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An Error In Your Favor

By Michael Frisch

A taxpayer who received a refund check in error was timely sued for return of the excess payment, according to a decision of the United States Court of Appeals for the Ninth Circuit

On May 5, 2017, the IRS mailed Page a $491,104.01 check for his 2016 tax refund. Page’s refund should have been $3,463, but the IRS made a clerical error. About a year later, on April 5, 2018, Page cashed the check. After the government discovered the error, it sent letters over several months demanding that Page return the erroneous refund. Page eventually returned $210,000 but kept the remaining $277,641.01.

Statute of limitations

Because we hold that the two-year statute of limitations started when the check cleared, the government’s complaint was timely on its face. The complaint alleges that Page cashed the erroneous refund check on April 5, 2018, meaning the check cleared on or after that date. The government filed its complaint less than two years later, on March 31, 2020. The complaint was therefore timely and should not have been dismissed.

(Mike Frisch)