Taha v. United States, No. 20-2061 (Fed. Cir. 2022)
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In 2002-2004, Mohamad was an Atek shareholder with no direct role in its operations. Mohamad timely 2002 and 2003 tax returns, paying the taxes due on shareholder income of $85,010 and $77,813 respectively. In 2007, Mohamad sought a refund for overpaid taxes, claiming he did not receive the full amount of reported shareholder income on which he paid taxes but received only $20,000 before Atek was shut down. He filed amended tax returns deducting the unpaid income as bad debt. The IRS maintains that it never received an amended tax return for 2003 and, consequently, there is no record of the IRS disallowing the 2003 refund claim. In 2018, the Federal Circuit affirmed the dismissal of the 2002 and 2004 refund claims but vacated the dismissal of the 2003 claim and remanded to the Claims Court the questions: whether Mohamad filed a timely 2003 claim, and, if so, whether it was timely, and whether the IRS disallowed that claim.
The Federal Circuit affirmed the Claims Court’s holding that IRC 7502, as interpreted by Treasury Regulation 301.7502–1(e)(2)(i), displaced the common-law mailbox rule for determining IRS filing dates and, alternatively, that dismissal was appropriate for failure to show that the tax refund claim was filed within the three-year limitations period, IRC 6511. The issue was not “business debt” so Mohamad was not entitled to a seven-year limitations period.
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