Administrative Prerequisites to Suit in Federal Tax Refund Litigation
By Jeffrey M. Glassman on April 22, 2025
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Jeffrey M. Glassman
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This is the second in a series of refund litigation blog posts. In this post, I focus on requirements that must be satisfied before a taxpayer can file a refund lawsuit.
These initial requirements are more than just technicalities—they are sometimes jurisdictional requirements that courts strictly enforce. Failing to meet these requirements can lead to the dismissal of a taxpayer's refund suit, regardless of the merits of their underlying claim.
As mentioned in my prior post, the total amount requested for a refund must be paid in full prior to initiating the refund lawsuit process. Assuming that has happened, the foundational step in pursuing a refund lawsuit is submitting a proper administrative refund claim to the Internal Revenue Service (IRS). This requirement is stated in the Tax Code, which provides that taxpayers must first file a claim for refund or credit with the IRS before initiating litigation. Typically, the administrative claim is filed using Form 843, titled "Claim for Refund and Request for Abatement," or through an amended return, such as Form 1040-X for individuals, Form 1120-X for corporations, or Form 941-X for employers.
Specificity in the refund claim is another vital consideration. Taxpayers are generally precluded from raising issues in litigation that were not presented in the refund claim submitted to the IRS. Consequently, taxpayers should strive to articulate all legal and factual reasons the IRS should grant the refund.
Taxpayers must also follow certain timing requirements before they filea refund lawsuit. The taxpayer must generally file their refund claim within the later of three years from the filing date of the original tax return or two years from the time the tax was paid. There are also lookback periods that can limit the amount of refund available based on taxes paid within specific periods prior to filing the claim. There are numerous exceptions to these timing rules, but the preceding description provides the basics.
Once the administrative claim is filed, taxpayers must wait a certain amount of time before they are allowed to file a lawsuit. Taxpayers can file a lawsuit only after the IRS denies their claim or after six months of no IRS action, whichever occurs first. If the IRS denies the claim, taxpayers then have two years to file their lawsuit in either federal district court or the U. S. Court of Federal Claims.
Given these stringent requirements, taxpayers should approach refund claims with careful and thoughtful attention. Properly managing this administrative stage not only secures jurisdiction in federal court but can provide a strong foundation for potential litigation. Perhaps the biggest takeaway should be that taxpayers should prepare their refund claim with litigation in mind. While the IRS often grants refund claims, in many cases the IRS simply does nothing with the claim or outright denies it. Taxpayers should be ready for both possibilities.
If you have any questions about refund litigation or any civil or criminal tax matter, you can contact me at 214-749-2417 or jglassman@meadowscollier.com.
These initial requirements are more than just technicalities—they are sometimes jurisdictional requirements that courts strictly enforce. Failing to meet these requirements can lead to the dismissal of a taxpayer's refund suit, regardless of the merits of their underlying claim.
As mentioned in my prior post, the total amount requested for a refund must be paid in full prior to initiating the refund lawsuit process. Assuming that has happened, the foundational step in pursuing a refund lawsuit is submitting a proper administrative refund claim to the Internal Revenue Service (IRS). This requirement is stated in the Tax Code, which provides that taxpayers must first file a claim for refund or credit with the IRS before initiating litigation. Typically, the administrative claim is filed using Form 843, titled "Claim for Refund and Request for Abatement," or through an amended return, such as Form 1040-X for individuals, Form 1120-X for corporations, or Form 941-X for employers.
Specificity in the refund claim is another vital consideration. Taxpayers are generally precluded from raising issues in litigation that were not presented in the refund claim submitted to the IRS. Consequently, taxpayers should strive to articulate all legal and factual reasons the IRS should grant the refund.
Taxpayers must also follow certain timing requirements before they filea refund lawsuit. The taxpayer must generally file their refund claim within the later of three years from the filing date of the original tax return or two years from the time the tax was paid. There are also lookback periods that can limit the amount of refund available based on taxes paid within specific periods prior to filing the claim. There are numerous exceptions to these timing rules, but the preceding description provides the basics.
Once the administrative claim is filed, taxpayers must wait a certain amount of time before they are allowed to file a lawsuit. Taxpayers can file a lawsuit only after the IRS denies their claim or after six months of no IRS action, whichever occurs first. If the IRS denies the claim, taxpayers then have two years to file their lawsuit in either federal district court or the U. S. Court of Federal Claims.
Given these stringent requirements, taxpayers should approach refund claims with careful and thoughtful attention. Properly managing this administrative stage not only secures jurisdiction in federal court but can provide a strong foundation for potential litigation. Perhaps the biggest takeaway should be that taxpayers should prepare their refund claim with litigation in mind. While the IRS often grants refund claims, in many cases the IRS simply does nothing with the claim or outright denies it. Taxpayers should be ready for both possibilities.
If you have any questions about refund litigation or any civil or criminal tax matter, you can contact me at 214-749-2417 or jglassman@meadowscollier.com.
