What “Authority” for Accountant Nullifies the Disability Exception for Tax Refunds? – Houston Tax Attorneys

Deadlines are a central feature of our tax system. We have written about many of these various deadlines on this website. From deadlines for filing returns, deadlines for various tax elections, to deadlines for filing appeals from audits, to deadlines for filing collection actions, deadlines for appeling IRS audits, and even tax court and other litigation deadlines.

Usually, as tax attorneys, our focus on deadlines is when they are missed. Taxpayers often contact us because they missed one of the plethora of tax deadlines. We often have to find work arounds, of which there are also many, to help clients achieve their goals.

One of the work arounds involves the exception for those with medical issues, personal crises, and financial setbacks that interfere with staying current on tax obligations and thereby prevent the taxpayer from getting a refund from the IRS of taxes that were overpaid. When these problems persist for years, taxpayers who eventually file their tax returns often discover they’ve missed the window to claim refunds of overpaid taxes.

Congress provided a financial disability exception that can suspend these time limits. But there are significantly unanswered questions when it comes to this exception. One is whether it even applies if you have an accountant on standby, i.e., are you really financially disabled if an accountant is there and authorized to file your tax return? If so, what “authority” does the accountant have to have?

The recent case of Goldman v. United States, No. 24-1896T (Fed. Cl. Jan. 21, 2026), provides an opportunity to consider these questions.

Facts & Procedural History

Goldman prepared and filed his income tax return for 2017 in 2023—more than five years late. The return claimed a refund of overpaid income taxes.

The IRS processed the tax return and then denied the refund claim. Goldman then appealed to the IRS Office of Appeals, which upheld the refund denial.

The IRS contended that Goldman’s filed his claim too late. The IRS noted that the tax code limits refunds to overpayments made within the three years immediately before filing the refund claim. Goldman’s 2017 tax was deemed paid on April 15, 2018 due to withholdings that were paid to the IRS for him in 2017. He filed his refund claim more than five years later. Without some exception to the three-year rule, the IRS asserted that his claim was late.

Goldman cited the financial disability exception under Section 6511(h). He submitted a physician’s statement certifying that he suffered from major depressive disorder from November 2017 through February 2022. This condition, according to the physician, prevented Goldman from managing his financial affairs during that period.

Goldman also provided his own statement. He certified that during the disability period, no one—including his wife—was authorized to act on his behalf in financial matters. But in the same statement, Goldman acknowledged that he had retained an accountant to file his 2017 return. He stated that he gave the accountant “all the proper authorizations” to file the return but that the accountant ultimately failed to do so.

On November 20, 2024, Goldman filed suit in the U.S. Court of Federal Claims seeking his refund. The government moved to dismiss the case for failure to state a claim. After briefing, the court identified two potentially fatal problems with Goldman’s case and ordered him to explain why the case shouldn’t be dismissed. The issue this post focuses on is the authorization given to the accountant.

The Three-Year Look-Back Rule for Payment

To understand this case, we have to start with the statute. The tax code provides specific time limits for claiming refunds. This is in Section 6511(a).

Once timely filed, the rules turn to what can the taxpayer recover. The limit on the amount that can be refunded is found in Section 6511(b). Section 6511operates as a “look-back” provision that restricts the amount a taxpayer can recover. Specifically, for refund claims that are timely filed, the statute limits any refund to the portion of the overpayment made within the three years immediately before filing the administrative claim.

This provision in (b) differs from a statute of limitations for filing under (a). These rules in (b) are measured by time, but they impose a substantive limitation on the amount of recovery. They are not jurisdictional time limit for court actions. The distinction matters for purposes of possible dismissal, as in this case. When a taxpayer seeks a refund for overpayments made outside the three-year window, the suit may be dismissed for failure to state a claim as there is nothing to recover, as the government argued in this case.

The mechanics work as follows. A taxpayer must first timely file an administrative refund claim with the IRS under (a). For most taxpayers with W-2 wages, income taxes are deemed paid on the due date of the return even though the witholdings from wages are remitted by the employer to the IRS throughout the year. So typically, April 15 of the year following the tax year is when payments are seems to have been made. The three-year period runs from that payment date. Under (b), any refund claim filed after those three years have elapsed can only recover taxes paid within the three years immediately before filing the claim.

In this case, the taxpayer’s 2017 income tax was deemed paid on April 15, 2018. He filed his refund claim on October 24, 2023. The three-year look-back period under (b) would run from October 24, 2020 through October 24, 2023. Goldman’s tax payment occurred on April 15, 2018—more than two years before the look-back period began. Absent some exception, Section 6511(b)(2)(A) limited his recovery to zero.

The Financial Disability Exception and Its Authorization Carve-Out

Section 6511(h) provides relief for taxpayers who cannot manage their financial affairs due to disability.

Revenue Procedure 99-21 sets out the exact form and manner in which taxpayers must furnish proof of financial disability. The revenue procedure requires two separate statements, basically a physician letter and a taxpayer letter. The taxpayer letter has to indicate one of two things, namely, either no person was authorized to act on the taxpayer’s behalf in financial matters during the period set out in the physician’s statement, or if someone was authorized, the taxpayer must provide the beginning and ending dates of that authorization. We’ll come back to this below.

If the taxpayer qualifies and submits the proper statements to the IRS, the statute then suspends all limitation periods in Sections 6511(a) and 6511(b) while the disability exists. This suspension tolls the three-year look-back period, giving disabled taxpayers additional time to file refund claims.

