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Timely tax filing is crucial

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If a tax refund claim is denied, the taxpayer may file a refund lawsuit, within two years of the date the IRS mails the disallowance notice. In one case, a corporation received a refund that should have included (but didn’t) substantial interest due to the lateness of the refund. The corporation then filed a refund suit to recover the interest, but not within the two-year limit. The U.S. District Court rejected the claim, stating that, outside of the two-year limit, the court lacked jurisdiction.

Court: Form 1099 wasn’t fraudulently filed.

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In a complex dispute between two businessmen, one (the payor) wrote a check to the other for the amount he believed was owed. The payee didn’t cash it. The payor filed a Form 1099 with the IRS for the amount and sent a copy to the payee. A U.S. District Court held the 1099 filing was fraudulent because the check wasn’t cashed. But the 7th Circuit Court of Appeals reversed the decision, ruling that, because the payee never communicated a rejection of the check, the payor wasn’t willfully fraudulent. (3/16/17, 2017-542)