The Federal Circuit majority found the refund claim by this individual (an Italian citizen who never lived or worked in the United States) was thus barred by the statute of limitations under section 6511.
A dissenting opinion was filed.
Read the Federal Circuit’s decision [PDF 92 KB]
An individual—a citizen of Italy who never lived or worked in the United States—was employed by a U.S. company in Italy, Brazil, Argentina, and the Dominican Republic for over 35 years.
In November 2003, the individual chose to participate in the employer’s voluntary separation plan and was awarded a gross separation payment of over $247,000.
Over two distributions in March and August 2004, the employer withheld over $70,000 that included U.S. income tax withholding, Social Security tax, and Medicare tax—even though the individual had no apparent U.S. tax liability because he never lived or worked in the United States.
In March 2009, the individual filed a nonresident alien income tax return for the 2004 tax year, seeking a refund from the IRS of all withheld taxes. The IRS denied the refund request on the basis that the claim was filed beyond the three-year limitations period (i.e., within three years of the April 15, 2005 filing date).
Eventually, the individual initiated refund litigation action before the U.S. Court of Federal Claims. According to his compliant, the three-year period did not apply because he was not seeking a refund of a tax overpayment, but correction of an erroneous withholding and, thus, that his circumstances were not within the scope of the three-year look-back provision of section 6511(b)(2)(A).
The claims court rejected this position and denied the refund because the refund claim was not made within the three-year period. The court found the amounts withheld and remitted to the IRS by the employer in 2004 were deemed paid on April 15, 2005, and that a refund claim must have been filed within three years of the “deemed paid” date.
Today, the Federal Circuit majority affirmed. The dissenting opinion found the majority’s conclusion to be an “unjust result.”