New Revenue Ruling 2020-8 Helps Taxpayers Seek COVID-19 Tax Refund Claims

By and on April 23, 2020

Recently, in Revenue Ruling 2020-8, the Internal Revenue Service (IRS) announced that it was suspending Revenue Ruling 71-533, which had addressed the interaction of two Internal Revenue Code (IRC) provisions regarding limitations periods on refund claims, pending reconsideration of the holding of the earlier Revenue Ruling.

Under IRC section 6511(d)(2)(A), a taxpayer generally must make a refund claim relating to an overpayment attributable to a net operating loss (NOL) carryback no later than three years after the taxable year in which the NOL was generated. Under IRC section 6511(d)(3)(A), a taxpayer generally must make a refund claim relating to an overpayment attributable to a foreign tax credit carryback no later than ten years after the taxable year in which the foreign taxes were paid.

Revenue Ruling 71-533 had addressed a situation that implicated both of these provisions. Specifically, the taxpayer at issue in the ruling had incurred a NOL in 1969, which it carried back to 1966. After application of the NOL, the taxpayer had excess foreign tax credits available for 1966, which it then carried back to 1964. The ruling held that the ten-year limitations period in IRC section 6511(d)(3)(A) applied to claims for refund with respect to the 1964 overpayment.

In Revenue Ruling 2020-8, the IRS noted that, even though the fact pattern in Revenue Ruling 71-533 involved both a NOL carryback and a foreign tax credit carryback, the ruling did not consider whether IRC section 6511(d)(2)(A) should apply in lieu of IRC section 6511(d)(3)(A). Therefore, the IRS stated that it was suspending Revenue Ruling 71-533 pending reconsideration of its ruling. However, the IRS also stated that this suspension would not be applied adversely to refund claims properly filed within the IRC section 6511(d)(3)(A) limitations period in accordance with Revenue Ruling 71-533 during the period in which the ruling’s holding is being reconsidered.

Practice Point: Revenue Ruling 2020-8 is particularly important to taxpayers seeking refunds under the special COVID-19 rules. We discussed those refunds here. The IRS is trying to do everything it can to facilitate getting relief to taxpayers.

Kevin Spencer
Kevin Spencer focuses his practice on tax controversy issues. Kevin represents clients in complicated tax disputes in court and before the Internal Revenue Service (IRS) at the IRS Appeals and Examination divisions. In addition to his tax controversy practice, Kevin has broad experience advising clients on various tax issues, including tax accounting, employment and reasonable compensation, civil and criminal tax penalties, IRS procedures, reportable transactions and tax shelters, renewable energy, state and local tax, and private client matters. After earning his Master of Tax degree, Kevin had the privilege to clerk for the Honorable Robert P. Ruwe on the US Tax Court. Read Kevin Spencer's full bio.

Le Chen
Le Chen focuses his practice on US and international tax matters. Read Le Chen's full bio.




jd supra readers choice top firm 2023 badge