Lundy v. Commissioner

• Decision Date: 28 June 1993
• Docket Number: Docket No. 29009-90.
• Citation: 65 T.C.M. 3011
• Parties: Robert F. Lundy v. Commissioner.
• Court: U.S. Tax Court

65 T.C.M. 3011

T.C. Memo. 1993-278

Robert F. Lundy v. Commissioner.

Docket No. 29009-90.

United States Tax Court.

Filed June 28, 1993.

Lawrence J. Ross and Glenn P. Schwartz, for the petitioner. Susan T. Mosley and Ruud L. Duvall, for the respondent.

Memorandum Findings of Fact and Opinion

CHABOT, Judge:

Respondent determined a deficiency in Federal individual income tax against petitioner for 1987 in the amount of $13,806, and additions to tax under section 6651(a)¹ (failure to file) in the amount of $1,502.25, section 6653(a)(1)(A) (negligence, etc.) in the amount of $690.30, and section 6653(a)(1)(B) in the amount of 50 percent of the interest on $6,009.

After concessions by both sides,² the issue for decision is whether petitioner is barred by the time limitations under sections 6511 and 6512 from obtaining from this Court a determination that he has an overpayment of his 1987 Federal individual income tax.

Findings of Fact

Some of the facts have been stipulated. The stipulations and stipulated exhibits are incorporated herein by this reference.

When the petition was filed in the instant case, petitioner resided in Lorton, Virginia.

In early 1980 petitioner's briefcase, containing records necessary for preparing his income tax returns, was stolen. Petitioner told respondent's employees about this situation, and was told that if petitioner intended to claim a refund, then he had 3 years in which to file his return and claim the refund. Petitioner filed his income tax return for that year almost 3 years late, and he also filed some other income tax returns almost 3 years late during the 1980's. On several occasions in the 1980's one or another agent of respondent told petitioner that he had 3 years in which to file a claim for refund, but that petitioner should get his income tax returns filed as soon as possible.

In 1987 Federal individual income taxes were withheld from the income of petitioner and his then wife, Carol A. Lundy (hereinafter sometimes referred to as Carol), in the amount of $10,131.11 (petitioner — $7,797.31; Carol — $2,333.80). No later payments were made on this account. Petitioner timely requested an automatic extension of time to file his tax return for 1987; the filing period was extended to August 15, 1988. From 1988 through 1990 petitioner had health problems, was hospitalized after a car accident, dealt with various family problems, and was involved in a divorce. On June 4, 1990, respondent sent a letter to petitioner stating that if respondent did not hear from petitioner within 30 days, then respondent would prepare a substitute return for 1987 for petitioner. In response, on July 3, 1990, petitioner wrote to respondent stating that he had not yet filed his 1987 income tax return, but that he would "file within the three year period to claim [his] refund". From June 1988 until September 1990, respondent contacted petitioner twice about his 1987 Federal income tax return. Each time respondent asked petitioner to file his tax return "as soon as possible". On these occasions, respondent did not tell petitioner that he did not have to file his 1987 tax return for 3 years.

On September 26, 1990, respondent mailed to petitioner a notice of deficiency for 1987.

Petitioner and Carol submitted to respondent a joint 1987 tax return dated December 22, 1990. Respondent received this tax return on December 28, 1990. On this 1987 tax return, petitioner and Carol³ reported adjusted gross income of $76,485, income tax liability of $6,594, and income tax withheld of $10,131, and claimed a refund of $3,537. Petitioner had not previously filed a Federal 1987 income tax return.

On December 28, 1990, petitioner filed a petition in the Tax Court. Respondent filed the answer on February 19, 1991. From March 1991 to January 1992, petitioner was involved in negotiations, both in person and on the phone, with respondent's Appeals officer. On February 3, 1992, respondent sent to petitioner and Carol a letter stating that petitioner and Carol would receive a refund of 1987 taxes in the amount of $3,537, the amount claimed on the late-filed tax return.

On March 17, 1992, respondent moved for leave to amend the answer to assert, for the first time, that petitioner's claim for refund is barred by the statute of limitations. After a hearing, this motion was granted on March 30, 1992.⁴

Petitioner's and Carol's correct tax liability for 1987 is $7,372;⁵ they are overwithheld in the amount of $2,390.11.⁶

Opinion

Petitioner's and Carol's, see supra note 3, 1987 taxes were paid more than 2 years before respondent mailed the notice of deficiency to them (Sept. 26, 1990), and less than 3 years before petitioner and Carol filed their 1987 tax return (Dec. 28, 1990).

