Refund Claims Involving a Saturday, Sunday or Legal Holiday

A recent revenue ruling presents three scenarios to clarify the effect of Sec. 7503 on the limitations periods for refund claims involving a due date falling on a Saturday, Sunday or legal holiday.

Situation 1: X and Y timely filed their 1994 joint income tax return on Wed., March 1, 1995; the due date was Sat., April 15, 1995. On Fri., April 17, 1998, they filed a refund claim for a portion of the income taxes withheld from their wages in 1994.

To satisfy Sec. 6511(a), X and Y had to file their 1994 refund claim within three years of the date they filed their 1994 return, or two years from the time they paid the tax, whichever is later. Sec. 6513(b)(1) deems the wages withheld from income during 1994 as paid on April 15, 1995, more than two years before the April 17, 1998 refund claim; thus, the refund claim will not fall within the prescribed two-year period.

X and Ys refund claim also fails to fall within Sec. 6511(a)s three-year period. Although they filed their joint return on March 1, 1995, Sec. 6513(a) treats the return as filed on April 15, 1995. Because they filed their refund claim on Fri., April 17, 1998, two days more than three years after April 15, 1995, Sec. 6511(a) bars their claim.

Sec. 7503 does not alter this result. Sec. 7503 applies only if (1) the last day prescribed falls on a Saturday, Sunday or legal holiday and (2) the taxpayer files on the next succeeding day that is not a Saturday, Sunday or legal holiday. In this case, Sec. 7503 does not apply to the filing of the return on March 1, 1995, because that filing did not occur on the next day succeeding Sat., April 15, 1995, that was not a Saturday, Sunday or legal holiday, nor does it apply to the refund claim filing, because the last day to file the claim was Wed., April 15, 1998, not a Saturday, Sunday or legal holiday. The three-year period within which the taxpayers had to file a refund claim began immediately after the deemed filing and payment date of April 15, 1995, and expired after April 15, 1998.

Situation 2: P timely filed a request for a four-month automatic extension to file a 1997 return. The automatic extension extended the due date from Wed., April 15, 1998, until Sat., Aug. 15, 1998. However, P did not file the 1997 return until Fri., Aug. 17, 2001, three years and two days later. That return included a refund claim on income taxes withheld from wages.

The refund claim included on the 1997 return filed Fri., Aug. 17, 2001, is timely; see Rev. Rul. 76-511. Sec. 6513(b)(1), however, deems the payment of the tax to which the refund claim relates to have occurred on April 15, 1998, which is beyond the period of three years plus the four-month extension immediately preceding Aug. 17, 2001, the refund claim filing date. Thus, although the refund claim was timely, Sec. 6511(b)(2)(A) specifically bars allowance of the refund.

Sec. 7503 has the effect of an extension only when a taxpayer performs an act on the next succeeding day that is not a Saturday, Sunday, or legal holiday after a Saturday, Sunday, or legal holiday that would otherwise be the last day prescribed for performing the act. Because P did not file a return on Mon., Aug. 17, 1998, P does not enjoy the benefit of an extension from Sat., Aug. 15, 1998, to the following Mon., Aug. 17, 1998.

Situation 3: A filed a 1994 return on Mon., April 17, 1995. On Fri., April 17, 1998, A filed a refund claim for income taxes withheld from wages during the 1994 tax year.

As April 17, 1998, refund claim falls within the Sec. 6511(a) three-year limitations period, because A filed the refund claim within three years of filing the return. Sec. 6511(b)(2)(A) also allows payment of the refund claim in full. Sec. 6511(b)(2)(A) permits a refund of taxes paid within the period immediately preceding the filing of the refund claim equal to three years, plus any extensions of time for filing the return.

Because the otherwise applicable due date of the return fell on Sat., April 15, 1995, and A filed on the next succeeding day that was not a Saturday, Sunday or legal holiday, Sec. 7503 extended the due date to Mon., April 17, 1995. Thus, taxes deemed paid under Sec. 6513(6)(1) on April 15, 1995, were paid within the period of three years plus extensions immediately preceding the refund claim.

Rev. Rul. 2003-41, IRB 2003-17, 814