Sunoco, Inc. v. Comm'r of Internal Revenue

Decision Date04 February 2004
Docket NumberNo. 19631–97.,19631–97.
Citation122 T.C. 88,122 T.C. No. 4
PartiesSUNOCO, INC. AND SUBSIDIARIES, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
CourtU.S. Tax Court

OPINION TEXT STARTS HERE

Robert L. Moore II, Thomas D. Johnston, and Majorie A. Burnett, for petitioner.

John A. Guarnieri, Craig Connell, and Keith L. Gorman, for respondent.

OPINION

WHALEN, J.

Respondent asks the Court to dismiss for lack of subject matter jurisdiction petitioner's overpayment claims under sec. 6512(b), I.R .C., for the years in issue to the extent that they involve interest computed under sec. 6611(a), I.R.C., so-called overpayment interest.

Held: On the basis of Estate of Baumgardner v. Commissioner, 85 T.C. 445, 1985 WL 15391 (1985), the Court has jurisdiction.

This case is before the Court to decide respondent's motion to dismiss for lack of subject matter jurisdiction filed with regard to certain claims petitioner made in an amendment to its petition. The issue raised by respondent's motion is whether this Court lacks jurisdiction under section 6512(b) to consider petitioner's claims for overpayment to the extent that they involve so-called overpayment interest, as described below. All section references are to the Internal Revenue Code for the years at issue. We believe that the issues in this case are controlled by our Opinion in Estate of Baumgardner v. Commissioner, 85 T.C. 445, 1985 WL 15391 (1985). On that basis, we hold that we have jurisdiction to determine an overpayment composed of overpayment interest. Therefore, we will deny respondent's motion.

Background

Petitioner filed the instant petition for redetermination of deficiencies respondent determined for 1979, 1981, and 1983. Petitioner later filed an amendment to its petition that makes reference to the fact that petitioner and respondent had settled various issues with regard to the years in issue. The amendment to petition claims additional overpayments for each of those years due to errors allegedly made by respondent “in calculating the interest on underpayments and overpayments arising out of the settled issues”. The amended petition alleges that in calculating interest respondent used “numerous incorrect starting and ending dates for the running of interest” and “numerous incorrect dates in applying payments and credits and making transfers to other accounts” and that respondent failed to credit or refund the correct amount of interest on petitioner's overpayments.” In addition, the amended petition alleges that respondent did not use netting principles when calculating the interest balances” and “in addition to the overpayments referenced above, petitioner seeks overpayments attributable to the calculation of interest utilizing netting principles.” In general, according to the amended petition, for each of the years in issue, the interest respondent charged on “underpayments” under section 6601 was too high, and the interest respondent allowed with respect to “overpayments” under section 6611 was too low.

The amended petition asserts that the overpayment for each of the years in issue is as follows:

