When filing a federal tax refund claim exceeding $2 million ($5 million for C corporations), taxpayers may face additional scrutiny from the Internal Revenue Service (IRS). These cases, known as Joint Committee (JC) refund cases, require the IRS to submit a detailed report to Congress’s Joint Committee on Taxation (JCT). Understanding this process can help taxpayers anticipate potential delays and navigate the review timeline more effectively.

How JC Refund Cases Work

Any refund claim surpassing the specified threshold automatically triggers a JC case review. The IRS assigns specialized examiners to conduct either a full audit or a sample review. If no discrepancies are found, the case proceeds through the standard congressional review process. However, if disputes arise—such as disagreements over the refund amount—taxpayers may appeal through the IRS Independent Office of Appeals.

In its report to the JCT, the IRS includes:

• The taxpayer’s history and compliance record
• The basis for the refund claim
• Supporting documentation

Common Sources of JC Refund Cases

These cases typically originate from:

• Refund claims for assessed and paid taxes that require JCT reporting during review
• Temporary refunds tied to net operating losses, capital losses, or business credits
• Disaster-related refunds or credits issued under federal declarations

Not all large refunds qualify as JC cases. Exclusions include employment tax refunds, windfall profit tax refunds, certain excise tax refunds, and automatically processed refunds not subject to IRS audit.

What Taxpayers Should Know

If contacted by the IRS regarding a JC case, cooperation with the assigned examiner is essential to protect one’s interests. While the process may extend the refund timeline, awareness of these procedures can inform more strategic financial planning.