What Is An "Open Tax Year"?

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“Open tax year” and “closed tax year” are terms that are widely used by tax practitioners. It is important to know what an open tax year is because of the value it holds pertaining to your refund and how long you have left to file for your return. In an open tax year the period of limitations has not expired within which the IRS can access additional tax and/or the taxpayer can file a timely claim for credit or refund of an overpayment in tax. The time span is three years after the initial date of the original deadline.

An example of this is if your 2013 tax return is filed on March 10, 2014. Add three years to this date, March 10, 2017, and that is the date you have until your refund expires. After this the statute of limitations for claiming a refund would have expired. However, you can file for an extension which will extend the period of claiming refunds and will give you extra time past the three years. There are some exceptions to the three year statute of limitations such as when taxpayers are unable to manage their finances due to physical or mental impairments and taxpayers who have seven years to claim a refund because of deductions for bad debt or worthless securities.

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