In Chief Counsel Advice 200819016, the IRS concluded that an individual's Form 1040X, Amended U.S. Individual Income Tax Return, received by the Service beyond the time period for filing a refund claim was allowed as a timely amendment to a refund claim made on the original return. According to the Service, as an amendment, rather than a time-barred new claim, there was no specific time period within which the supplemental claim had to be filed.
The Service indicated that two considerations are relevant to determine whether a supplemental claim for refund is considered an amendment to an original timely claim, rather than an untimely new claim. If these two requirements are satisfied, there is no specific time period within which a supplemental claim must be filed. The Service found that a supplemental claim should not be considered an amendment to the original claim if:
- it would require the investigation of new matters that would not have been disclosed by the investigation of the original claim (U.S. v. Andrews, (1938) 19 AFTR 1243 , 302 US 517 ); and
- the Service took final action on the original claim by either rejecting or allowing the claim in whole or in part (since once IRS has taken final action, there is no longer a claim left to amend). (Mondshein, Lillian, Admrx v. U.S., (1971, DC NY) 28 AFTR 2d 71-5806 , affd (1973, CA2) 31 AFTR 2d 73-533 ). It is important to note that certain narrow exceptions apply to this rule, such as where the Service's claim disallowance is not final action by the Service because it did not fully consider all the grounds for the refund. (Bemis Brothers Bag Co v. U.S., (1933, S Ct) 12 AFTR 28 , 289 US 28 ).
This discussion highlights the importance of procedural issues and the need for tax professionals to be intimately familiar with such procedures. For a full discussion of the Service’s analysis of this issue, see the attached copy of the Chief Counsel Advice below.
