IRS lengthens lookback period for refund claims

The Internal Revenue Service is giving taxpayers more time to file tax refund claims for tax returns they filed earlier in the pandemic.

In Notice 2023-21, the IRS said Monday it’s lengthening the lookback period for refund claims for returns with due dates that were postponed by two earlier notices in 2020 and 2021, Notice 2020-23 and Notice 2021-21. 

In response to COVID-19, the IRS issued those two notices, operating under a section of the Tax Code that gives the IRS the authority to postpone certain deadlines in case of federally declared disasters. Notice 2020-23 and Notice 2021-21 postponed certain tax return filing due dates, but neither of the notices lengthened the lookback period for refund claims for such returns under Section 6511(b)(2)(A) of the Tax Code, the limitation period on filing a claim for a credit or refund of any tax overpayment. Therefore, some payments that taxpayers made —  including estimated and withheld income taxes deemed paid on April 15 of each year for calendar-year taxpayers — will fall outside of the lookback period if taxpayers filed their returns after April 15.  If the payments fall outside of the lookback period, then, despite filing a timely refund claim, a taxpayer can’t be refunded those payments. 

Using the Treasury Secretary’s disaster relief authority under Section 7508A(a) of the Tax Code, the new notice disregards the periods from April 15, 2020 to July 15, 2020, and from April 15, 2021 to May 17, 2021, in determining the beginning of the lookback period to align the lookback periods with the postponed return filing due dates.

The new notice is expected to appear in the IRS’s Internal Revenue Bulletin 2023-11, dated March 13, 2023.