                        T.C. Memo. 2000-36



                      UNITED STATES TAX COURT



               LOREN H. SCHWECHTER, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 15583-95.            Filed February 4, 2000.



     Leonard T. Timpone, for petitioner.

     Lauren W. Gore, for respondent.



                        MEMORANDUM OPINION


     GALE, Judge:   Respondent determined the following

deficiencies in petitioner’s Federal income tax:

               Year             Deficiency

               1988               $9,866
               1989                1,612
               1991                  414

We must decide the following:
                               - 2 -

     1.   Whether the limitations period for assessing taxes for

the years 1988 and 1989 has expired.    We hold that it has not.

     2.   Whether petitioner has made overpayments with respect to

1988 and 1989.   We hold that he has, to the extent provided.

     3.   Whether any credits or refunds of overpayments made by

petitioner with respect to 1988 and 1989 are allowable.    We hold

they are not.

     Some of the facts have been stipulated and are so found.      We

incorporate by this reference the stipulation of facts and the

attached exhibits.   At the time of filing the petition,

petitioner resided in Miami, Florida.

     The dispute in this case centers upon whether petitioner

timely filed his Federal income tax returns for years 1988 and

1989 or otherwise made a timely claim for refund for those years.

Petitioner claims to have filed his 1988 and 1989 returns prior

to the filing deadlines, including extensions, and that

accordingly, the notice of deficiency issued by respondent in May

1995 with respect to those years was untimely.    Petitioner offers

no other argument or evidence to dispute the amount of the

deficiencies determined for 1988, 1989, or 1991.    Petitioner

further claims that he is entitled to refunds for certain

overpayments made with respect to 1988 and 1989 because he timely

filed returns or made timely claims for refund through

correspondence sent to respondent.     Respondent contends, and his
                              - 3 -

records indicate, that although petitioner obtained 122-day

extensions for filing his 1988, 1989, and 1991 returns, he did

not file such returns until October 4, 1993, and accordingly the

notice of deficiency is timely, and no timely claim for refund or

credit with respect to 1988 or 1989 was made.

     Petitioner is a nonpracticing attorney who formerly worked

for respondent as an attorney in the estate and gift tax area.

During 1988 and 1989, petitioner operated a consulting enterprise

which valued businesses and performed forensic accounting work.

During this period, petitioner also worked as an employee and

Federal income tax was withheld from his wages.

     Petitioner claims to have timely filed his returns for the

years 1988 and 1989 on August 11, 1989, and May 7, 1990,

respectively, taking into account the filing extensions that it

has been stipulated he received.   According to petitioner, he

hand delivered these returns to one of respondent’s offices in

Florida, because he had experienced difficulties in the past with

respect to prior returns in that respondent had mistakenly

claimed that petitioner had failed to file them.   Petitioner did

not produce copies of these purportedly hand-delivered returns at

trial and maintains that he inadvertently discarded them in May

1993, when disposing of records relating to his divorce.

Respondent’s records indicate that while petitioner filed for 4-

month extensions for 1988, 1989, and 1991 on April 11, 1989,
                                 - 4 -

April 15, 1990, and April 15, 1992, respectively, he did not file

returns for those years until October 4, 1993.    To prove that he

filed his returns on time, notwithstanding the absence of copies

of the timely filed returns or of any entry in respondent’s

records, petitioner relies on his own testimony, the testimony of

his mother, a series of letters purportedly sent by him to

respondent during the period 1989 through 1995, and evidence of

certain divorce proceedings between him and his former spouse.

     With respect to the divorce, petitioner claims that as part

of protracted proceedings that lasted from 1983 until 1991, he

was required to submit, and did submit, copies of his filed 1988

and 1989 returns to the divorce court.    In addition, he asserts

that his right to obtain a refund was used in the calculation of

his child support obligations.    However, petitioner never

introduced any records from the divorce proceedings.    In fact,

the only records from the divorce proceedings that are in

evidence were introduced by respondent, and they do not support

petitioner’s claims.   In a judgment filed on October 30, 1989,

the divorce court made detailed findings concerning petitioner’s

assets, which the court then allocated among petitioner’s

creditors and former spouse, to whom petitioner owed a family

support arrearage of $29,773.    Despite finding insufficient

assets to satisfy petitioner’s obligations, the divorce court

made no mention of petitioner’s 1988 return or the refund in
                                - 5 -

excess of $16,000 claimed thereon, even though the judgment was

entered approximately 2-1/2 months after petitioner contends he

filed his 1988 return.

