Rev. Rul. 68-150

Advice has been requested whether the special ten-year period of limitation provided by section 6511(d)(3)(A) of the Internal Revenue Code of 1954 is applicable only to claims for credit or refund based on the payment of additional foreign taxes or whether it is also applicable to claims filed under the circumstances described below.

The taxpayer, in reviewing the foreign tax credits he had taken on his income tax returns in previous years, discovered an error in the computation of the credit in one year because he had used the wrong rate of foreign currency exchange in computing the foreign tax. In another year he had failed to include additional creditable foreign taxes in the computation of the credit. The taxpayer filed claims for refund after the expiration of the three-year period of limitation provided by section 6511(a) of the Code, but within the ten-year period provided by section 6511(d)(3)(A).

Section 6511(d)(3)(A) of the Code provides:

(A) SPECIAL PERIOD OF LIMITATION WITH RESPECT TO FOREIGN TAXES PAID OR ACCRUED.-If the claim for credit or refund relates to an overpayment attributable to any taxes paid or accrued to any foreign country or to any possession of the United States for which credit is allowed against the tax imposed by subtitle A in accordance with the provisions of section 901 or the provisions of any treaty to which the United States is a party in lieu of the 3-year period of limitation prescribed in subsection (a), the period shall be 10 years from the date prescribed by law for filing the return for the year with respect to which the claim is made.

Revenue Ruling 63-248, C.B. 1963-2, 623, in discussing whether a taxpayer has a right to make or change the election to claim foreign taxes as a deduction in computing taxable income or as a credit against the Federal income tax within the ten-year period, states that the ten-year statute `is available only for the purposes of determining the size of the credit and not for the purposes of making a choice between a deduction or credit.' This statement is based on House Report No. 1358, Eighty-sixth Congress, C.B. 1960-2, 865 at 869.

It follows that the ten-year period of limitation provided by section 6511(d)(3)(A) of the Code is applicable to claims for credit or refund based on the correction of mathematical errors in the computation of taxes subject to the provisions of that section, the discovery of creditable taxes which were not reported on the income tax return when filed, or any other adjustments to the size of the foreign tax credit, including those due to the payment of additional foreign taxes. The provisions of section 6511(d)(3)(A) of the Code are not limited to overpayments resulting from the payment of additional foreign taxes.

In view of the foregoing, it is held that the claims for refund in the instant case were timely filed.