Rev. Rul. 57-354

Advice has been requested regarding the application of section 322(b) of the Internal Revenue Code of 1939 and section 6511(a) of the Internal Revenue Code of 1954 to claims for credit or refund in cases where no return was filed or where the return filed was delinquent.

In the instant case, delinquent returns were filed by the taxpayer for the purpose of recovering taxes withheld and paid as estimated taxes for the years 1951, 1952 and 1953. These amounts are presumed to have been paid on March 15 of each of their following years. The returns, which disclosed no tax liability, were filed by the taxpayer in October 1955 for the year 1951 and December 1955 for the years 1952 and 1953.

Section 322(b)(1) of the 1939 Code, relating to the limitation on allowance of refunds and credits, provides as follows:

(1) PERIOD OF LIMITATION.-Unless a claim for credit or refund is filed by the taxpayer within three years from the time the return was filed by the taxpayer or within two years from the time the tax was paid, no credit or refund shall be allowed or made after the expiration of whichever, of such periods expires the later. If no return is filed by the taxpayer, then no credit or refund shall be allowed or made after two years from the time the tax was paid, unless before the expiration of such period a claim therefor is filed by the taxpayer.

Section 322(b)(2) of the 1939 Code relates to the limit on the amount of credit or refund and provides that, if a return was filed by the taxpayer and the claim was filed within three years from the time the return was filed, the amount of credit or refund shall not exceed the portion of the tax paid during the three years immediately preceding the filing of the claim.

Under section 322(e) of the 1939 Code, prepayments of tax made through the withholding of tax at the source, or payments of estimated tax, prior to the due date of the tax are considered as having been paid on the last day prescribed by law for the payment of the tax by the taxpayer, which was March 15 if he filed his return on the basis of a calendar year.

The status of a claim for return must in the final analysis be determined in the light of the facts as they exist at the time it is filed. Thus, if no return was filed prior to the filing of a claim for refund, the two-year period of limitation is applicable in determining the timeliness of the claim. However, if a return was filed prior to the filing of a claim for refund, the three-year period of limitation governs.

Based on the facts in the instant case, a refund of any overpayment of tax for the year 1951 is barred since the return, which also constitutes a claim, was not filed within three years from the presumptive date of payment, March 15, 1952. The returns for the years 1952 and 1953 were filed within three years of the presumptive dates of payment and therefore such returns, pursuant to the taxpayer's election to have them treated as claims, were filed within the statutory period applicable with respect to both the time in which a claim must be made and the limit on the amount allowable.

Section 6511(a) of the 1954 Code corresponds to section 322(b) of the 1939 Code and is applicable for taxable years beginning after December 31, 1953, and ending after August 16, 1954. Section 6511(a) provides in part as follows:

Claim for credit or refund of an overpayment of any tax imposed by this title in respect of which tax the taxpayer is required to file a return shall be filed by the taxpayer within three years from the time the return was required to be filed (determined without regard to any extension of time) or 2 years from the time the tax was paid, whichever of such periods expires the later, or if no return was filed by the taxpayer, within two years from the time the tax was paid * * *

Section 6511(a) is distinguishable from its counterpart provision in the 1939 Code since it provides that the three-year period for filing claims for credit or refund shall run from the due date of the return instead of from the date the return was filed, regardless of any extension of time.

Under circumstances similar to those in the instant case, where a taxpayer files a return constituting a claim for refund under the provisions of the 1954 Code on a date more than three years from the due date of the return, such return will not represent a timely filed claim for the purpose of section 6511(a) of the 1954 Code. Moreover section 6511(b) of the 1954 Code, like section 322(b)(2) of the 1939 Code, limits the amount of any overpayment of tax which may be refunded even though the claim is timely filed under section 6511(a).