Informal refund claim may matter for identity-theft levy repayment

Plain-English summary

Chief Counsel advised on repaying levy proceeds to an identity-theft victim when the normal refund claim deadline might be a problem. The applicable Internal Revenue Manual provision says repayment falls under ordinary refund statute expiration procedures and specifically addresses a person without a filing obligation. A separate manual provision concerning Section 7654 cover overs did not apply to a Section 6402 refund of an overpayment. Chief Counsel noted that courts recognize informal refund claims even when the formal regulatory requirements were not met. The IRS could therefore consider whether its communication records showed that it knew or should have known the person was requesting a refund.

Ruling snapshot

• Question: Could communications with the IRS constitute an informal refund claim for levy proceeds taken because of identity theft?
• Outcome: Advice given; the IRS should evaluate whether its records establish a timely informal refund claim.
• Key authorities: IRC §§ 6402 and 7654; United States v. Kales, 314 U.S. 186 (1941); IRM 5.19.21.2.3.1 and 21.8.1.6.9

Full text (IRS public release)

ID:      CCA_2018022014165618
UILC:    6402.00-00

Number: 201823005
Release Date: 6/8/2018
From:
Sent: Tuesday, February 20, 2018 2:16:56 PM
To:
Cc:
Bcc:
Subject: RE: Request for Advice re Barred Refund for ID Theft Victim


Per discussion:

IRM 5.19.21.2.3.1 provides guidance on repaying amounts to a person when that
person’s property was levied upon by the Service as a result of identity theft. Note that,
per paragraph (3)(b), this IRM provision specifically addresses a person who does not
have a filing obligation. Paragraph (2) explicitly provides that return of the levy
proceeds here “falls under normal payment RSED procedures and time frames.”

You have inquired about language at IRM 21.8.1.6.9. Please note that this provision is
addressing section a 7654 “cover over”, not a section 6402 refund of an
overpayment. Section 7654 cover over does not appear to be applicable to this
situation.

The regulations under section 6402 set forth the formal requirements for filing a refund
claim. It has long been recognized by the courts, however, that an informal claim for
refund may suffice. See, e.g., United States v. Kales, 314 U.S. 186, 194 (1941). If the
Service believes the taxpayer could successfully show, based on records of
communication with the Service, that the Service knew or should have known that the
taxpayer was requesting a refund, it would be appropriate for the Service to consider
those facts in its determination of whether there has been any informal claim for
refund.




Please do not hesitate to contact me with any questions or concerns.