IRS Loses Couple’s Tax Return, Blames the Couple

by Bruce Givner on May 14, 2015

In a complaint filed April 30 in the US Court of Federal Claims, John and Dorothy Shea stated that the Internal Revenue Service (IRS) had erroneously denied their refund claim as untimely filed after the agency had admitted to losing the couple’s timely filed return and refused to accept a claim on a replacement return.

In 2007 the Sheas, owners of Shea Homes, a privately held homebuilding company, filed an initial return based on estimated taxable income. Due to the complex nature of their business, the Sheas filed a second, superseding return in October 2008 prior to the extended deadline. The Sheas had hoped to carry back additional net operating losses of $515,958 to their 2005 tax year and claim a refund of $146,410.

In January of 2009, the IRS informed the Sheas that it had lost the superseding return. Five days after receipt of the letter, the Sheas resubmitted the superseding return. However, the IRS later denied the refund claim as untimely filed.

As stated in the complaint, because the refund claims were filed “within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever of such period expires the later,” as required by tax code Section 6511(a), the claim was, indeed, timely filed.

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