Rev. Rul. 59-157

A series of questions has been presented to the Internal Revenue Service with respect to the filing of refund claims under the provisions of section 2(d), Public Law 408, 84th Congress.

Public Law 408, C.B. 1956-1, 854, which amends section 120 of the Internal Revenue Code of 1939 (relating to unlimited deduction for charitable contributions) provides, in general, that an unlimited charitable deduction is to be available for charitable and other contributions under the 1939 Code where in the current year and in eight out of ten of the immediately preceding years the individual's contribution to charity, plus his income tax payments, exceeded 90 percent of his net income, but only if an amount equal to any refund under such provision is paid to, or set aside for, charity.

The following questions and their answers appear below.

Question 1 .-Where and on what form should claim for refund under Public Law 408 be filed?

Answer . Section 301.6402(a)(2) of the Regulations on Procedure and Administration, relating to claims for credit or refund, provides in part that `the claim, together with appropriate supporting evidence, must be filed in the office of the District Director for the Internal Revenue district in which the tax was paid.' Except to the extent special rules (not generally applicable here), relating to the use of the return forms as claims apply, claims should be made on Form 843, Claim.

Question 2 .-In the event the taxpayer dies before the claim for refund has been filed, will it be appropriate for the duly appointed legal representative of the estate of the decedent to file a refund claim?

Answer . Section 301.6402(e) of the regulations provides, in part, that `If a return is filed by an individual and, after his death, a refund claim is filed by his legal representative, certified copies of the letters testamentary, letters of administration, or other similar evidence must be annexed to the claim, to show the authority of the legal representative to file the claim.'

Accordingly, the duly appointed legal representative of a deceased taxpayer may file claim for refund under Public Law 408.

Question 3 .-It is necessary that a claim for refund, filed during the lifetime of the taxpayer, specify the names of the organizations to which the amount of the refund is to be paid as a charitable contribution?

Answer . Section 301.6402-2(b)(1) of the regulations provides in part, that `* * * The claim must set forth in detail each ground upon which a credit or refund is claimed and facts sufficient to apprise the Commissioner of the exact basis thereof.'

In addition to setting forth in detail each ground upon which a credit or refund is claimed, a taxpayer must submit satisfactory evidence to the District Director sufficient to insure that either the refund itself, or an amount equal to the amount to be refunded, has been or will be paid to an organization or organizations described in section 170(c) of the Internal Revenue Code of 1954.

Question 4 .-Is it necessary that a taxpayer filing a claim during his lifetime, which may not be paid until after his death, provide by will that the amount of the claimed refund will be paid in cash to certain named charitable organizations described in section 170 or section 2055 of the 1954 Code?

Answer . Section 2(b)(2) of Public Law 408, Supra , provides that in the case of a taxpayer who has died at the time the refund is made, that (A) an amount equal to the amount of the refund, must under the terms of the decedent's will, be transferred to a person or organization described in section 2055 of the Internal Revenue Code of 1954, and (B) an amount equal to the amount of such transfer must be deductible from the value of the gross estate under such section or the corresponding provisions of the Internal Revenue Code of 1939.

The report of the Committee on Finance, Senate Report No. 1403, C.B. 1956-1, 953, commenting on this provision states as follows: `If the taxpayer has died at the time the refund is made, an amount equal to the refund must, under the terms of the decedent's will, be transferred for public, charitable, or religious uses (as described in section 2055 of the 1954 Code which provides a deduction for charitable, etc., contributions for the estate-tax purposes) and the amount so transferred must be deductible from the value of the gross estate.'

It is not necessary that the taxpayer's will make specific cash bequests of the amount of the refunds. However, in the absence of a specific bequest the will must provide for a residuary or other bequest or device to such a person or organization in an amount of money or property not less than the amount of the refund.

Question 5 .-Will the receipt of a refund under Public Law 408, supra , in any year affect in any manner the taxpayer's right to an unlimited deduction for charitable contributions in such year under section 170(b)(1)(C) of the 1954 Code?

Answer . The report of the Committee on Finance, U.S. Senate Report No. 1403, 84th Congress, supra , in its discussion of Public Law 408, supra , points out that the amount of any refund is not to be taken into consideration in determining the qualification of the taxpayer for an unlimited charitable deduction for any year or any liability of the taxpayer or his estate for income or estate-tax purposes. Therefore, a refund will not be taken into account for any taxable year for purposes of determining whether the sum of the contributions and taxes paid in a taxable year exceeds 90 percent of the taxable or net income of the taxpayer.