Steve files his return on April 1 and pays the entire amount of tax for the year at that time, $5,000. He is audited and pays the deficiency of $1,500 two years later. The maximum amount Steve may file a claim for refund for eighteen months later is
A)$6,500.
B)$5,000.
C)$1,500.
D)some other amount.

Question

Quizplus · Accepted Answer

According to the statute of limitations, a taxpayer has two years from the date of payment to file a claim for refund. In this case, Steve paid the deficiency of $1,500 two years after filing his return and paying the full tax amount. Therefore, the maximum amount Steve may file a claim for refund for eighteen months later (which is within the statute of limitations) is $1,500.

Steve Files His Return on April 1 and Pays the Entire