In action seeking refund of taxes that had been assessed for year 2009 under 26 USC sections 219(b)(d), (b)(5)(A) and 4973(a),(b), where taxpayers had contributed too much to their IRAs in 2007, even though taxpayers claimed that they had withdrawn all excess contributions in March of 2010. Taxpayers conceded that they owed 2007 and 2008 annual taxes for excess contributions made in 2007, and while they argued that they owed no annual tax for 2009, since, under section 408(d)(4) of Tax Code they withdrew any 2007 excess contribution prior to April 15, 2010 deadline for filing 2009 tax return, Ct. found that section 408(d)(4) covers only distributions made before tax return deadline of tax year when excess contribution was made. As such, section 408(d)(4) applied only if taxpayers had withdrawn 2007 excess contributions to IRA before April 15, 2008.
Federal 7th Circuit Court
Civil Court
Income Tax