Terry files his return on March 31. The return shows taxes of $6,000, and Terry pays this entire amount when he files his return. By what time must he file a claim of refund?
A)the later of two years from the return filing or three years from the date the tax is paid
B)the later of three years from the return due date or two years from the date the tax is paid
C)two years from the payment of tax date, if the IRS mails a notice of deficiency in the third year following the due date of the return
D)four years from the payment of tax date, if the IRS mails a notice of deficiency

Question

Quizplus · Accepted Answer

Terry has paid the entire amount of taxes owed when he filed his return. Therefore, he has two options for claiming a refund: (1) the later of three years from the return due date or (2) two years from the date the tax is paid. Option (1) does not apply since Terry filed his return on March 31, so the return due date was April 15 of that year, which was less than three years ago. Option (2) is applicable since Terry paid the taxes when he filed his return, which was less than two years ago. Therefore, Terry must file a claim of refund by the later of three years from the return due date or two years from the date the tax is paid, which is the answer in choice (B).

Terry Files His Return on March 31