Refunds Disability Affects Claim Date 
Refunds Disability Affects Claim Date
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Objective one
What it does: This may provide additional time to file a claim for
refund
Why it works: A new law provides more time for a disabled person to file a claim for refund.
Alternatives
Cost v. Benefit Analysis
Other
What Does the IRS Say About This?
July 28, 1998
MEMORANDUM FOR ALL REGIONAL DIRECTORS OF APPEALS
| FROM: | David M. Geber /s/, Acting Director, Office of Collection, Service Center and Appraisal Services |
| SUBJECT: | Memorandum on Internal Revenue Service Restructuring and Reform Act of 1997 for Section 3202 |
This memorandum provides awareness for Appeal's Offices on the Internal Revenue Service Restructuring and Reform Act of 1997 SECTION 3202: SUSPENSION OF STATUTE OF LIMITATIONS ON FILING REFUND CLAIMS DURING PERIODS OF DISABILITY.
Internal Revenue Code (IRC) Section 6511: Limitations on Credit or Refund required taxpayers to file a claim for credit or refund of an overpayment of any tax imposed by this title within three years from the time the return was filed or two years from the time the tax was paid whichever expires later. If no return was filed by the taxpayer, the claim for credit or refund of an overpayment had to be filed within two years from the time the tax was paid. The Supreme Court held in Brockamp v. United States 519 U.S. 347, that equitable tolling does not apply to the statute of limitations for filing a refund claim under IRC Section 6511.
Section 3202 amends IRC Section 6511 and suspends the running of the statute of limitations on refunds during the time a taxpayer is medically, physically or emotionally unable to handle his or her financial affairs. The disability must be medically determinable and must continuously last for not less than twelve months or result in the death of the taxpayer. It does not suspend the running of the statute of limitations for taxpayers who have a spouse or other guardian to act for him or her during periods of disability.
Section 3202 is effective for periods of disability before, on, or after the date of enactment, July 22, 1998. It does not apply to any claim for refund or credit that is barred by the operation of any law, including the statute of limitations, as of the date of enactment.
The impact for Appeals of this sections's amendment to IRC 6511 is that cases now in Appeals may have taxpayers assert the suspension of the statute of limitations under equitable tolling. We could also receive claims on cases previously handled by Appeals. The Office of Chief Counsel is working on formulas to determine equitable tolling periods of statute suspension for refund and credit claims, and verification required to allow the financial disability claims. When these details have been determined, an update will be sent to your offices. It has not been determined if an IRS form will be created and required for medical documentation of disability.
MEMORANDUM FOR ALL REGIONAL DIRECTORS OF APPEALS
| FROM: | Vincent S. Canciello /s/, National Director of Appeals |
| SUBJECT: | Memorandum of Information on Internal Revenue Service Restructuring and Reform Act of 1998 Section 3202 |
This memorandum provides information on the qualifying criteria developed and taxpayer information needed for the Internal Revenue Service (IRS) to process requests to suspend the statute of limitations for credits/refunds during periods of financial disability. This memorandum updates our memorandum dated July 28, 1998 and is not considered an Appeals Office procedure.
The IRS Restructuring and Reform Act of 1998 SECTION 3202: SUSPENSION OF STATUTE OF LIMITATIONS ON FILING REFUND CLAIMS DURING PERIODS OF DISABILITY becomes Internal Revenue Code (IRC) Section 6511(h). This section of the act became effective for periods of disability before, on, or after the date of enactment, on July 22, 1998. If the criteria below has been met, the normal Refund Statute Extension Date (RSED) will be suspended for the period of time the taxpayer is financially disabled:
A taxpayer must provide the following information to be considered financially disabled:
The information above was reviewed by the Office of Chief Counsel and can be found in Internal Revenue Manual (IRM) 121.2.6.5.(6) (7) (8), Statute of Limitations, IRM 21.12, General DP Adjustments, and on the Taxpayer Service Electronic Bulletin Board.
Law (commentary and citation)
Regs (commentary and citation)
Cases (commentary and citation)
(1) In general--
In the case of an individual, the running of the periods specified in subsections (a), (b), and (c) 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.
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