     Petitioner’s mother (Mrs. Schwechter) testified that she

recalled seeing copies of petitioner’s tax returns for the years

in issue that were stamped to indicate receipt by the Internal

Revenue Service.1   However, her testimony is inconsistent and

contrary to other evidence in the record; we therefore find it

unreliable.   First, Mrs. Schwechter testified that she was

present in the divorce court when petitioner was asked to produce

his tax returns, including those for the years in issue, and that

he produced such returns.    Later, she testified that she saw

copies of the returns, but she denied any recollection that those

tax returns were presented during the divorce proceedings.

Furthermore, Mrs. Schwechter could not recall any of the dates

during 1988 and 1989 when the divorce hearings took place,

despite the fact that she was a co-defendant and under subpoena

to attend.    Moreover, the divorce court’s October 1989 judgment

made no mention of any refunds owed to petitioner, supporting an

inference that it did not obtain access to the 1988 return

despite Mrs. Schwechter’s testimony to the contrary.    For all




     1
       Mrs. Schwechter does not claim to have seen petitioner
prepare or file his returns.
                                 - 6 -

these reasons, we give little weight to Mrs. Schwechter’s

testimony.

     Petitioner also introduced as circumstantial evidence of

timely filing, and as documentation of subsequent informal claims

for refund, copies of a series of letters purportedly sent by him

to the Internal Revenue Service during the years 1989 through

1995.   Three of the letters purportedly sent to respondent on

December 17, 1989, April 4, 1990, and April 24, 1992, concern

only petitioner’s 1988 return.    Another four letters purportedly

sent to respondent on August 2, 1990, January 23, 1991,

January 22, 1992, and March 16, 1992, address both petitioner’s

1988 and 1989 returns.    Two additional letters introduced by

petitioner appear to be duplicate copies of one of the previously

mentioned letters, and a third was dated after the mailing of the

notice of deficiency.    While the letters vary in length and

specificity, they all make it clear that petitioner is seeking a

refund for taxes paid in 1988 and/or 1989.    Petitioner has

offered the letters for two distinct purposes.    First, petitioner

offers the letters as circumstantial proof that he timely filed

his 1988 and 1989 returns.    Second, petitioner contends that the

letters themselves constitute informal claims for refund.

     We do not believe these letters are probative evidence

because the record demonstrates that the dates on some of

petitioner’s correspondence with the Internal Revenue Service
                               - 7 -

have been misrepresented or falsified, casting doubt on the

authenticity of the dates on the rest.   For example, petitioner

offered into evidence an undated letter from him addressed to the

Internal Revenue Service, Collection Division, Atlanta, Georgia,

in which he demands payment of refunds for the 1988 and 1989

taxable years.   Attached to the letter as it was offered as an

exhibit is a U.S. Postal Service Receipt for Certified Mail, with

the addressee noted as “IRS Service Center, Atlanta Georgia” and

a postmark of January 23, 1991.   The clear import of stapling the

January 23, 1991, certified mail receipt to the undated letter

was to suggest that the letter had been sent on that date.

However, petitioner also introduced the identical undated letter

into evidence in two other formats.    In one, the undated letter

has attached to it a May 2, 1994, letter from respondent to which

the undated letter appears to respond.   In yet another exhibit,

the copy of this same undated letter contains a stamp indicating

receipt by respondent on June 8, 1994.

     In another example, respondent introduced into evidence a

letter written to respondent by petitioner which was dated

February 24, 1995, and, according to both the date filled out on

the facsimile cover sheet and the date stamp of the facsimile

machine, was faxed to respondent on February 27, 1995.   This

February 1995 letter made specific reference to, and attached a

copy of, another letter which petitioner claimed he had written
                               - 8 -

to respondent in 1993.   However, the attached copy of the letter

claimed by petitioner to have been written in 1993 is dated

August 27, 1995.   Asked at trial to account for this

chronological discrepancy, petitioner offered no explanation.

     We conclude that petitioner is, at best, confused about when

he sent written correspondence to respondent.   On this record, we

find that the dates on the letters petitioner claims to have sent

to respondent are unreliable, because it has been demonstrated in

at least two instances that petitioner’s claims about the dates

of his letters are in error, creating an inference that the dates

on other correspondence introduced by petitioner may have been

altered.   Moreover, there is insufficient evidence that the

letters relied on by petitioner were in fact mailed to

respondent.   The one certified mail receipt introduced by

petitioner is attached to a letter that other evidence indicates

was sent approximately 3-1/2 years later, as discussed supra.

