Important Notice: Departmental Requests for Additional Information for Requests for Refund Based on Decision in the Kaestner Case

January 2, 2020

On July 2, 2019, the Department of Revenue (“Department”) issued an Important Notice (“Notice”) to announce the United States Supreme Court’s (“Court”) decision in North Carolina Department of Revenue v. The Kimberley Rice Kaestner 1992 Family Trust (“Kaestner”). The Notice also outlined North Carolina law regarding the statute of limitations for requesting a refund of a claimed overpayment of tax. The Notice further explained that, under the applicable statute of limitations, taxpayers who had previously filed a Notice of Contingent Event with the Department to extend the statute of limitations pending the Court’s decision had until December 21, 2019, to request a refund.

Requests for Additional Information

In order to determine whether taxpayers who submitted a timely refund request are, in fact, entitled to a refund, the Department requires additional information. The additional information is needed because the North Carolina estates and trusts income tax return, Form D-407, does not include information necessary for the Department to determine whether Kaestner entitles a particular taxpayer to a refund.

For that reason, the Department will send an informational document request (“IDR”) to each taxpayer that timely filed a request for refund. The IDR asks a series of questions and requires the taxpayer to provide the Department with various documents, including but not limited to: 

  • A copy of the trust instrument, including any amendments and modifications.
  • A copy of federal Form 1041, U.S. Income Tax Return for Estates and Trusts, including any amended returns, for each tax year for which a refund of North Carolina income tax has been requested based on Kaestner.

Taxpayers must respond to the IDR within 30 days from the date of the IDR. 

Assistance 

If you have filed a refund request in response to the Court’s decision in Kaestner and you do not receive an IDR as described above by February 3, 2020, please contact Anthony Serricchio, Revenue Tax Auditor, by phone at 919-754-2088 (8:00 a.m. until 5:00 p.m. EST, Monday through Friday), or by email at Anthony.Serricchio@ncdor.gov.

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