McGuinness v. Comm'r , 2007 Tax Ct. Summary LEXIS 88 ( 2007 )

T.C. Summary Opinion 2007-81
UNITED STATES TAX COURT
PATRICK T. MCGUINNESS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 19382-05S. Filed May 24, 2007.
Patrick T. McGuinness, pro se.
Laura A. Price, for respondent.
ARMEN, Special Trial Judge: This case was heard pursuant to
the provisions of section 7463 of the Internal Revenue Code in
effect when the petition was filed.1 Pursuant to section
7463(b), the decision to be entered is not reviewable by any
1
Unless otherwise indicated, all subsequent section
references are to the Internal Revenue Code, as amended, and all
Rule references are to the Tax Court Rules of Practice and
Procedure.
- 2 -
other court, and this opinion shall not be treated as precedent
for any other case.
This matter is before the Court on respondent’s Motion To
Dismiss For Lack Of Jurisdiction, filed February 23, 2007. A
hearing on respondent’s motion was held in Jacksonville, Florida,
on March 19, 2007. Thereafter, at the Court’s direction,
respondent filed a Supplement to his motion on April 12, 2007,
and petitioner filed a Notice Of Objection on April 20, 2007.
In his motion, respondent’s moves to “dismiss this case for
lack of jurisdiction under I.R.C. §§ 6512(b)(3)(B) and 6511(b)(2)
because petitioner’s claim for refund of an overpayment of income
taxes for tax year 2001 was filed more than three years after
petitioner paid such income taxes.” For reasons discussed
hereinafter, we shall recharacterize respondent’s motion as one
for summary judgment, and, as recharacterized, we shall grant it.
Background
At the time that the petition was filed, Patrick T.
McGuinness (petitioner) resided in Jacksonville, Florida.
For 2001, the taxable year in issue, petitioner did not file
a request for an extension of time for filing a return, see sec.
6081(a), nor did petitioner timely file a return, see sec.
6072(a).
- 3 -
During the period of petitioner’s delinquency, respondent
prepared a substitute for return under section 6020(b).2
Thereafter, on August 22, 2005, respondent sent petitioner a
notice of deficiency. In the notice, respondent determined a
deficiency in petitioner’s Federal income tax for 2001 of
$25,876, together with additions to tax under section 6651(a)(1)
for failure to file of $1,624.72, under section 6651(a)(2) for
failure to pay of $1,371.99, and under section 6654(a) for
failure to pay estimated tax of $203.71. Respondent’s deficiency
determination was principally attributable to petitioner’s
failure to report wages in the amount of $101,128.3
On October 17, 2005, petitioner filed a petition with the
Court for redetermination of deficiency. In the petition,
petitioner contested respondent’s determinations; petitioner also
claimed that he had overpaid his income tax and was entitled to a
refund in the amount of $1,354.
2
The date that the substitute for return was prepared is
unclear in the record. A transcript of account (Form 4340)
indicates that the substitute for return was prepared in the
month of May 2004; in contrast, the “IRC Section 6020(b) ASFR
Certification” is dated May 30, 2005. However, the date that the
substitute for return was prepared is of no moment. See Healer
v. Commissioner, 115 T.C. 316, 321-324 (2000) discussed infra.
3
In the notice, respondent credited petitioner for the
amount withheld from his wages ($18,655) insofar as petitioner’s
ultimate tax liability is concerned. However, we note that the
determination of a statutory deficiency does not take such
withheld amount into account. See sec. 6211(b)(1).
- 4 -
On November 21, 2005, respondent’s Appeals Office in
Jacksonville, Florida, received petitioner’s 2001 return for
filing. The return, which is a joint return by petitioner and
his wife, includes the couple’s income (specifically including
petitioner’s wages as determined by respondent in the August 22,
2005 notice of deficiency), deductions, credits, and payments.
In sum, the return reported a tax liability of $21,229 and
claimed Federal income tax withheld of $22,583, thereby resulting
in an overpayment (and a request for refund) of $1,354.4
Respondent accepted petitioner’s return as filed and, on
January 2, 2006, assessed “additional” tax against petitioner and
his spouse in the amount of $21,229; i.e., the amount reported on
the delinquently filed return. However, respondent did not
refund or credit the $1,354 overpayment; rather, respondent
transferred the overpayment into an excess collections account on
the ground that the statute of limitations barred refund or
credit.
Discussion
Deficiency Jurisdiction
In an action for the redetermination of a deficiency, the
Court’s jurisdiction under section 6213(a) depends on (1) the
issuance by the Commissioner of a valid notice of deficiency to
4
The return was prepared by a C.P.A. affiliated with an
accounting firm.
- 5 -
the taxpayer and (2) the timely filing of a petition by the
taxpayer.5 Secs. 6212, 6213, 7502; Rule 13(a), (c); Frieling v.
Commissioner, 81 T.C. 42, 46 (1983). In the present case,
respondent sent petitioner a valid notice of deficiency on August
22, 2005, and petitioner timely filed a petition for
redetermination on October 17, 2005. Thus, the jurisdictional
prerequisites are satisfied, and the Court has jurisdiction in
this deficiency proceeding.