Besides petitioner’s self-serving testimony, the only proof that

letters were actually mailed concerns two letters received by

respondent on June 8, 1994, and February 27, 1995.   Therefore, we

conclude that the letters in the record are not probative on the

question of whether petitioner timely filed his returns or made

timely claims for refund with respect to any of the years in

issue.
                               - 9 -

     In addition to the foregoing difficulties with petitioner’s

corroborating evidence, his own testimony is highly implausible.

As an explanation for the absence of stamped copies of the

purportedly hand-delivered and timely filed returns, petitioner

claims that he inadvertently discarded them in May 1993 when he

disposed of records relating to his divorce proceedings.   We find

it implausible that petitioner would not have kept closer track

of these returns if, as he claims, he had experienced trouble in

the past with the IRS losing his returns.   Moreover, petitioner

claims to have written, and has introduced into evidence, several

letters inquiring about his refunds for 1988 and 1989 which

purportedly were written prior to May 1993.   We find it

remarkable, given petitioner’s work experience with the IRS, that

not one of these letters expressing concern about overdue refunds

enclosed a copy of the timely filed returns for the years in

issue if such returns were in fact in petitioner’s possession

until May 1993.   Finally, we find it implausible that petitioner

discarded the returns, yet managed to retain copies of extensive

pre-May 1993 correspondence that he purportedly sent to

respondent concerning the returns.

     The parties agree that petitioner submitted returns for 1988

and 1989 on October 4, 1993.   Petitioner contends that such

returns were merely duplicates of previously filed, timely

returns.   Respondent contends that no returns for 1988 or 1989
                              - 10 -

were filed until that date.   On the basis of the entire record in

this case, we conclude that petitioner has failed to show that a

return was filed, or that a claim for refund was made, prior to

October 4, 1993.

     On the returns submitted on October 4, 1993, petitioner

reported wages, interest, and dividend income for 1988 and 1989

of $82,452.96 and $22,716.54, respectively.     Petitioner claimed

Schedule C business deductions for 1988, 1989, and 1991 of

$61,381, $46,062, and $30,374, respectively.     After claiming

various deductions not at issue in this case, the returns show

taxes of $2,501 for 1988 and $0 for 1989.     For 1988 and 1989,

$19,209 and $5,295.872 were withheld from petitioner’s wages,

respectively.   The returns sought refunds of $16,708 and

$7,796.873 for 1988 and 1989, respectively.

     On May 11, 1995, respondent issued a notice of deficiency

with respect to petitioner’s 1988, 1989, and 1991 taxable years.

In the notice, respondent disallowed Schedule C business expenses

in the amount of $34,381, $30,770, and $11,021 in 1988, 1989, and


     2
       Although the parties’ stipulation states the amount
withheld for 1989 was $5,285.87, petitioner’s return for the
year, respondent’s certificate of assessments and payments for
petitioner with respect to that year, and an earlier stipulation
record the figure as $5,295.87.
     3
       The $7,796.87 refund sought for 1989 exceeds the $5,295.87
in withheld taxes for that year by $2,501. On his 1989 return,
petitioner appears to have treated the $2,501 in taxes shown as
due on his 1988 return as an amount available as a credit against
his 1989 tax liability.
                              - 11 -

1991, respectively.   Respondent also determined that petitioner

had unreported unemployment compensation income of $5,200 in 1989

and was liable for self-employment tax of $414 in 1991.   After

taking into account certain net operating loss carrybacks, the

notice determined deficiencies of $9,866, $1,612, and $414 for

1988, 1989, and 1991, respectively.

1.   The Deficiency Determinations

      Petitioner has offered no evidence or argument in support of

his averments in the petition that respondent’s deficiency

determinations for the years in issue are in error, other than to

claim that the notice of deficiency is invalid because untimely.

