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ASK THE CALIFORNIA EMPLOYMENT TAX AND PAYROLL TAX ATTORNEY – HOW TO GET MORE TIME TO FILE YOUR CLAIM FOR REFUND

By Robert S. Schriebman
2020

Introduction

If you want to bring a lawsuit in a court of law you must comply with the many statutes of limitations for bringing a specific type of cause of action. Refund claims are no exception. They too are governed by very strict time limits. If you miss the time limit by even one day, you may be prohibited from filing your claim. Every governmental taxing agency, whether federal or state, has unique rules that apply to that specific agency.

For many years I have had the pleasure of lecturing and speaking internationally to tax professionals on matters of practice and procedure. I never missed an opportunity to stress to my audience the different statutes of limitations for filing refund claims. Most tax professionals are familiar with the IRS refund statute, but many make the mistake of assuming that the IRS version also applies to the FTB and the CDTFA. Many did not know that the EDD also has its own version of the statute of limitations for filing refund claims.

In this article I will give you an overview of the basic refund statutes for the IRS, FTB and EDD. You will see that they are all different. When you file a refund claim, the specific agency will assign someone to make sure the claim is filed on time and is complete. Their job is to bounce your refund claim if it is late.

While each taxing agency has its unique refund statutes, it is important to also discuss exceptions to the basic rules that may give you more time to file your claim. These exceptions are very limited and what applies to one agency does not apply to another.

Basic IRS Refund Claims Statute of Limitations

The time limits for IRS refund claims are governed by IRC § 6511. Where a tax return is filed, a claim must be filed within 3 years from the date the return was filed, or within 2 years from the time the tax was paid – whichever period expires later. If no return is filed, the claim must be filed within 2 years from the time the tax was paid. Generally speaking, if you are entitled to a refund, but you missed the claim filing deadline, your potential refund cannot be used as a credit toward the future payment of taxes. The IRS just keeps your money and puts it into the Treasury. Limited exceptions are set forth in IRC § 6513 but that is the subject for another article.

Basic FTB Refund Claims Statute of Limitations

The statute of limitations for filing a claim for refund with the FTB is not the same as IRC. § 6511. As a general rule, the period of limitations for filing refund claims is 4 years after the last day prescribed for filing the return (determined without regard to any extension of time for filing the return), or 1 year after the date of overpayment, whichever is later (RTC 19306).

Basic EDD Refund Claims Statute of Limitations

The statute of limitations for filing a claim for refund with the EDD is not the same as IRC. § 6511 or RTC 19306. No refund claim shall be made or credit allowed unless a claim is filed within 3 years from the last day of a calendar month following the close of a calendar quarter for which the overpayment was made, or within 6 months after the EDD Notice of Assessment becomes final, or within 60 days from the date of the overpayment, whichever period expires later. As a rule of thumb, I never wait more than 60 days to file a claim after the taxpayer makes a payment.

How Can I Get More Time?

Not all taxing agencies allow additional time to file a refund claim beyond the basic statutes of limitations. For example, the EDD code has no statutory exceptions.

For the IRS, the primary example of allowing more time is set forth in IRC § 6511(h). If a taxpayer is unable to manage his/her financial affairs due to disability, the basic time limits shall be suspended during any period of which the taxpayer is financial disabled. The taxpayer is considered financially disabled if the taxpayer is unable to manage his/her financial affairs by reason of a medically determinable physical or mental impairment which is so severe that it is life threatening, or which has lasted or can be expected to last for a continuous period of not less than 12 months. The burden of proof is on the taxpayer to furnish medical and phycological documentation to prove the nature and extent of that disability.

The FTB has a similar rule as that of the IRS per RTC § 19316. However, the FTB version provides that the taxpayer shall not be considered financially disabled for any period during which that individual’s spouse or any other person is legally authorized to act on that individual’s behalf in financial matters. Most likely this is a reference to a financial Power of Attorney.

Conclusion

Refund claims are governed by specific and strict statutes of limitations. Never make the mistake of assuming that the IRS refund claim statute, IRC § 6511, sets forth a standard time table that applies equally to the EDD, FTB, and CDTFA. the IRS and the FTB have statues that grant more time to file your claim, but under very limited circumstances such as, severe health issues and financial disabilities.

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Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angeles County serving clients throughout California and the United States. He has successfully dedicated more than 40 years to helping individual taxpayers, business owners, CPAs, Enrolled Agents, and tax attorneys navigate the complicated tax systems of the federal and state governments. Mr. Schriebman is in private practice. He is not affiliated in any way with the EDD and he is not employed by the EDD or any other agency of the State of California.

Robert Schriebman has written the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.

Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House.

Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House in addition to the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.

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