Donald and Leticia Polk v. US, US Federal Court of Claims, No. 1:22-CV-00896 (Aug. 18, 2023)
This post is part of our series on recent important tax cases that may be of interest to accounting, tax, and finance professionals. For more like this, see our Federal Tax Update and California Federal Tax Update, which offer a comprehensive analysis of the year’s most pivotal tax developments.
Ten-year Statute of Limitations Applies to Foreign Tax Credit (Donald and Leticia Polk v. US, US Federal Court of Claims, No. 1:22-CV-00896 (Aug. 18, 2023))
Did you know the SOL for a foreign tax credit refund is 10 years? Apparently, neither did the IRS. Donald and Leticia Polk did not file a 2008 tax return. In 2010, the IRS prepared a 2008 substitute income tax return for the Polks that resulted in an assessment of taxes in the amount of $156,796, as well as late filing and payment penalties and interest. The IRS took payments from refunds to the taxpayers on subsequent returns. The Polks filed a claim for a refund. The claim was made more than three years after the due date of the return and more than 2 years after the payment of tax (§6511(a)). Part of the amount due was from a foreign tax credit disallowed by the IRS under the general statute of limitations.
Special period of limitation with respect to foreign taxes paid or accrued. If the claim for credit or refund relates to an overpayment attributable to any taxes paid or accrued to any foreign country or to any possession of the United States for which credit is allowed against the tax, in lieu of the 3-year period of limitation, the period is 10 years from the due date for filing the return for the