Recharacterization of Respondent’s Motion
In view of the filing of petitioner’s delinquent return and
respondent’s acceptance thereof, as well as the assessment of the
tax reported on that return, respondent concedes that there is no
deficiency in income tax nor any addition to tax due from
petitioner for 2001. However, respondent contends that refund or
credit of the $1,354 overpayment is barred by the statute of
limitations.
Because this is an action for the redetermination of a
deficiency over which we have jurisdiction, we have pendant
jurisdiction to determine the amount of any overpayment. Sec.
6512(b)(1). In so doing, we necessarily consider whether refund
5
The validity of a notice of deficiency does not turn on
the substantive merits of the Commissioner’s determination; i.e.,
the correctness of that determination. Rather, validity
contemplates that the Commissioner did, in fact, make a
determination in a notice of deficiency that is mailed to the
taxpayer at the taxpayer’s last known address.
- 6 -
or credit may be barred by the statute of limitations. Cf. sec.
7459(e). Because the statute of limitations constitutes an
avoidance or a defense, see Day v. McDonough, 547 U.S. 198, ,
126 S. Ct. 1675, 1681 (2006) (“A statute of limitations defense *
* * is not ‘jurisdictional’”); see also Kontrick v. Ryan, 540
U.S. 443 (2004), we shall recharacterize respondent’s Motion To
Dismiss For Lack Of Jurisdiction as a motion for summary judgment
and proceed accordingly.
Allowance of Refund or Credit
As previously stated, section 6512(b)(1) authorizes us to
determine the amount of the overpayment of tax for 2001 that is
to be refunded or credited to petitioner. However, section
6512(b)(3) imposes a limit on the amount of any overpayment that
may be credited or refunded. As relevant herein, section
6512(b)(3) provides as follows:
SEC. 6512(b). Overpayment Determined by Tax Court.--
* * * * * * *
(3) Limit on amount of credit or refund.--No such
credit or refund shall be allowed or made of any
portion of the tax unless the Tax Court determines as
part of its decision that such portion was paid–
* * * * * * *
(B) within the period which would be
applicable under section 6511(b)(2) * * *, 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
* * *
- 7 -
Section 6511(b)(2) is entitled “Limit On Amount Of Credit Or
Refund”. In a case such as the present one, where the date of
the mailing of the notice of deficiency (August 22, 2005) is
beyond the third year after the due date for filing the 2001
return (April 15, 2002) and no return was filed by the taxpayer
before that date (i.e., August 22, 2005), section 6511(b)(2)(B)
applies to limit the amount of any refund or credit that may be
made or allowed. See Commissioner v. Lundy, 516 U.S. 235 (1996);
Healer v. Commissioner, 115 T.C. 316, 319-320 (2000); cf. sec.
6512(b)(3), flush language; Zarky v. Commissioner, 123 T.C. 132
(2004). Section 6511(b)(2)(B) provides that “the amount of the
credit or refund shall not exceed the portion of the tax paid
during the 2 years immediately preceding the filing of the
claim.” Therefore, because petitioner’s claim for refund is
deemed to have been filed on August 22, 2005, see sec.
6512(b)(3)(B), then only tax paid during the immediately-
preceding 2-year period may be refunded (or credited).
In the present case, petitioner paid no income tax other
than through withholding on his wages. Income tax withheld by a
taxpayer’s employer is deemed to have been paid by the taxpayer
on April 15 of the year immediately following the calendar year
for which the tax was withheld. Sec. 6513(b)(1). Therefore,
petitioner is deemed to have paid the tax for which he seeks a
refund on April 15, 2002. But, because petitioner did not pay
any income tax during the 2 years immediately preceding August
- 8 -
22, 2005, the date of his deemed claim, petitioner is not
entitled to a refund (or a credit) of his 2001 overpayment. Sec.
6511(b)(2)(B).
Petitioner contends that the substitute for return under
section 6020(b) should be “counted” as his return. However, this
Court has expressly held that a substitute for return prepared by
the Commissioner pursuant to section 6020(b) does not constitute
a return filed by the taxpayer for purposes of section 6511.
Healer v. Commissioner, supra at 321-324.
Petitioner also contends that his delinquency was caused
principally by his confusion regarding how a $5,000 option
payment on a movie contract should be reported. Although we are
well aware of the intricacies of the Internal Revenue Code, the
fact remains that, at the very least, petitioner could have
timely filed his return and amended it later when he had resolved
the reporting matter, particularly given that the option payment
was less than 5 percent of his total income.6
Finally, petitioner contends that it would be unfair,
particularly in view of respondent’s acceptance of his delinquent
return and complete concession of the deficiency and additions to
tax, to bar payment of his refund. Suffice it to say that the
United States Supreme Court has clearly instructed that
limitations on allowance of refunds and credits prescribed by
6
We recall that petitioner’s return was prepared by a
C.P.A. affiliated with an accounting firm.
- 9 -
sections 6511 and 6512 shall be given effect, consistent with
congressional intent, without regard to an individual’s perceived
notion of fairness. Commissioner v. Lundy, supra.
To give effect to our disposition of the disputed matter, as
well as respondent’s concessions,
An order granting
respondent’s motion, as
recharacterized, and decision
will be entered deciding that
there is no deficiency nor any
addition to tax due from, nor
overpayment due to, petitioner
for the taxable year 2001.