Effective filing dates of returns are disputable issues of fact

The IRS’s motion for dismissal was denied in a case where determining the timeliness of a taxpayer’s refund claims depended on determining the effective filing date of the taxpayer’s returns.

The Court of Federal Claims denied a motion by the IRS to dismiss a taxpayer’s refund claim for two prior tax years, holding that a trial is required to resolve a genuine factual dispute concerning whether the refund claims had been filed before the statute of limitation expired.

Facts: Maria Montiel, a citizen and resident of Mexico, filed Form 1040, U.S. Individual Income Tax Return, on March 16, 2008, for tax year 2007 and on Feb. 25, 2009, for tax year 2008. She later determined that she should have filed Form 1040NR, U.S. Nonresident Alien Income Tax Return, as a nonresident alien for both years. On June 10, 2011, Montiel filed an amended 2007 tax return (including a completed Form 1040NR) requesting a refund of $8,772 and filed an amended 2008 return (with Form 1040NR) requesting a $2,254 refund on June 13, 2012. She filed a suit with the Court of Federal Claims requesting a refund of taxes for both years after the IRS denied the claims as untimely.

Issues: A court will consider a taxpayer’s lawsuit to recover the payment of a tax only if the taxpayer had filed a proper claim for the refund of a tax. Sec. 6511(a) requires any claim for the refund of an overpayment of a tax to be filed by the taxpayer within three years from the time the return was filed or within two years from the time the tax was paid, whichever is later. All timely filed tax returns are considered filed on the return’s due (or extended due) date. U.S. citizens and residents generally must file Form 1040 (or an extension) by April 15 of the year following the tax year; however, nonresident aliens have until June 15 to file their tax returns.

A nonresident alien is an individual who is neither a citizen nor a resident of the United States. A resident alien is someone who either (1) has been lawfully admitted for permanent residence to the United States, or (2) was present in the United States at least 31 days during the calendar year in question and for at least 183 days in total during the three-year period ending with the year in question (counting all the days present during the year in question, one-third of the days present in the immediately preceding calendar year, and one-sixth of the days in the year before that).

Montiel contended that she was a nonresident alien because she traveled to the United States on a B1/B2 visa and was present fewer than 60 days each year. Therefore, she argued, the deadline for her refund claims should be June 15, 2011, and June 15, 2012, based on her actual residency status, as opposed to the form that she filed. The IRS argued that the refund deadlines should be April 15, 2011, and April 15, 2012, because she represented herself as a U.S. resident by filing Form 1040 and couldn’t later use a different residency status to obtain a refund under a different statute-of-limitation period.

Holding: The court denied the government’s motion to dismiss the suit, finding that the effective filing dates of the original returns were disputed issues of jurisdictional fact because they would ultimately determine whether Montiel complied with the statute of limitation under Sec. 6511(a) and could file suit for refunds for 2007 and 2008. The court rejected the IRS’s argument because it found that the IRS had conflated “the filing of a particular form with the payment of a particular tax.” According to the court, the taxpayer provided enough evidence to prove that she might be entitled to a tax refund, given that she qualified as a nonresident alien and complied with the filing requirements for a refund under that residency status.

– Montiel, No. 13-882T (Fed. Cl. 8/7/14)

By Charles J. Reichert, CPA, instructor of accounting, University of Minnesota–Duluth.