Statutes of limitations on filing returns, claiming refunds

Mike B. of Greenbrier, TN, writes to us with a question regarding IRS statutes of limitations.

Q: I did not file a tax return in 1996. Since this was so long ago, do I need to worry about it if I am audited by the IRS? If I filed it now, could I claim a refund if I overpaid on my taxes?

A: There is usually a three year statute of limitations for the IRS to audit a tax return and a 10-year statute of limitations for collecting taxes.

According to Tax Code section 6501(e), the statute of limitations is six years if the taxpayer omits additional gross income in excess of 25% of the amount of gross income stated in the tax return they filed.

You may file a tax refund claim for overpayment of any tax within three years from the time the tax return was filed, or two years from the time the tax was paid, whichever period is the last. If no tax return was filed with the IRS, the claim may be made within two years from the date that the tax was paid.

Under section 6511(d)(1) of the Tax Code a taxpayer may file a claim within seven years if the tax refund pertains to a bad debt or in connection with a loss from a worthless security.

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