      The Commissioner has 3 years from the time a return is filed

to issue a notice of deficiency with respect to income tax.   See

secs. 6212(a),4 6213(a), 6501(a), 6503(a)(1).   Even if

petitioner’s claim based on the statute of limitations were

properly before the Court,5 he would not prevail.   In general, a

return is deemed to have been filed when it is received by


     4
       Unless otherwise noted, all section references are to the
Internal Revenue Code in effect for the years in issue, and all
Rule references are to the Tax Court Rules of Practice and
Procedure.
     5
       Petitioner did not raise this claim in his petition or
seek amendment thereto. See United Bus. Corp. of Am. v.
Commissioner, 19 B.T.A. 809, 831-832 (1930), affd. 62 F.2d 754
(2d Cir. 1933); Oliver v. Commissioner, T.C. Memo. 1997-84; see
also Columbia Bldg., Ltd. v. Commissioner, 98 T.C. 607, 611
(1992); Badger Materials, Inc. v. Commissioner, 40 T.C. 1061,
1062-1063 (1963), withdrawing in part and modifying 40 T.C. 725
(1963).
                              - 12 -

respondent.   See United States v. Lombardo, 241 U.S. 73, 76

(1916).   As previously discussed, we do not find petitioner’s

testimony, or the corroborating evidence he has offered, reliable

or credible with respect to his claim that he timely filed his

returns for the years in issue.   Moreover, even if any of

petitioner’s evidence were reliable, it would still fall short of

the type of corroboration we have found sufficient to prove

timely filing when a return is lost and the Commissioner has no

record of receiving it.   Typically, we have required reliable

testimony or other corroborating evidence of the circumstances

surrounding the return’s preparation and mailing.   See, e.g.,

Estate of Wood v. Commissioner, 92 T.C. 793 (1989), affd. 909

F.2d 1155 (8th Cir. 1990); Mitchell Offset Plate Serv., Inc. v.

Commissioner, 53 T.C. 235, 239-240 (1969); see also Rakosi v.

Commissioner, T.C. Memo. 1993-68 (taxpayer failed to prove she

filed her return where she did not produce any documentary

evidence of timely mailing and relied solely on the self-serving

testimony of herself and her husband), affd. without published

opinion 46 F.3d 1144 (9th Cir. 1995).   Here petitioner has

offered no corroborating evidence with respect to the

preparation, mailing, or delivery of the returns.   Thus we

conclude that petitioner did not file his 1988 and 1989 returns

prior to October 4, 1993.   Since we conclude that petitioner did

not submit returns for the years in issue until October 4, 1993,
                               - 13 -

the May 11, 1995, notice of deficiency was timely because issued

within 3 years of October 4, 1993.      In the absence of any other

evidence or argument to support petitioner’s allegations of

error, respondent’s deficiency determinations for the years in

issue are sustained.

2.   Amount of Overpayment

      The parties have stipulated that $19,209 and $5,295.87 were

withheld from petitioner’s wages in 1988 and 1989, respectively.

Section 6401(b) provides that refundable credits, such as taxes

withheld from wages under section 31, exceeding the income tax

imposed for each year shall be considered overpayments of tax.

In the instant case, the income tax imposed for 1988 and 1989

equals the sum of the deficiency and the amount shown as tax by

the petitioner on his return for each year.     See sec. 6211(a) and

(b)(1).   For 1988, the deficiency is $9,866 and the amount shown

on the return was $2,501; thus, the income tax imposed for 1988

is $12,367.   For 1989, the deficiency is $1,612 and the amount

shown on the return was $0; thus, the income tax imposed for 1989

is $1,612.    Accordingly, petitioner has an overpayment for 1988

of $6,842 (a section 31 credit of $19,209 less the tax imposed of

$12,367), and an overpayment for 1989 of $3,683.87 (a section 31

credit of $5,295.87 less tax imposed of $1,612).
                              - 14 -

3.   Petitioner’s Entitlement to Credits or Refunds of the 1988

and 1989 Overpayments

      Although we have determined that an overpayment exists, our

jurisdiction to order a refund or credit of an overpayment is

limited and depends upon when the taxes were paid.    See secs.

6511(a) and (b) and 6512(b); Commissioner v. Lundy, 516 U.S. 235

(1996).   The withholding taxes making up the overpayments for

1988 and 1989 are deemed paid on April 15, 1989, and April 15,

1990, respectively.   See sec. 6513(b)(1).   Under section

6512(b)(3), we may order the credit or refund of an overpayment

only if one of three conditions is met.   The first condition, set

out in section 6512(b)(3)(A), requires that the tax be paid after

the mailing of the notice of deficiency, which did not occur

here.

