Rev. Rul. 66-118

Advice has been requested whether the limitation on the amount of a refund or credit under section 6511(b)(2)(A) of the Internal Revenue Code of 1954 is applicable in a situation where the filing of a claim was timely under section 7503 of the Code.

The taxpayer's individual income tax return for the calendar year 1958 was filed on or before April 15, 1959, the due date for filing the return. His sole source of income was salary and the amount of tax withheld exceeded the tax liability shown on the return. The overassessment was refunded on the initial processing of the return. No other action was taken by the Internal Revenue Service on the return. On April 16, 1962 (Monday), the taxpayer filed a claim for refund for the year 1958.

Section 6511(a) of the Code provides, in pertinent part, that a claim for credit or refund of an overpayment of any tax in respect of which the taxpayer is required to file must be filed by the taxpayer within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever of such periods expires the later.

Section 6511(b)(2)(A) of the Code provides that if the claim for refund was filed by the taxpayer during the 3-year period prescribed in subsection (a), the amount of the credit or refund shall not exceed the portion of the tax paid within the period, immediately preceding the filing of the claim, equal to 3 years plus the period of any extension of time for filing the return.

Section 6513(b) of the Code provides in part that for purposes of section 6511 or 6512 of the Code, any tax actually deducted and withheld at the source during any calendary year is deemed to have been paid by the recipient of the income on the 15th day of the fourth month following the close of his taxable year. A similar provision applies to taxpayers who file and pay their estimated income taxes during the taxable year.

Section 7503 of the Code provides that when the last day prescribed under authority of the internal revenue laws for performing any act falls on Saturday, Sunday, or a legal holiday, the performance of such act shall be considered timely if it is performed on the next succeeding day which is not a Saturday, Sunday, or a legal holiday.

Under the circumstances in the instant case, the claim for refund filed on Monday, April 16, 1962, was timely, having been filed within the 3-year period set forth in section 6511(a) of the Code in view of the provisions of section 7503 of the Code.

The question is then presented as to whether, notwithstanding that the filing of the claim was timely by reason of the provisions of section 7503 of the Code, the amount of refund allowable is restricted by section 6511(b) of the Code for the reason that in fact no tax was paid within the 3-year period immediately preceding the date of actual filing of the claim, the withheld tax in this case being deemed to have been paid on April 15, 1959, by virtue of section 6513(b) of the Code. Nothing in section 7503 of the Code affects the time when the tax was actually paid or is deemed to have been paid. Nevertheless, it would obviously nullify the full effectiveness of that section if the limitation of section 6511(b)(2)(A) of the Code were so applied that the refund could not be allowed under the circumstances here presented. Under the circumstances, it is considered that the effect of section 7503 of the Code in requiring that the filing `be considered timely if it is performed on the next succeeding day' is to treat the claim as if it had in fact been filed on the last day otherwise prescribed for such filing.

Accordingly, under the stated facts, the filing of the claim for refund in this case is not only deemed to have been timely by virtue of the provisions of section 7503 of the Code but to have occurred for purposes of section 6511(b) on April 15, 1962, so that section 6511(b) does not serve to restrict the amount refundable.

In view of the fact that Revenue Ruling 57-354, C.B. 1957-2, 913, was based, in part, on section 6511 of the Code prior to the amendment of such section by section 82 of the Technical Amendments Act of 1958, Public Law 85-866, C.B. 1958-3, 254, at 311, the last three paragraphs of that Revenue Ruling are hereby superseded.