas contended that the shortfall wouldn't have occurred if the IRS had applied all of the company's overpayments to future or past quarters.

The IRS classifies a remittance of taxes as either a payment or a deposit.  If a tax remittance is determined to be a deposit, it is treated like a cash bond, which the IRS simply holds, an a taxpayer may seek a refund of the deposit at any time.  But if a remittance is deemed a payment, the taxpayer may only recover the money by filing a timely claim for refund.

Comments

  1. TaxseerNovember 1, 2019 at 11:51 PM

    Thanks again for all the great information…I am grateful! 1099 C Form Online. You can clearly explain about it.

    ReplyDelete

Post a Comment

Popular posts from this blog

Early Results from Focused Efforts on High Income Tax Cheats

            Over the past year, the Internal Revenue Service ( IRS ) has used funding from the Inflation Reduction Act on audit activities for those who earn more than $1 million and have more than $250,000 in tax debt. In that time, the IRS collected $1 billion from the group that met these criteria. The increase in funding will allow for other goals to be reached as well.           More staff has been added and technology is being updated to provide better service to all taxpayers in the coming years. The IRS will now expand its enforcement activity to include complex partnerships, large corporations, and high-income high wealth individuals who do not file tax returns. In recent years the IRS was not consistent with enforcing tax rules in this area and had fallen behind in the ways some had gotten around their tax responsibilities. These new initiatives look to bridge that gap. If you are in need of t...
Read more

Protect Yourself from Threats

            When it comes to data security threats, the challenges never end. The tactics that criminals use continue to change, but there are some basic things to keep in mind. When it comes to mass email messages or texts, the goal is to get someone to click on a link to steal information or download malware. This is phishing or smishing. An update to this scam is called clone phishing. In this variation, a real email is copied and sent to the recipient again. This time it has an attachment with malicious software or a link to a website designed to steal your personal information.           We can never be too sure how the attack will present itself, but we can be prepared with security measures to protect ourselves. Stop and be aware of warning signs. Unexpected messages with urgent tones telling you to click or download something should be examined closely. Getting a repeated message from a trusted source w...
Read more

The IRS Focuses on High Income Tax Cheats

             The Internal Revenue Service ( IRS ) continues to focus on applying the tax laws with accuracy and fairness. With that in mind, they have announced that they are restarting a program that focuses on individuals who did not file returns from 2017 to 2021 and had at least $400,000 in income. They have identified at least 125,000 cases of people who are not in compliance.           The non-filer letters will be going out every week to start the process of filing returns, collecting taxes, interest, and penalties. The basis of these letters comes from information through Forms W2, 1099 and others. Those who receive letters of this nature need to take quick action. The enforcement actions in this program are stronger than usual. That makes it critical that those who receive these letters go to a qualified tax professional . The IRS can be made aware of qualifying deductions and credits that can ch...
Read more