In Libitzky v. United States, ___ F.4th ___. 2024 U.S. App. LEXIS 19477 (9th Cir. 2024), CA9 here & GS here, the panel rejected the Libitzkys’ refund suit for failure to meet the refund suit limitations periods in § 6511, here. Many readers of this blog will likely already have some familiarity with the time limitations for refund suits and know that application of the time limitations can be complex. I cover the subject in the Federal Tax Procedure (2024 Practitioner Ed.), pp. 226-230 and Federal Tax Procedure (2024 Student Ed.), pp. 157-161, available free here. The only difference between the Practitioner Edition and the Student Edition is the former has footnotes and the latter does not. I have made significant revisions to these pages in my 2025 Working Draft (to be published in July or August 2025), particularly adding Example 8a inspired by Libitzky. The revisions as of the posting of this blog are in redline format here (Practitioner Edition). (Please note that a number of changes are nonsubstantive, such as changing April 15 of Year 02 to 4/15/02.
I have had considerable difficulty understanding the Libitzky opinion. The discussion I present here will likely reflect the difficulty. So, I have decided to first cover the applicable “law” as I understand it. I will then state key representative “facts” of Libitzky through Example 8a. That is the approach I take in the Book—to first present the law and then present various fact scenarios (Examples to discuss the complexities in the law). In presenting the law, I will copy and paste from the 2025 Practitioner Edition working draft retaining the redlines showing changes from the 2024 editions. I include only the portion related to Libitzky. I only include footnotes where they are needed for the discussion of Libitzky. (The numbering of the footnotes are not the same as in the Book.)
There are two statutes of limitation on taxpayers claiming tax refunds.
First, there is a statute of limitations for filing the claim for refund. A claim for refund must be filed within three years from the date the return was filed or two years from the date the tax was paid, whichever is later, and, if no return is filed, within two years from the date of payment. § 6511(a). This is sometimes called the refund claim limitation period. This statute of limitations has traditionally been read literally, requiring filing within the stated periods with no equitable relief; so read literally, the statute of limitations is said to be jurisdictional for the predicate condition in § 7422(a) to file a suit for refund. Also, if read literally, the statute means that a taxpayer can file a return claiming a refund 40 years late and qualify under this first rule. I hope readers will instinctively say something must be missing here, for statutes of limitations do not normally allow such lengthy lapses before the claim must be pursued. The answer to that concern is in the second rule, a limitation on the amount of tax that can be refunded. n1
n1 Omohundro v. United States, 300 F.3d 1065, 1068-1069 (9th Cir. 2002)); Weisbart v. Treasury, (2d Cir. 2000); and Rev. Rul. 76-511, 1976-2 C.B. 428. The 40 years late example is inspired by Oropallo v. United States, 994 F.2d 25, 30 (1st Cir. 1993) (noting that the limitation might be “illusory” for late filed returns because a taxpayer could “file a tax return 40 years late and still have 3 additional years in which to file a claim for refund;” the Second Circuit in Weisbart said that “Nevertheless” this construction makes sense, noting that the purpose of § 6511(a) “is not to bar stale refund claims, but to ensure that a taxpayer give the IRS notice of such claims before suing in federal court.”) But see Libitzky v. United States, ___ F.4th ___, ___ (9th Cir. 2024) (stating that “both the limitation period [in § 6511(a) and the look-back period in § 6511(b) (discussed immediately below the text above)] are shorter and less generous for taxpayers who do not timely file their tax returns.” (Bold-face supplied by JAT)). In other words, the Libitzky Court would not accept the conclusion that a refund claim return filed, say, 4 or 40 years after the return due date (meaning that the return is not timely filed) can avoid the two-year limitations period in § 6511(a). My concern with that notion is the limitations periods in § 6511(a) are whichever is later which, as I read the syntax of § 6511(a) would permit the return claiming a refund filed after the two year period to qualify under the first rule (3-years from the time the return was filed), thus mooting the applicability of the 2-year period in § 6511(a). For reasons that I note below, however, Libitzky may have been correct under § 6511(b) because of its distinction between a refund claim and a filed return. See below Example 8a on p. 233.