The provision defines financial disability narrowly. A taxpayer qualifies only if unable to manage financial affairs by reason of a medically determinable physical or mental impairment. The impairment must be expected to result in death or to last for a continuous period of at least 12 months. Brief illnesses or temporary setbacks don’t qualify.

As with any benefit in the tax rules, Section 6511(h) has rules that one has to meet. The statute provides that a taxpayer shall not be treated as financially disabled during any period when the taxpayer’s spouse or any other person is authorized to act on behalf of the taxpayer in financial matters. This limitation prevents taxpayers from claiming disability when they have delegated their financial affairs to someone else.

The authorization requirement focuses specifically on tax matters. Courts have held that broad authority to act in all financial matters isn’t required. The question is whether someone was authorized to file the taxpayer’s administrative refund claim.

What Authorization Are We Even Talking About?

The court identified two potential problems with the taxpayer’s financial disability claim. Both centered on the authorization issue.

One problem the court noted is that the taxpayer had an accountant at some point who was authorized to file a tax return, but had ended the relationship with him. Second, the taxpayer didn’t explicitly provide dates when his accountant’s authorization started and ended. This could matter in this analysis because the mere fact that the accountant failed to file the return doesn’t change the analysis. Section 6511(h)(2)(B) focuses on whether someone was authorized, not whether they actually performed.

So what does “authorized” actually mean? The court focused on whether the taxpayer had specified the dates of his accountant’s authorization, but the opinion doesn’t define what constitutes “authorization” under Section 6511(h)(2)(B). This lack of definition creates practical problems for taxpayers trying to comply with Revenue Procedure 99-21.

The IRS requires taxpayers to use Form 2848 (Power of Attorney and Declaration of Representative) to authorize someone to represent them before the IRS. Form 2848 grants the representative authority to perform specific acts on the taxpayer’s behalf. The form includes several boxes that taxpayers must check to indicate what authority they’re granting.

One of those boxes specifically authorizes the representative to sign tax returns on the taxpayer’s behalf. When a taxpayer checks this box on Form 2848, the representative gains broad authority that extends beyond preparing returns. The representative can file returns, amend returns, and file refund claims. This authorization continues until the taxpayer revokes it or until the authorization expires according to the terms stated on the form.

Form 2848 differs substantially from Form 8879, the form used for electronic filing authorization. Form 8879 merely authorizes an Electronic Return Originator to transmit a specific tax return for a specific tax year to the IRS. The form’s authorization is narrow and time-limited. It covers only the single return being filed. Form 8879 doesn’t grant authority to represent the taxpayer before the IRS, to file subsequent returns, or to file refund claims for other tax years.

It would seem that this distinction matters for the financial disability analysis. Consider a taxpayer who signed Form 8879 to authorize electronic filing of their 2017 return in April 2018. The taxpayer then becomes disabled for several years. The taxpayer files a refund claim for 2017 in 2023. The Form 8879 signed in 2018 wouldn’t constitute “authorization” under Section 6511(h)(2)(B) for the refund claim filed in 2023. The earlier form only authorized transmission of the original return. It didn’t authorize the preparer to file the refund claim years later.

But it would seem that a properly executed Form 2848 with the return-signing box checked would constitute authorization under Section 6511(h)(2)(B). If the taxpayer signed Form 2848 granting the representative authority to sign returns and file claims, that authorization could continue during the disability period. The taxpayer could have an authorized agent able to protect the taxpayer’s rights. The disability exception wouldn’t apply during any period the Form 2848 remained in effect.

The timing of Form 2848’s execution and revocation becomes the key issue. A taxpayer might have granted broad authorization through Form 2848 at some point but later terminated the relationship with the representative. If the termination and revocation occurred before the disability began, no authorization existed during the disability period. But if the Form 2848 authorization remained in effect during part of the disability period, the exception wouldn’t apply during that time.

Goldman’s vague statement that he gave his accountant “all the proper authorizations” doesn’t clarify which forms he executed. Did Goldman execute Form 2848 granting his accountant broad authority? Or did he simply sign Form 8879 for the 2017 return? If Goldman executed Form 2848, when did he revoke it or when did it expire?

These questions might determine the outcome in this case. If Goldman executed Form 2848 with the return-signing box checked, and that authorization remained in effect throughout his claimed disability period from November 2017 through February 2022, one would think that Goldman cannot claim financial disability for any part of that period. He had an authorized representative the entire time.

The mere fact that the accountant failed to file Goldman’s return wouldn’t terminate the Form 2848 authorization. The authorization continues until the taxpayer affirmatively revokes it or until it expires by its own terms. Goldman’s failure to specify when and how his relationship with the accountant ended means the court cannot determine whether a Form 2848 authorization remained in effect.

The court did not get into these issues and didn’t address the Form 2848 or Form 8879. But the statute and Revenue Procedure 99-21 don’t explicitly say what authorization is required, leaving taxpayers to guess what level of authorization triggers the carve-out.

The Takeaway

The financial disability exception is intended to protect those who are disabled. It provides relief for taxpayers who cannot manage their affairs due to serious medical conditions. But the rules are not clear. They say that the exception doesn’t apply during any period when someone was authorized to act on the taxpayer’s behalf in financial matters. When the authority involves a third party accountant, does this require a Form 2848 or Form 8879? One would think it does but the rules and even this court case do not even address the issue. Those seeking to apply the financial disability exception may need to consider this in crafting their personal statement that they submit with their claims.