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Second Circuit: Tax refund jurisdiction of Tax Court

Second Circuit: Tax refund jurisdiction of Tax Court

The U.S. Court of Appeals for the Second Circuit today, in a case of “first impression,” addressed the jurisdiction of the U.S. Tax Court with regard to overpayments of tax pursuant to section 6512(b)(3).


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The Second Circuit reversed and remanded a 2017 decision by the Tax Court, and held that a taxpayer who has been granted a six-month extension of time to file an income tax return, but in fact who had not filed the tax return before the IRS mailed a notice of deficiency, is allowed the “look-back” period of three years under section 6512(b)(3).

The case is: Borenstein v. Commissioner, No, 17-3900 (2d Cir. April 2, 2019). Read the Second Circuit’s decision [PDF 165 KB]


The taxpayer made payments of income tax for 2012 of $112,000. The payments were deemed made on April 15, 2013. However, she did not file an income tax return for 2012 by October 15, 2013 (the six-month extended due date granted to her) nor did she file the return for 2012 during the following 22 months.

The IRS on June 19, 2015, issued a notice of deficiency for 2012. On August 29, 2015—shortly before filing her petition—the taxpayer submitted a delinquent return for 2012 that reported a tax liability of approximately $79,600.

The parties agreed that the taxpayer had for 2012 a tax liability (deficiency) of $79,600 and an overpayment of approximately $32,000. However, the IRS contended that the taxpayer was not entitled to a credit or refund of this overpayment because her tax payments were made outside the applicable “look-back” period (as linked to the date when the notice of deficiency was mailed).

The taxpayer contended that she was eligible for the three-year look-back period specified in the final sentence of section 6512(b)(3) and that she was entitled to a refund of $32,000.

The Tax Court—in a “case of first impression”—held in August 2017 that the taxpayer was not eligible for the three-year look-back period, per the final sentence of section 6512(b)(3), because the notice of deficiency was not mailed to her “during the third year after the due date (with extensions) for filing the return of tax.” Rather, the court found that because the taxpayer did not file her 2012 income tax return before the notice of deficiency was issued and because she did not pay her tax liability within two years of the mailing of the notice of deficiency, she was not entitled to a refund. 

Second Circuit

The taxpayer appealed to the Second Circuit, which today reversed and remanded the Tax Court’s decision.

The Second Circuit agreed with the taxpayer that the term “with extensions” in section 6512(b)(3) has the effect of extending by six months the “third year after the due date” and therefore that the notice of deficiency mailed 26 months after the return’s due date was mailed during the third year. Thus, this meant, according to the Second Circuit, that the Tax Court has jurisdiction to look back three years—and in this case, this look-back would allow the taxpayer to recover her tax overpayment.

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