Second, there is a statute of limitations on the amount of tax that can be refunded if the claim is timely under the first rule. The IRS may only refund the amount of tax paid either (i) within the three year period prescribed in § 6511(a) plus the period of any extension, or (ii), if the claim was not filed in such 3-year period, within two years immediately preceding the date of the claim. § 6511(b)(2). This is called the “lookback” rule or some variant.I hope readers can see that § 6511(b)’s lookback rule amount limitation will deny the refund in the substantially delinquent filing claiming a refund–such as the 40 year delinquent filing I noted above that qualified under the limitations period in § 6511(a).
This may be a bit confusing. I provide examples to illustrate. Please note that the convention I use in developing the examples is to treat the applicable return year as Year 01, so that the return due date is 4/15/02. That is not the same as April 15, 2002 but the dates are used only to illustrate with a tax return for Year 01 (not 2001) and key dates that would follow from that return year.
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Example 8a: n2 Similar to Example 8, except with the following key facts: (i) tax year is 01 with a return due date of 4/15/02; (ii) the taxpayer prepaid by combination of estimated tax and withholding tax deemed paid on 4/15/02; (iii) taxpayer filed for extension which gave him until 10/15/02 to file a timely Year 01 return, (iv) the taxpayer did not file a timely return by the extended due date, (v) for purposes of the § 6511(b)(2)(A) 3-year limitations period, the Year 01 extension gave the taxpayer until 10/15/05 to file a timely refund claim; and (vi) on 1/6/06, the taxpayer files the original return claiming a refund. Based on these facts, the taxpayer does not meet the § 6511(b)(2)(A) 3-year limitations period. Now, add (vii) the confluence of certain events in 9/04 involving contacts between the IRS and the taxpayer are an informal claim for refund, with the later Year 01 original return claiming a refund filed 1/6/06 then perfecting the informal claim. (See discussion of the informal refund claim doctrine beginning on p. 239.) n3 That delinquent return meets the § 6511(a) 3-year rule because the return and the refund claim are filed contemporaneously.n4 But, does the delinquent original return filing on 1/6/06 coupled with the informal claim in 9/04 meet § 6511(b) limitation on amount of refund to taxes paid in the two-year lookback period that limits the refund if no return is filed in that two-year period ending 4/15/04? One Circuit Court held no, since even though the informal claim and perfection related to the date of the informal claim (9/04), at the conclusion of the two-year lookback period (4/15/04), no return had been filed making that two-year lookback period applicable to deny the refund.n5
n2 This Example 8a is the fact pattern in Libitzky v. United States, ___ F.4th ___ (9th Cir. 2024).
n3 There is perhaps an issue of whether (i) the informal claim doctrine tolls the statute of limitations so that the later filed perfected refund return is timely on the date the return is filed or (ii) the later filed perfected refund return relates back to the date of the informal claim (in which case there is no tolling). For example, if in the Libitzky fact pattern illustrated in Example 8a, the return claiming the refund had actually been filed during the 2-3 year period after the return due date of 4/15/02, I think the claim for refund would clear both the claim limitations period in § 6511(a) and the amount limitations period in § 6511(b) because extensions are included in the 3-year calculation. In the Libitzky fact pattern and in Example 8a, the return was not filed during the 2-3 year period and the issue was whether the informal claim doctrine could treat the later filed refund claim return as having been filed on the date of the informal claim which was in the 2-3 year period. Libitzky seems to treat the informal claim as being different than the return claiming the refund that subsequently perfected the informal claim, so that while the claim was filed (or could be considered filed) 9/04 within the 2-3 year period, the return was not deemed filed in the 2-3 year period.
n4 Libitzky v. United States, ___ F.4th ___ (9th Cir. 2024) seems to hold that this fact pattern would not meet § 6511(a)’s limitation period, but I think that is clearly wrong because a very late filed return–even 40 years late–claiming a refund will meet the 3-year period for filing the claim which is tied to the return filing date whether timely or untimely. See discussion at p. 229 n. 1047.
n5 Libitzky v. United States, ___ F.4th ___ (9th Cir. 2024). I haven’t articulated for myself a rationale that I deem satisfactory for why Libitzky is correct or incorrect in its bottom-line holding that the Libitzkys do not get the refund they claimed. To me, the problem is that the 2-year lookback rule in § 6511(b)(2)(B) should not apply because the 3-year lookback period in § 6511(b)(2)(A) may apply if the informal refund claim date is deemed the date of filing of the delinquent original return which was the format for the perfected claim required for the operation of the informal claim doctrine.
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