Ask The California Employment Tax And Payroll Tax Attorney – Is A Claim For Refund Valid If It Is Not Signed?
By Robert S. Schriebman
Is a claim for refund considered legally sufficient if it is not signed? The recent Brown case illustrates what can happen if a refund claim is not properly signed. Brown v. US, Court of Appeals, Federal Court; 2021-1721, Jan. 5, 2022.
The Browns submitted IRS claims for refund that they personally did not sign. Instead, their attorney signed the claims for them. His signature was not legible and he failed to attach his power of attorney to each claim because the Brown’s never gave him a power of attorney nor did the attorney request the Browns give him a power of attorney. The IRS reviewed both claims and denied them as legally insufficient. We will look at the Brown case, but first let’s discuss the basics of refund claims.
Some taxing agencies such as the EDD and FTB do not have preprinted refund claim forms. If you file a refund claim with either the EDD or the FTB you need to know the basics.
- The claim must be in writing.
- The claim should be as complete as possible containing all information that identifies the taxpayer, the periods involved, the tax portions and various penalties as well as the date of payment and the amount.
- The claim should set forth all reasons why the taxpayer believes the assessment and penalties are erroneous.
- The taxpayer must exhaust all administrative remedies.
- The claim should be sent to the IRS by registered or certified mail, return receipt requested.
- The claim must be signed by the taxpayer or by an authorized agent with the Power of Attorney attached.
- Do not assume that the refund claim statutes of limitations are the same for every taxing agency, including the IRS, EDD, CDTFA and FTB; they are not the same.
The IRS, on the other hand, uses Form 843 “Claim for Refund and Request for Abatement.”
The Brown Case
The Browns are US citizens and husband and wife. During the years in issue, they lived and worked in Australia. They wanted to claim The Foreign Earned Income Exclusion. To this end, the Browns directed their attorney to file IRS refund claims and to sign the claim forms for them. The attorney did as he was instructed, except that his signature was not legible on either claim form and he did not attach Form 2848 Power of Attorney to either claim form. The IRS rejected the claims as legally insufficient in violation of IRC § 7422(a). The Browns took the IRS to the Claims Court in Washington D.C. The Claims Court ruled against the Browns and upheld the IRS’ rejection. The Browns filed an appeal to the US. Court of Appeals, Federal Circuit. By the time all this litigation was instituted, the statute of limitations for filing a revised proper claim had expired.
The Appeals Court cited IRC § 7422(a) which states the following:
“Must set forth in detail each ground upon which a credit or refund is claimed and facts sufficient to appraise the Commissioner of the exact basis thereof. The statement of the grounds and facts must be verified by a written declaration that it is made under the penalties of perjury. A claim which does not comply with this paragraph will not be considered for any purpose as a claim for refund or credit.”
The Appeals Court also cited Treasury Regulation § 301.6402-2(b)(1) stating that it is permissible to have a legal representative sign a refund claim form so long as a power of attorney is attached. The fact that the Browns never gave their representative a power of attorney was fatal error on their part. Equally fatal was the fact that their attorney did not request a power of attorney from the Browns in the first place! Two wrongs do not one right.
The fact that the Browns failed to personally sign their refund claims or to give their lawyer a power of attorney, means that the filed claims are effectively unsigned and unverified and are not deemed legally sufficient under the requirement that a refund claim must be “duly filed.” Therefore, the IRS could not legally accept the Brown’s improperly executed refund claims for processing.
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 50 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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