IRS Will Now Give You More Time To Make Tax Refund Claims
Written by
David Nadelle
Edited by
Nicholas Morine
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The 2023 tax season officially started on January 23. For taxpayers who haven’t requested a filing extension, who are serving in the military abroad or who don’t reside in a recognized disaster area (Alabama, California and Georgia), the season ends on “Tax Day,” April 18.
However, certain taxpayers who took advantage of the postponed filing deadlines due to the COVID-19 pandemic will have more time to make tax refunds claims, according to the Internal Revenue Service (IRS).
Following a recommendation to Congress from the National Taxpayer Advocate’s (NTA) Erin Collins, the IRS announced it will amend the “lookback period” to allow tax refunds for certain taxpayers who would have otherwise been denied past-year claims.
In its Notice 2023-21, the IRS discussed discrepancies between dates “for filing a claim for credit or refund and the three-year lookback period caused by postponing certain filing deadlines for filing seasons 2020 and 2021,” per the NTA.
“This notice provides relief by disregarding the period beginning on April 15, 2020, and ending on July 15, 2020, in determining the beginning of the lookback period,” the notice reads.
In order to receive a tax refund, any tax payments must be paid within a lookback period of three years, plus any time given as an extension. As a result of the pandemic, the IRS postponed filing deadlines to Jul. 15 in 2020 and to May 17 in 2021.
But, unlike typical tax filing extensions, these pandemic postponements didn’t address extending lookback periods. The result is that many taxpayers may fall under the false assumption that they have more time to file than allowed.
For example, if a taxpayer used a postponement to file taxes up to Jul. 15, 2020, they would likely expect to have three years from that date to file a refund claim. Given the IRS amendment to the lookback period, that taxpayer now has the ability to enjoy the full lookback period, and they must file by Jul. 15, 2023, to take advantage of such.
Despite calling for permanent reform for disaster relief postponements or similar circumstances in the future, Collins welcomed the lookback period amendment by the IRS. Writing on the National Taxpayer Advocate blog, Collins stated: “Taxpayers will never know this was a potential problem as the IRS did the right thing and proactively fixed the lookback period to eliminate challenges and refund denials for taxpayers.”
“Without IRS intervention, any claims for credit or refund filed during the postponed period three years later that included withholding or estimated taxes would have been denied because the withheld amount(s) would have been credited to the taxpayer’s account as of April 15, outside the three-year lookback period,” she added.
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