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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