For Immediate Release
July 10, 2006

North Carolina Reminds Taxpayers of Protective Claim Procedures for Income Taxes Use

North Carolina Reminds Taxpayers of Protective Claim Procedures for Income Taxes Use

North Carolina Reminds Taxpayers of Protective Claim Procedures for Income Taxes Use

Potential refunds can be lost if Taxpayers fail to follow the DOR’s procedural policies.

A protective refund claim is one that is filed to protect a Taxpayer’s right to a potential refund based on a contingent event. Contingent events can include pending litigation or an ongoing income tax audit in another state where the statute of limitations for the taxable period is about to expire. These protective claims apply to corporate and personal income taxes.

The protective claim need not be filed if a Taxpayer is under examination by the IRS for a taxable period. North Carolina law provides that a Taxpayer has two (2) years after being notified by the IRS of changes to their federal return to file an amended return to report the changes.

No special form is provided for filing a protective claim. A written request is acceptable by the state if:

  1. it is filed before the statutory refund claim period expires;
  2. it identifies and describes the contingency affecting the claim;
  3. if it clearly and definitely alerts the DOR as to the essential nature of the claim; and
  4. it identifies the tax schedule and specific year for which the protective claim is filed.

After the contingent event has been resolved, the Taxpayer may file for refund by completing and submitting an amended return for the year at issue.

If you would like additional information on this topic or have any questions, please contact the taxdesk@thesaltgroup.com

 

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