Rev. Rul. 74-580

Advice has been requested concerning whether there can be a refund of a payment of tax that was assessed and paid after the expiration of the period of limitations on assessment, as provided in section 6501 of the Internal Revenue Code of 1954.

Section 6401(a) of the Code provides that the term "overpayment" shall include the payment of any part of the tax assessed or collected after the expiration of the applicable period of limitation.

Section 6402(a) of the Code provides in the case of any overpayment, the Secretary or his delegate, within the applicable period of limitations, may credit the amount of such overpayment, including any interest allowed thereon, against any liability in respect of an internal revenue tax on the part of the person who made the overpayment and shall refund any balance to such person.

Section 6501 of the Code provides, in part, that taxes imposed by the Code shall be assessed within three years after the date the return was filed, unless prior to the expiration of this period a written agreement between the Commissioner and the taxpayer had been executed pursuant to section 6501(c)(4) to extend the assessment period.

Section 6511 of the Code provides, in part, that a claim for credit or refund of an overpayment of any tax imposed by the Code in respect of which tax the taxpayer is required to file a return shall be filed by the taxpayer within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever of such periods expires the later.

Senate Report No. 960, 70th Cong., 1st Sess. (1928), 1939-1 (Part 2) C.B. 409 at 438, states that section 607 of the Revenue Act of 1928 (the origin of sections 6401 and 6402 of the Internal Revenue Code of 1954) provides that regardless of the correct tax liability, any payment made pursuant to an assessment after the expiration of the period of limitations on assessment shall be an overpayment and is to be credited or refunded the same as any other overpayment. It is immaterial whether the payment was voluntary or involuntary.

In the case of Elmer M. Melahn, 9 T.C. 769 (1947), the court held that a waiver must be executed before the expiration of the period of limitations.

A payment of tax and interest on an assessment made after the expiration of the period of limitations on assessment does not operate as a waiver of the period of limitations on assessment, since a waiver must be effected by a written agreement between the Commissioner and the taxpayer and executed prior to the expiration of the period of limitations on assessment. Any payment of tax that was assessed and paid after the expiration of the period of limitations on assessment constitutes an overpayment under section 6401(a) of the Code which should be refunded under section 6402(a) if the taxpayer has filed a timely claim for refund in accordance with section 6511(a).

Accordingly, a payment of tax that was assessed and paid after the expiration of the period of limitations on assessment, as provided in section 6501 of the Code, can be refunded, if within 2 years after payment a claim for refund is filed.

Based on the above, the Service will no longer follow Thompson v. United States, 71-2 U.S.T.C. 9549 (E.D. Mich. 1971) in which the court held that voluntary tax payments made after the expiration of the period of limitations for assessment effectively "waived" that statute and precluded the voluntary payments from being refundable overpayments under section 6401(a) of the Code.