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Incompetency can extend time for filing refunds.

Scott's father filed a return for 1984 on Scott's behalf. Scott later filed a claim for refund, claiming his father had overpaid his 1984 tax by $30,000.

Although Scott's refund claim was barred by the statute of limitations in IRC section 6511(a), Scott claimed the statutory period should be extended because he had been mentally incompetent from 1984 to 1990 due to alcoholism.

Result: For Scott. Under the U.S. Supreme Court case Irwin v. Veterans Admin. (1990), the doctrine of "equitable tolling" can extend the limitations period for refund claims. Further, although mental incompetency is not one of the grounds set forth by the Court for equitable tolling, another federal court ruled mental incompetency can toll the limitations period for refund claims. [Johnsen (E.D.N.Y, 1991)].

Scott's mental incompetency therefore could be grounds for equitable tolling. However, whether Scott was actually mentally incompetent during the six years in question, and whether alcoholism can legally give rise to mental incompetency, still must be decided at a later date.

* Scott (DC Hawaii, 1992).
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Publication:Journal of Accountancy
Article Type:Brief Article
Date:Sep 1, 1992
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