Today TaxMama hears from Tammy in Pasadena, CA who’s upset, “I filed my 2005 tax return as was getting a pretty sizable return. IRS kept it. They told me that I would have to file for 2001 – 2004 to make sure that I didn’t owe them any money before they would give me the refund. I filed the tax returns as they requested (I was owed a refund for each year). Then IRS released the 2005 tax return and sent me the checks for 2003 and 2004. But I received letters that it was too late to get a refund for 2001 and 2002. After I called back I was told that they just wanted to have those years and file, but they would not be sending me the refunds. If they are the ones who requested me to file the returns shouldn’t they send me the refunds? What can I do to get the refunds? “
Dear Tammy,
I am so sorry to say this, but I think you’re unclear on the concept.
It’s your responsibility to file your tax returns on time. The tax code even gives you three extra years to file and still claim your refunds.
If you can’t get around to it during that time, you’ve just made a generous contribution to the pet project of your least favorite legislator.
IRS asked you for those unfiled returns because they have no way of knowing whether you owe them money for those years until you file your tax returns. It’s not an arbitrary request. They will, typically hold on to your future refunds until you either file a tax return, or they prepare a Substitute For Return for you – listing you as single, with no dependents and no deductions. Then, they have a baseline for how much to withhold – until you wake up and file a real tax return.
You see, we taxpayers have a little deal with IRS. We have three years to file. They have three years to audit us. A nice balance, don’t you think?
Now, your present problem is – how do you get your refunds back for those two years?
It all depends. Why didn’t you file those tax returns?
Were you ill and close to dying, only making a miraculous recovery against all odds?
Was one of your parents or family members dying a slow, lingering death and you were with them all the time, caring for them?
Were in a drug-induced, or alcoholic haze for all those years and just got out of rehab to take back your life?
Are you getting the picture?
If you have a really, really good reason for not having filed during those past years, IRS will consider it and perhaps send you the refund.
Whatever WERE you doing for all those years, that you couldn’t get around to filing a simple tax return that would give you a refund? Were you so rich that you didn’t need the money?
If you were simply busy, or figured, “Well, I have a refund coming anyway so there’s no rush, I’ll get to it in my own sweet time…” you’ve just learned a really expensive lesson!
But if you were incapacitated, here’s a good code section to use to help you get your money back – IRC 6511(h).
Code section reference IRC Sec 6511(h):
https://www.taxalmanac.org/index.php/Sec._6511._Limitations_on_credit_or_refund
(h) Running of periods of limitation suspended while taxpayer is
unable to manage financial affairs due to disability (1) In general In the case of an individual, the running of the periods specified in subsections (a), (b), and© shall be suspended during any period of such individual’s life that such individual is financially disabled. (2) Financially disabled (A) In general For purposes of paragraph (1), an individual is financially disabled if such individual is unable to manage his financial affairs by reason of a medically determinable physical or mental impairment of the individual which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. An individual shall not be considered to have such an impairment unless proof of the existence thereof is furnished in such form and manner as the Secretary may require. (B) Exception where individual has guardian, etc. An individual shall not be treated as financially disabled during any period that such individual’s spouse or any other person is authorized to act on behalf of such individual in financial matters.
Now, if you do happen to qualify for the “financially disabled” exception, write a response to the IRS notice that denied your refund and explain your circumstances. Attach a copy of the Code
section that I just provided to you.
Please, never do this again!
And remember, you can find answers to all kinds of questions about late filing and all kinds of other tax issues, free. Where? Where else? At TaxMama.com
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