Petitioner contends that, under section 6511(b)(2)(A), he is entitled to recover an overpayment of income tax paid within 3 years before he made his claim for overpayment and that the claim was the 1987 tax return that he and Carol filed. Respondent contends that the combined effect of sections 6512(b)(3)(B) and 6511(b)(2)(B) is that petitioner is entitled to recover only those payments made within 2 years before the notice of deficiency was mailed. Petitioner responds that respondent's analysis gives respondent the right to cut off a portion of petitioner's statutory limitations period. Respondent answers that that is the result of the plain language of the statute.

We agree with respondent.

A. Statutory Analysis

Section 6511⁷ provides the general statute of limitations for credits or refunds. Section 6512⁸ provides a special rule for credits or refunds "in case of petition to Tax Court". Section 6512(a)(1) permits suits by taxpayers for the recovery of any part of the tax "As to overpayments determined by a decision of the Tax Court which has become final". Section 6512(b)(1) provides that "Except as provided by paragraph (3)" the Tax Court may determine an overpayment, which shall be credited or refunded. Section 6512(b)(3)⁹ provides that there shall not be a credit or refund of any portion of the tax unless that portion was paid during one of three time periods. The only one of these periods that petitioner contends is applicable is the one in section 6512(b)(3)(B).

Section 6512(b)(3)(B) permits a credit or refund if the Court determines that the tax was paid —

within the period which would be applicable under section 6511(b)(2), (c), or (d), if on the date of the mailing of the notice of deficiency a claim had been filed (whether or not filed) stating the grounds upon which the Tax Court finds that there is an overpayment, * * *

Both sides agree that subsections (c) and (d) of section 6511 do not affect the instant case, and that our focus should be on section 6511(b)(2). We arrive at section 6511(b)(2) because we have been instructed to go there by section 6512(b)(3)(B). See Gunther v. Commissioner [Dec. 45,438], 92 T.C. 39, 61-63 (1989), affd. [90-2 USTC ¶ 50,434] 909 F.2d 291 (7th Cir. 1990). The instruction in section 6512(b)(3)(B) directs us to focus on the situation as it would have been on a specified date — the date of the mailing of the notice of deficiency. Thus, this provision requires us to "take a snapshot" of the situation as of September 26, 1990. With that in mind, we proceed to section 6511(b)(2).

Section 6511(b)(2) has three subparagraphs, each providing what has been referred to as a "look-back" rule. (See our recent comment in Allen v. Commissioner [Dec. 48,566], 99 T.C. 475, 478-479 n. 5 (1992), on appeal (6th Cir., Feb. 16, 1993), noting the difference between the look-back periods described in section 6511(b)(2) and the period for filing a claim described in section 6511(a).) The dispute centers on whether subparagraph (A) or (B) of section 6511(b)(2) applies. Neither side contends that subparagraph (C) applies.

Section 6511(b)(2)(A) provides the rule for the situation where "the claim was filed by the taxpayer during the 3-year period prescribed in subsection (a)". For any tax "in respect of which tax the taxpayer is required to file a return", section 6511(a) prescribes only the period "within 3 years from the time the return was filed". On September 26, 1990, the deemed-claim date, petitioner's and Carol's 1987 tax return had not been filed, so there was no "3-year period prescribed in subsection (a)". Because there was no 3-year period as prescribed in section 6511(a), no claim had been filed within that 3-year period. Therefore, section 6511(b)(2)(A) cannot provide the rule for decision in the instant case.

Section 6511(b)(2)(B) provides the rule for the situation where the claim was filed, but not within the 3-year period prescribed in section 6511(a). This is the situation in the instant case. That is, section 6512(b)(3)(B) directs us to make a determination assuming that a claim for credit or refund was filed on September 26, 1990 (the date the notice of deficiency was mailed), but no tax return had been filed by that date, so the deemed claim for credit or refund was not filed within the 3-year period prescribed in section 6511(a). In this situation, section 6511(b)(2)(B) provides a 2-year look-back period. That is, "the credit or refund shall not exceed the portion of the tax paid during the 2 years immediately preceding the filing of the claim." Petitioner's and Carol's 1987 income taxes were paid entirely by withholding in 1987, and 50 were deemed paid on April 15, 1988. Sec. 6513(b)(1). April 15, 1988, is more than 2 years before September 26, 1990. Thus, no portion of petitioner's and Carol's 1987 income taxes was paid within the 2-year period immediately before September 26, 1990.

We conclude from the foregoing that petitioner is not entitled to a determination from this Court that he has an overpayment that can be credited or refunded. This conclusion is consistent with a long line of Tax Court precedents, among the most recent of which are Patronik-Holder v. Commissioner [Dec....