Protecting contingent refund claims
Taxpayers have a limited time to file refund claims with the IRS. Occasionally, this time limit may expire before the taxpayer’s right to the refund claim is finalized and determinable (e.g., during pending litigation). To preserve its right to claim a refund, the taxpayer must file a protective claim.
A protective refund claim suspends the refund statute of limitation until the taxpayer can file a complete refund claim after the occurrence of the contingency (see CCA 201136021 (“a valid protective claim contains a present claim that the Service may immediately allow or disallow once the contingency is resolved”)).