      The second condition, set out in section 6512(b)(3)(B),

allows a credit or refund of an overpayment if a claim for refund

deemed filed on the date the notice of deficiency was mailed

would have constituted a timely claim for refund of the overpaid

amount under applicable limitations periods prescribed in section

6511(b)(2), (c), or (d).   Since the returns for 1988 and 1989

filed by petitioner on October 4, 1993, each sought a refund,

petitioner made actual claims for refund for both years more than

19 months earlier than a claim deemed filed, pursuant to section

6512(b)(3)(B), on the date of the May 11, 1995, notice of
                               - 15 -

deficiency.    Thus, the deemed claim under section 6512(b)(3)(B)

offers no benefit to petitioner.

       The third condition, set out in section 6512(b)(3)(C),

applies where an actual claim for refund, which is timely under

section 6511, has been filed before the mailing of the notice of

deficiency and either has not been disallowed or, if disallowed,

was or could have been the basis of a timely refund suit as of

that date.    In such circumstances, any credit or refund is

limited to taxes paid within the periods specified in section

6511(b)(2), (c), or (d).

       As noted, the 1988 and 1989 returns filed by petitioner on

October 4, 1993, each sought a refund; thus the refund claim on

each return would be timely under section 6511 because made

“within 3 years from the time the return was filed”.    Sec.

6511(a).    We therefore consider whether the taxes at issue were

paid within the periods specified in section 6511(b)(2), (c), or

(d).    Section 6511(c) and (d) contains special rules not

applicable in this case.    We accordingly consider section

6511(b)(2).

       Section 6511(b)(2) limits the allowance of a claim for

credit or refund based upon whether the claim was filed within 3

years from the filing of the return, see sec. 6511(b)(2)(A), was

not filed within such period, see sec. 6511(b)(2)(B), or was not

filed at all prior to allowance, see sec. 6511(b)(2)(C).      The
                              - 16 -

returns filed on October 4, 1993, for 1988 and 1989 both asserted

claims for refund (which accordingly fall within the 3-year

period), subjecting these claims to the limitation imposed by

section 6511(b)(2)(A).   Under this limitation, the overpaid taxes

must have been paid in the 3-year period, plus any return filing

extensions, immediately preceding the filing of the claim.    Thus,

only taxes paid in the 3 years and 122 days6 preceding October 4,

1993-–that is, after June 3, 1990-–are subject to credit or

refund based on the claims made in the October 4, 1993 returns.

As the taxes at issue were deemed paid on April 15, 1989, and

April 15, 1990, we do not have authority under section

6511(b)(2)(A)(as incorporated by section 6512(b)(3)(C)) to credit

or refund them based on petitioner’s late-filed 1988 and 1989

returns.

     Petitioner also argues that the various letters he wrote to

respondent inquiring about his 1988 and 1989 refunds constitute

informal claims for refund.   While petitioner introduced into

evidence certain letters purporting to have dates prior to

April 15, 1991, and April 15, 1992, we have concluded, for the

reasons previously discussed, that these letters were not sent to

respondent on or near the dates indicated on the letters.     The

only letters of petitioner’s in the record for which there is



     6
        It has been stipulated that petitioner received 122-day
extensions for filing both his 1988 and 1989 returns.
                             - 17 -

evidence of receipt by respondent were sent in 1994 and 1995.

Thus, petitioner has not made a claim for refund prior to

October 4, 1993, and accordingly we are without authority to

order a credit or refund of taxes under section 6511(b)(2)(B) (as

incorporated by section 6512(b)(3)(C)).

     We therefore conclude that we are without authority to order

any credit or refund of petitioner’s 1988 and 1989 overpayments.

Nevertheless, although neither party has addressed this issue,

our conclusion regarding the overpayments does not mean that

petitioner is required to make any payment in respect of the 1988

and 1989 deficiencies sustained herein.    Petitioner is entitled

to offset his unassessed withholding taxes for 1988 and 1989

against the 1988 and 1989 deficiency amounts, respectively.      See

White v. Commissioner, 72 T.C. 1126, 1133 (1979) (estimated taxes

may offset tax liability attributable to a deficiency for same

year); Baral v. Commissioner, T.C. Memo. 1978-383 (withholding

taxes may offset tax liability attributable to a deficiency for

same year).

     To reflect the foregoing,

                                      Decision will be entered

                                 under Rule 155.
