Getting IRS Refunds after 3 years

Today TaxMama® hears from Lisa in the TaxQuips Forum who wants clarification. “Is there any way to amend an old tax return and receive a refund after the 3 year limit? I think you briefly touched on this in the CPE Link webinar last week.”

Ask TaxMama

Dear Family,

The reason Lisa is asking about this, is that IRS only issues refunds if you file your tax return within three years of the date it is due – or if you amend a tax return within three years after it has been filed. When you notice a major error after that time frame (or file more than 3 years after the tax return is due), the U.S. Treasury keeps your money.

So, IS there a way to get around this time limit? How did TaxMama manage this?

The only ways to get a refund past the three year filing limit are:

1) Hardship – the person couldn’t file the amendments because they were ill or dying or spending full-time caring for someone who was ill or dying. That kind of thing.

2) The money paid in for the taxes was not a tax payment – it was a deposit.

In my client’s case – he paid $10,000 or so with each year’s extension for several years, without really having any idea of his tax liability – and without filing a tax return.

He should have labeled it a DEPOSIT for TAX FORM and YEAR rather than a tax payment. (Writing DEPOSIT on the check – and including a cover letter that spells out that this is not a tax payment.) That would have been the correct thing to do to protect his right to that money.

But even without that, in his case, based on the large, round amounts of payments, it was obvious he was just throwing money into the pot without any computations.

You can find some information about the procedure to identify something as a deposit, in the collections process here. You can use a similar method to make estimated tax payments, too.

Although cash deposits do not earn interest, you can get a refund of these funds in the long run. They also stop the running of interest on the taxes due for the year to which the deposit is designated. And if you’ve covered all the taxes potentially due, they will also help you avoid underpayment penalties.

And remember, you can find answers to all kinds of questions about getting around the refund rules, and other tax issues, free. Where? Where else? At

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16 thoughts on “Getting IRS Refunds after 3 years

  1. Kim says:

    Well it’s not about time…it’s about money. Our business returns were too complicated, we could not do them ourselves. At $1000 per return we could not afford it. As a matter of fact, we took no vacations, had no credit cards and were in debt up to our eyeballs. There were no extras.

    I agree that it doesn’t hurt to ask. Thanks for the response.

  2. TaxMama says:

    Hi Kim,

    _I_ understand your problems.
    But waiting 5 years to file?

    During that time, I’ll bet you had time to watch TV, take in a movie once in a while, maybe even take a weekend trip.

    You didn’t spend 100% of your non-job time sitting around helplessly.

    The IRS will probably not accept your excuses for the lateness – at least not in order to give you a refund.

    That doesn’t mean I would TRY to argue the case if I were you.
    They cannot say “yes” if you don’t even ask.

    And good luck.


  3. Kim says:

    Hi Tax Mama,

    I understand the 3 year rule but wondering how the “hardship” rule applies. We paid $4000 in IRS deposits and would have received $243 additional in refund for 2007 ($4243) had we filed on time. We owned our own business and the market crashed in 2007 and we entered financial hardship. We couldn’t afford to pay our accountant to do our returns. Our business struggled and we ended up moving out of state for a new job in 2012. We were unable to start filing taxes for any year after that until November 2012. In 2013 we filed bankruptcy due to those 5 years of hardship. Since 2007 we had two children and many medical bills. My question is whether that is hardship enough? We have since filed all tax returns to date. Any help would be appreciated.

  4. TaxMama says:

    Dear Prakash,

    We have had some argument about what the 3-year deadline is when you file an extension.

    One person passionately insists that the three years is from Oct 15th.
    I’ve only been dealing with late filers for about 20 years or so. Most of the tax pros I know confirm that, in their experience, the three years is from April 15th. After all, once you don’t use an extension, it’s lost.

    However, it does not hurt to include a copy of the extension with the 2009 return and to explain that you are basing your refund request on that time frame.

    You also mentioned some problems you’ve had.
    When you get the letter accepting your tax return, but rejecting the refund, try to explain why you are filing so late – and provide details and a timeline to explain why you could not do it any sooner. Sometimes, that works.

    And yes, you can use all legitimate carryforwards.
    Yes, they will accept your 2009 tax return – even if they don’t issue a refund.

    Good luck.


  5. Prakash says:

    Hi again, continuation of the previous post.. please reply to this one too.. In case if I cannot get the ‘refund’ for 2009 due to time limitation, can I still use the AMT credit or FTC carry forward (if any) from my 2009 return over to 2010 and later tax returns? do they at least accept the 2009 returns and file (without refund)?

    Note: this is not the Amendment but I have not filed the original yet.


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