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collection of a specific deficiency is not the same as agreeing
that the deficiency agreed to is accurate. A taxpayer who signs
the form may later claim a refund after paying. But he gives up
the right to come to Tax Court: “If you later file a claim and
the Service disallows it, you may file suit for refund in a
district court or in the United States Claims Court, but you may
not file a petition with the United States Tax Court.” Just to
make sure that point is clear, the form also states--directly
above the signature line--“I understand that by signing this
waiver, I will not be able to contest these years in the United
States Tax Court, unless additional deficiencies are determined
for these years.”
The Commissioner assessed the tax as agreed, but the
Nicholses never paid because they learned later in 2001 that one
of their businesses had produced net operating losses (NOLs) for
the tax years 1995 and 1997. This spurred them to file an
amended 1994 tax return (Form 1040X) in December 2002, claiming
these NOLs as deductions that they could carry back to the 1994
tax year. The IRS treated their 1040X as a refund claim and
rejected it as untimely.2 The filing and rejection of a Form
1040X is often the prelude to a refund action, but the Nicholses
2 The rejection letter stated that no credit or refund would
be allowed for a claim filed more than three years after the due
date of the returns which established the NOLs; i.e., the 1995
and 1997 tax returns.
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Last modified: May 25, 2011