Dealing with the IRS can be a dangerous labyrinth for the untrained taxpayer or their non-tax advisors. In a recent Federal court case, E. John Rewwer, et al. v. United States, the taxpayers filed the wrong form claiming a refund and both the IRS and the DOJ Tax Division cried foul and tried to dismiss their case. Fortunately, the court found that the taxpayer’s filing met the “informal refund claim” requirements and denied the government’s motion.
The taxpayers received an unfavorable audit determination increasing their tax liabilities for 2007, 2008 and 2009. All amounts were paid and the taxpayers then filed IRS Form 843 (Claim for Refund and Request for Abatement) for all three years. The taxpayer’s attorney, not the taxpayers, signed the requests for refund but didn’t include IRS Form 2848 (Power of Attorney). The IRS allowed the 2008 claim but then denied the 2007 and 2009 claims, so the taxpayers appealed within the IRS. A taxpayer generally has two years from the date of the determination to file a refund suit in federal district court. The taxpayers didn’t hear from IRS Appeals, and the two years was expiring, so they filed their refund suit.