The IRS considers an overpayment of taxes as any payment in excess of the proper tax amount due. If you are owed a refund from the overpayment of tax, you must claim the refund within either three years from the time your original tax return was due or two years from the time the tax was paid — whichever was later — unless you did not file your tax return. If you did not file your tax return, you must claim the refund within two years from the time the tax was paid. The IRS will not issue a tax refund if these time periods (or statutes of limitations) have passed.
The IRS considers taxes paid at different times depending on how the payments were made.
- Income tax and estimated tax payments are considered to be paid on the date the tax return was due.
- Taxes paid with property seized by the government are not considered paid until the property is sold.
- Taxes paid with wage or asset garnishments are considered paid on the various dates the funds were applied to the tax bill.
- If the IRS levies on taxpayer’s funds, the tax is considered paid at the time of the levy.
- Refund offsets used to pay taxes are applied on the date the offset is made.
Filing a Claim for a Tax Refund from the IRS
The majority of taxpayers file a claim for a tax refund by filing their annual tax return, which is generally due by April 15. If you overpaid taxes for a previous year and have already filed your original tax return, you can claim a refund by filing either Form 1040X to amend a previous year's originally filed individual tax return or Form 1120X to amend a previous year's originally filed corporation tax return. If a refund claim is for taxes other than income taxes, you can make the claim on Form 843. Claims made on Form 843 must include a statement of facts as to why you are entitled to the tax refund.
It is important that the administrative claim for a refund is filed properly and timely. Failure to comply with all of the formal requirements can jeopardize your claim and also prevent you from filing a refund suit.
If the IRS denies a claim for a tax refund or does not respond within six months, taxpayers have options. You can file a refund suit either in a U.S. District Court or the U.S. Court of Federal Claims. The U.S. Tax Court also has refund jurisdiction in certain situations. The court a taxpayer should choose to litigate their claim requires careful consideration and research.
Claiming a Maryland Tax Refund
In Maryland, if you have not filed your original tax return, you will need to file it to claim a refund. If you have already filed your original state tax return, you need to file Form 502X to make changes to an originally filed state return and claim a refund. The Comptroller of Maryland requires you to submit a copy of your federal return with your amended Maryland state return.
Like the IRS, the Comptroller of Maryland allows taxpayers to claim refunds within three years from the date the original return was filed or within two years from the date the tax was paid, whichever is later. Maryland has special rules for refunds depending on the type of refund and type of notification. For example, if the claim for refund resulted from a notification received from another state, final decision of a federal court, or decision of an administrative board, you may have an additional year from the date of the notification if the statute of limitations has expired.
If you think you have a tax refund claim the clock has already started ticking. Don't delay. Maryland tax attorney Jim Liang can help you:
✓ Determine if you are owed a refund
✓ Calculate the deadline by which you must claim your refund
✓ Advise on your best course of action to get your overpayment refunded
To start getting your refund claim processed, contact the Law Office of Jim Liang for a free consultation.