Statute of limitations start time for amending late filed IRS return

Thanks for the opportunity to ask this.
I late filed for 2002-2004 in Nov 2005. For 2002, 2003 and 2004, I owed the IRS. In 2005 and 2006 the IRS owed me.
I had filed late pending a dispute outcome over 2001 taxes which was finally settled in my favor with a refund Apr 2006.
The due amounts from 2002-2004 have not yet been paid to or requested by the IRS and a change to tax law in late 2007 covered a VA benefit income for which I had in 2002 and 2003 judging it as a non-taxable benefit (below link).
I understand that the 2007 tax change would apply for three prior years in a on-time filing situation
That change, if applied to my late filed 02-03 taxes results in a refund to me for both years that more than make the 2004 taxes I owe.
My question is:
Does the three year statute of limitations (to amend taxes for a refund) start on the day I filed (8 Nov 05) for those years, the same as it would for the IRS if they were going after me to collect taxes due for the same years?
Thanks So Much for your time in even considering this.
http://www.ustaxcourt.gov/InOpHistoric/Wallace.TC.WPD.pdf ROOSEVELT WALLACE, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 4637-03. Filed April 16, 2007.
http://www.kiplinger.com/features/archives/2008/04/late-tax-filing.html Late Tax-Filing • The statute of limitations for the IRS to audit your return starts at the later of the original due date or when you actually file your return. So, the sooner you file, the sooner the clock starts ticking.
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Thank you for asking. First, the staute of limitations to amend a prior-year tax return works as follows:
Section 6511 of the Internal Revenue Code (IRC) sets the following deadline to amend most tax returns. You have until the LATER of:
1) three years from the date the return was filed, or 2) two years from the date the tax was paid.
Since you indicated above that the tax due on the 2002 - 2004 returns has not been paid, all three years are still open to be amended. However, if you are claiming a refund on some or all of these years, it gets more complicated. It's one thing to say the statue of limitations is open to amend a return. But just because a return is open to be amended, it does not necessarily follow that you are eligible to receive a refund. If tax is still due for 2002 - 2004, you can amend them to reduce or remove any remaining tax due. However, unless you paid any tax for 2002 - 2004 within the last two years, the returns are statute-barred for purposes of claiming a refund.
IRS issued News Release 2007-198 (December 12, 2007) following the Tax Court's decision in the Roosevelt Wallace case. I've pasted a link to the news release below.
http://www.irs.gov/newsroom/article/0,,id 6442,00.html
About the same time, IRS issued Revenue Ruling 2007-69. Here is a link to it:
http://www.irs.gov/pub/irs-drop/rr-07-69.pdf
If you decide to amend any or all of the years about which you are asking, don't forget to sign your amended returns and enclose each one in a separate envelope. Or, better in my opinion, file them in person at your local IRS walk-in office. Take originals and your copy so the IRS reps can date stamp your copies, which you need to retain for your records.
http://www.irs.gov/localcontacts/index.html
Good luck to you.
Condor
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See
http://goliath.ecnext.com/coms2/gi_0199-1322319/SOL-on-individuals-refund-claims.html
I think example 2 applies to you
<Quote>
Example 1: Individual G made estimated tax payments of $1,000 and received an automatic extension to Aug. 16, 2004, to file her 2003 income tax return. When G filed her return on that date, she paid $200 additional tax due. On Aug. 15, 2007, she files an amended return and claims a $700 refund. Because G files the refund claim within three years of her return filing, plus the four-month extension period, she is entitled to a full refund; see Regs. Sec. 301.6511 (b)-1(b)(1)(i).
Example 2: The facts are the same as in Example 1, except that G filed her return on Nov. 1, 2004--2 1/2 months after her extension period ended--and paid $200 of additional tax on that date. On Oct. 29, 2007, G files an amended return and claims a $700 refund Although she files the refund claim within three years from the date she filed her original return, her refund is limited to $200. The $1,000 estimated tax was paid more than three years before, plus the four-month extension period.
Example 3: Individual V filed his 2003 return on April 15, 2004, and paid $500 tax. On Nov. 2, 2005, after an IRS examination of his return, V has to pay $200 in additional tax. On May 2, 2007, he files a claim for a $300 refund. V's refund is limited to the $200 paid during the two years immediately before he filed his claim; see Regs. Sec. 301.6511 (b)-l(b)(1)(ii).
</Quote>
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Let's take the earliest year - 2002. It was due April 2003. Therefore, as long as you file before April 2006, you can claim your refund and have it sent. Since you filed originally in November 2005, you met the 3 year rule for being able to have your refund actually sent. In the first 3 years after filing, one may amend the return to anything and get a refund. That closes November 2008. After that, one may amend but can only seek a refund for the amount paid in the 2 years prior to the RECEIVE date of the amended return.
Therefore, I don't see a problem. File your claims and see if they go through.
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That's not correct. The deadline to amend a 2002 return and receive a refund of prepaid credits, i.e., withholding, estimated tax payments, or earned income credit, was April 15, 2006- the original due date plus three years (this assumes no extensions were filed). He can amend up until November 2008 (the original filing date plus three years) but if he amends after April 15, 2006, he is only eligible to receive a refund of payments made within the two-year period immediately preceding the date the amended return is filed.
Condor
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