Tax Law

Filing an IRC Section 254 Protective Claim for Refund

Generally, a deduction cannot be taken for a claim against the estate while it remains a potential or unmatured claim. Claims that later mature can be deducted on a timely claim for a refund. A protective claim for a refund may be filed pursuant to Treasury Regulation Section 20.2053-1(d)(5) to preserve the estate's right to claim a refund for claims that mature after the statute of limitations period for filing a claim for a refund has expired. To clarify the regulations, the IRS has now issued Revenue Procedure 2011-48, which provides procedures for filing an IRC Section 2053 protective claim for refund.   The Revenue Procedure provides guidance on filing a protective claim for refund and the procedures for notifying the IRS to consider an IRC Section 2053 protective claim for refund.

Revenue Procedure 2011-48, Section 4 provides guidance as to the time period for filing a protective claim, requirements for filing a claim, who can file the claim, the methods for filing a claim and the information required for filing a claim.   Revenue Procedure 2011-48, Section 5 sets for the procedures for notifying the IRS that a claim for refund is ready for review.  This section provides procedures as to the time period for providing notification, the methods for providing this notification, and who can represent the estate in pursuit of a claim for refund.

For taxpayers who elect to file an IRC Section 2053 protective claim they should be very fastidious in following the procedures outlined in Revenue Procedure 2011-48.  Currently, there is no requirement for the IRS to review the claim before the statute of limitations has run. By providing very specific and detailed information, taxpayers can avoid the potential risk of the IRS rejecting the claim for lack of specificity when the time for filing has run and the taxpayer is unable to correct any deficiency.




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