                  T.C. Summary Opinion 2005-116



                     UNITED STATES TAX COURT



           JOHN AND KRISTINE WOLFGRAM, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent


     Docket No. 7152-04S.              Filed August 8, 2005.


     John and Kristine Wolfgram, pro se.

     Thomas D. Greenaway, for respondent.



     COUVILLION, Special Trial Judge:    This case was heard

pursuant to section 7463 of the Internal Revenue Code in effect

at the time the petition was filed.1    The decision to be entered

is not reviewable by any other court, and this opinion should not

be cited as authority.




     1
      Unless otherwise indicated, subsequent section references
are to the Internal Revenue Code in effect for the year at issue.
                               - 2 -


     Respondent determined a deficiency of $623 in Federal income

tax for petitioners’ 2001 tax year.    At trial, respondent

conceded the deficiency.   The issue for decision is whether the

Court has jurisdiction to consider petitioners’ arguments that

respondent, under section 6402, incorrectly applied an

overpayment of petitioners’ 2001 Federal income taxes toward

payment of an indebtedness owing by petitioner John Wolfgram (Mr.

Wolfgram) to a Federal agency, and that petitioner Kristine

Wolfgram (Mrs. Wolfgram) is entitled to a refund as an injured

spouse under section 301.6402-6(i), Proced. & Admin. Regs.

     Some of the facts were stipulated.    Those facts, with the

exhibits annexed thereto, are so found and are made part hereof.

Petitioners’ legal residence at the time the petition was filed

was Fair Oaks, California.   At the time of trial, petitioners

were residing at Foresthill, California.

     Petitioners filed a joint Federal income tax return for

2001.   On that return, petitioners reported $63,411.38 in wage

and salary income, $787.51 in taxable refunds of State and local

income taxes, and $2,350 in Schedule C-EZ, Net Profit From

Business, income.   The return showed a tax of $2,861, Federal

income tax withholdings of $5,235.66, and an overpayment of

$2,374.66.   Petitioners elected that the entire overpayment be

applied to their 2002 estimated tax.    Respondent did not do that.

Respondent instead issued a notice of deficiency, determining a
                                - 3 -


deficiency of $623 based on the failure of petitioners to include

as gross income on their return $4,147 in wage and salary income.

The $623 determined deficiency reduced petitioners’ overpayment

from $2,374.66 to $1,751.66.    Although the sequence of events is

not entirely clear from the record, petitioners were advised at

some point that respondent proposed to transfer, transmit, or pay

the overpayment under section 6402(d) to a Federal agency (which

was not named at trial) as a setoff or payment of an indebtedness

owing solely by Mr. Wolfgram.   Mr. Wolfgram has not denied owing

the indebtedness.

     On or about this time, Mrs. Wolfgram filed with the IRS Form

8379, Injured Spouse Claim and Allocation, for a refund of all or

a portion of the overpaid 2001 taxes, based on the fact that

approximately 97 percent of the income reported on the 2001

income tax return represented her earnings, and, under

appropriate provisions of the Internal Revenue Code, she would be

“injured” if the overpayment of taxes attributable to her income

was used to pay the separate indebtedness of her spouse.   IRS

agreed with that position, and, according to counsel for

respondent at trial, one-half of the acknowledged overpayment of

$1,751.66 was paid to her.

     When the case was called for trial, counsel for respondent

orally conceded the $623 deficiency after petitioners satisfied

counsel that the omitted wage and salary income had been included
                               - 4 -


as gross receipts on Schedule C-EZ of their return.    The case was

tried solely on petitioners’ contention that 97 percent of the

remaining overpayment ($2,374.66 less the prior refund of

approximately $875.83) should be paid to Mrs. Wolfgram, since 97

percent of the income reported on the return was income earned by

her, and, additionally, petitioners claimed that, even though

they resided in California, which is a community property State,

petitioners had a separation of property agreement under which

all of Mrs. Wolfgram’s income constituted her separate property,

and all of Mr. Wolfgram’s earnings were community property.

     This case calls for the review of a reduction of an

overpayment under section 6402(d).     Section 6402(f) provides that

no court of the United States shall have jurisdiction to hear any

action, whether legal or equitable, brought to restrain or review

a reduction under section 6402(c), (d), or (e), which applies to

the facts of this case.   The Court notes that the flush language

of section 6402(f) states that the prohibition of a court review

does not preclude any legal, equitable, or administrative action

against the Federal agency to which the overpaid taxes were paid.

This Court, therefore, has no jurisdiction to consider the merits
                               - 5 -

of petitioners’ arguments.2   See Wooten v. Commissioner, T.C.

Memo. 2003-113.

     Reviewed and adopted as the report of the Small Tax Case

Division.



                                            An appropriate order and

                                       decision will be entered.




     2
      In Thomas v. Bennett, 856 F.2d 1165 (8th Cir. 1988), the
court held that the purpose of the jurisdictional limitation is
to relieve the Secretary of the Treasury from the burden of
handling challenges to the substantive merits of debts underlying
requested refund setoffs, and that Congress determined that the
appropriate place for litigation of such claims is with the
agency to which the obligation is owed, recognizing that the IRS
does not have the information and resources needed to adjudicate
the validity of the underlying obligation.
