Overpayment SOL.

In Bruce L. Brosi, 120 TC No. 2 (2003), the Tax Court held that a taxpayer did not qualify for suspension of the refund statute of limitations (SOL) on account of financial disability, when his claim for a suspension was based on caring for his disabled mother.

In February 2001, the IRS issued a deficiency notice to the taxpayer for failure to file his 1996 return. In May 22, 2001, he petitioned the Tax Court, seeking a redetermination for 1996, and filed Form 1040 in July 2002 with the IRS Appeals Office. The return showed that his income tax withholding exceeded his tax liability by $8,260.

The IRS argued that the Tax Court had to dismiss the case; it lacked jurisdiction because the SOL had expired The taxpayer claimed that Sec. 6511(h) suspended the SOL.

The Tax Court noted that Sec. 6512 grants it limited jurisdiction to determine and award overpayments to taxpayers; any such refund is restricted under Sec. 6512(b)(3) according to when the overpayment was made. In this case, the taxpayer was deemed under Sec. 6513(b)(1) to have paid his taxes withheld during 1996 on April 15, 1997. The deficiency notice was mailed before he filed his 1996 return. Based on these undisputed facts, the court concluded that the taxpayer was not entitled to a refund under Sec. 6511(b), unless the running of the SOL was suspended.

Sec. 6511(h)(2) suspends the SOL for any period of an individual's life during which he is financially disabled (i.e., unable to manage his financial affairs because of a medically determinable mental or physical impairment that can be expected to result in death, or has lasted (or can be expected to last) for a continuous period of not less than 12 months).

The taxpayer argued that his failure to file was a result of his caring for his mother while being employed as an airline pilot. He said that he was his mother's primary healthcare provider for four years, starting in 1996, and had traveled weekly from Pennsylvania to his parents' home in Illinois to care for his mother for four days and to work full time the rest of the week.

While the Tax Court sympathized with the taxpayer, it stated that those types of problems are not covered by Sec. 6511(h) and dismissed the case. (For more information on Sec. 6511(h), see Grooms, Tax Practice Management, "SOL on Tax Refunds" p. 163, this issue.)