Questions and Answers

Identifying Information:Filing of amended tax returns, for a year closed by statute of limitations, to establish a business and job development credit.
Tax Type:Corporate Income Tax; Individual Income Tax
Brief Description:Filing of amended tax returns, for a year closed by statute of limitations, to establish a business and job development credit.
Keywords:
Approval Date:01/06/2006



Body:
Office of Policy and Research

January 6, 2006




Question: May a taxpayer amend a tax return for a year that is closed by the statute of limitations to establish an income tax credit in order to carry the credit forward for use in an open year?

Answer: A taxpayer may amend a return for a year that is closed by the statute of limitations in order to establish an income tax credit that may be carried forward for use in an open year. To establish the credit for the closed year, the taxpayer must show that the qualifications have been met by completing the applicable credit schedule with appropriate documentation and submitting with the applicable income tax return. Once a credit is established for a closed year, any credit remaining from that closed year may be carried forward to each succeeding year as long as the taxpayer has met the necessary qualifications. Any carryover shall be applied against each closed year’s tax liability until the oldest year that is open for purposes of the statute of limitations is reached. For that year, the Department will issue a refund or credit based on the amended return being filed, provided that a credit remains after having applied the carryforward to each preceding closed year’s tax liability. The Department will not issue a refund for any years that are closed by the statute of limitations. If the necessary qualifications for an income tax credit are not met at any time during the carryforward period, the credit shall end.

Discussion: K.S.A. 79-3230(a) provides in part:

K.S.A. 79-3230(c) provides in part:
These two limitation provisions limit the Department’s authority to assess income tax and the taxpayer’s ability to claim refunds or credits for years that are outside the period fixed by the statutes. Neither statute prohibits the Department from accepting an amended return for a closed year. Courts from other jurisdictions have recognized this principal: “The fact that a statute may bar an assessment for taxes or a claim for refund after a certain period does not mean that the administrative agency or the courts must ignore the facts establishing the amount of tax or refund owing. Taxpayers as well as the government may rely upon these principles.” Smurfit Newsprint Corporation, v. Department of Revenue, Or. Tax (Case No. 4298, Dec. 23, 1998); Springfield Street Railway Co. v. The United States, 312 F.2d 754, 759 (USCC 1963); Hill v. Commissioner, 95 TC 437 (1990).






Date Composed: 06/29/1999 Date Modified: 01/06/2006