+-----------------------------------------------------------------------------+
                ¦Year¦            ¦Respondent's Totals¦Petitioner's           ¦Overpayment    ¦
                ¦    ¦            ¦                   ¦Computation            ¦               ¦
                +----+------------+-------------------+-----------------------+---------------¦
                ¦    ¦            ¦                   ¦                       ¦               ¦
                +----+------------+-------------------+-----------------------+---------------¦
                ¦1979¦Underpayment¦$1,948,026         ¦1  $1,353,083          ¦-$594,943      ¦
                +----+------------+-------------------+-----------------------+---------------¦
                ¦    ¦interest    ¦                   ¦                       ¦               ¦
                +----+------------+-------------------+-----------------------+---------------¦
                ¦    ¦Overpayment ¦–4,304,396       ¦1 –6,346,670       ¦– 2,042,274    ¦
                +----+------------+-------------------+-----------------------+---------------¦
                ¦    ¦interest    ¦                   ¦                       ¦               ¦
                +----+------------+-------------------+-----------------------+---------------¦
                ¦    ¦            ¦                   ¦                       ¦               ¦
                +----+------------+-------------------+-----------------------+---------------¦
                ¦    ¦Total       ¦–2,356,370         ¦–4,993,587             ¦–2,637,217     ¦
                +----+------------+-------------------+-----------------------+---------------¦
                ¦    ¦            ¦                   ¦                       ¦               ¦
                +----+------------+-------------------+-----------------------+---------------¦
                ¦1981¦Underpayment¦231,936            ¦–0–                    ¦–231,936       ¦
                +----+------------+-------------------+-----------------------+---------------¦
                ¦    ¦interest    ¦                   ¦                       ¦               ¦
                +----+------------+-------------------+-----------------------+---------------¦
                ¦    ¦Overpayment ¦–11,626,105      ¦2 –48,785,132      ¦–37,159,027  ¦
                +----+------------+-------------------+-----------------------+---------------¦
                ¦    ¦interest    ¦                   ¦                       ¦               ¦
                +----+------------+-------------------+-----------------------+---------------¦
                ¦    ¦            ¦                   ¦                       ¦               ¦
                +----+------------+-------------------+-----------------------+---------------¦
                ¦    ¦Total       ¦–11,394,169        ¦–48,785,132            ¦–37,390,963    ¦
                +----+------------+-------------------+-----------------------+---------------¦
                ¦    ¦            ¦                   ¦                       ¦               ¦
                +----+------------+-------------------+-----------------------+---------------¦
                ¦1983¦Underpayment¦24,970             ¦–0–                    ¦–24,970        ¦
                +----+------------+-------------------+-----------------------+---------------¦
                ¦    ¦interest    ¦                   ¦                       ¦               ¦
                +----+------------+-------------------+-----------------------+---------------¦
                ¦    ¦Overpayment ¦–3,317,982       ¦3 –5,759,613       ¦–2,441,631   ¦
                +----+------------+-------------------+-----------------------+---------------¦
                ¦    ¦interest    ¦                   ¦                       ¦               ¦
                +----+------------+-------------------+-----------------------+---------------¦
                ¦    ¦            ¦                   ¦                       ¦               ¦
                +----+------------+-------------------+-----------------------+---------------¦
                ¦    ¦Total       ¦–3,293,012         ¦–5,759,613             ¦–2,466,601     ¦
                +----+------------+-------------------+-----------------------+---------------¦
                ¦    ¦            ¦                   ¦                       ¦               ¦
                +-----------------------------------------------------------------------------+
                

FN1. As of Dec. 14, 1993.FN2. As of Mar. 3, 1997.FN3. As of June 14, 1993.

Attached to respondent's motion to dismiss is the affidavit of an employee of the Internal Revenue Service, a former technical analyst, who is knowledgeable about the preparation of interest computations on Federal tax liabilities and who has had extensive experience with the computerized records of the Internal Revenue Service, referred to as transcripts of account, which reflect account activity, such as assessments, payments, credits, and the like, for particular taxpayers. The Government's affidavit includes, as an exhibit, a document that was prepared on behalf of petitioner entitled “Listing of Differences—Sun's Interest Computations v. IRS' Interest Computations.” This exhibit is referred to herein as petitioner's list of differences. It is petitioner's list of each of the errors that respondent allegedly made in computing interest.

There is also attached to the Government's affidavit petitioner's computation of the amount of interest that would have accrued with respect to petitioner's account for each of the years in issue if the differences described in petitioner's list were taken into account. Finally, there are attached to the Government's affidavit three schedules that were prepared on behalf of respondent to verify the accuracy of petitioner's computations. We note that, while we have been provided with petitioner's interest computations and respondent's verification of petitioner's computations, we have not been supplied with respondent's computations of interest.

On the basis of the information in the record, we have prepared three appendixes in which we have reproduced petitioner's computation of interest for each of the tax years in issue, 1979, 1981, and 1983. These appendixes are attached hereto as appendixes 1, 2, and 3, respectively.

Each appendix is in the nature of a transcript of petitioner's account with the Internal Revenue Service for one of the years in issue; i.e., 1979, 1981, or 1983. It shows all of the transactions that affect the balance of petitioner's account for the year. These transactions are shown in the appendix in the column designated “Other Events” (col.G). Some “events” increase petitioner's liability, such as income tax assessments, refunds, and the application of interim overpayments from the current year to the tax liability for other years. These are shown as positive numbers. Other “events” reduce petitioner's liability, such as tax payments, the carryback of a net operating loss from a later year, or the carryback of a foreign tax credit from a later year. These are shown as negative numbers.

Each appendix shows the balance of petitioner's account as of various dates. The account balance on a particular date may be a positive number, indicating an interim underpayment, or a negative number, indicating an interim overpayment.

The account balance on a particular date comprises the prior transactions that were booked to the account, such as tax payments by petitioner, refunds to petitioner,...

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