Rumor or Reality #3: It’s ok if I miss a tax filing deadline if I don’t owe taxes, so long as I file within three years

Rumor!  Clearance holders are expected to timely file federal, state, and local taxes, whether or not taxes are owed. This rumor has been around for a while and seems to come from the “three-year rule” for receiving a refund from the federal government (and some state governments) in certain circumstances.* DOHA (the office of the Administrative Judges who decide these cases for DoD) has rejected this rumor:

We have addressed the “three-year rule” before. In ISCR Case No. 12-11357 at 4 (App. Bd. Jun. 17, 2016), we noted that the cited rule requires that a Federal taxpayer file within three years in order to receive a refund. This rule does not provide that taxpayers owed a refund can legitimately file after the April 15 deadline without first obtaining an extension. “The fact that the IRS may waive a late filing penalty does not constitute proof that tax returns were not filed late … The three-year statute of limitation is not a grant of a filing extension, but only a limitation on claiming a refund.” See also ISCR Case No. 14-02930 at 3 (App. Bd. Dec. 9, 2015).

Importantly, the SF-86 (Section 26) specifically asks whether the applicant has failed to file or pay Federal, state, or other taxes when required by law or ordinance. Read more about this issue in our 2022 tax season series here.

*Nothing in this post is intended as tax advice. The attorneys at Kalijarvi, Chuzi, Newman & Fitch, P.C. are not tax professionals. You should consult with a tax professional regarding any tax matters, including any conclusions you may draw from this post.

See the full Rumor or Reality series here.