                         T.C. Summary Opinion 2016-45



                         UNITED STATES TAX COURT



                    KEVIN A. PECK, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 29144-13S.                        Filed August 22, 2016.



      Kevin A. Peck, pro se.

      Adam W. Dayton and Ric D. Hulshoff, for respondent.



                               SUMMARY OPINION


      GUY, Special Trial Judge: This case was heard pursuant to the provisions

of section 7463 in effect when the petition was filed.1 Pursuant to section 7463(b),



      1
      Unless otherwise indicated, all section references are to the Internal
Revenue Code, as amended and in effect at all relevant times. All monetary
amounts are rounded to the nearest dollar.
                                         -2-

the decision to be entered is not reviewable by any other court, and this opinion

shall not be treated as precedent for any other case.

      Respondent issued petitioner a statutory notice of deficiency for the taxable

year 2009. Petitioner filed a timely petition for redetermination with the Court

pursuant to section 6213(a). At the time the petition was filed, petitioner resided

outside of the United States.

      Respondent concedes that petitioner is not liable for the deficiency or the

additions to tax determined in the notice of deficiency. Although the parties agree

that petitioner overpaid his Federal income tax for 2009, they disagree in the first

instance as to whether the Court has jurisdiction to award petitioner a refund. In

this regard, the primary issue for decision is whether petitioner was “financially

disabled” within the meaning of section 6511(h) so that the running of the period

of limitations governing claims for refund was suspended and is not a bar to the

Court’s jurisdiction. If we conclude that the Court has jurisdiction to award a

refund, we must determine the amount of petitioner’s overpayment--a question

that turns on whether he is entitled to a deduction for charitable contributions in

excess of the amount respondent allowed.
                                            -3-

                                    Background

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

facts and the accompanying exhibits are incorporated herein by this reference.

I. Petitioner’s Background

      A. Military Service

      Petitioner has had a long career in the U.S. Army (Army) and has been

stationed at numerous military installations in the United States and overseas.

After initially enlisting in 1988, petitioner left the Army to attend Shippensburg

University, where he earned a bachelor’s degree. He resumed his career with the

Army as an officer in 1995.

      Between 1995 and 2002 petitioner was stationed at Fort Campbell, on the

Kentucky-Tennessee border, and later at a military base near San Antonio, Texas.

Petitioner was stationed in Iraq in 2003.

      In 2004 the Army selected petitioner to pursue graduate studies at Baylor

University where he earned two master’s degrees, one in science information

systems and the other in healthcare administration.

      In 2007 petitioner returned to Iraq for 10 months. After that tour of duty

petitioner made a brief stop at Fort Belvoir, Virginia, followed by a deployment to

Seoul, South Korea, from 2008 to 2011. Petitioner was responsible for managing
                                          -4-

medical information technology systems for the Army’s healthcare system in

South Korea.

      While stationed in South Korea petitioner moved multiple times. He

explained that paying rent in South Korea was not a simple matter. To pay his

rent, he first made a cash withdrawal at the bank (in U.S. dollars), converted the

dollars to local currency, and then delivered the cash to his landlord.

      B. Rental Properties

      In 1998 and 2000 petitioner purchased residences in Clarksville, Tennessee,

and San Antonio, Texas, respectively. He later converted the residences into

rental properties. Petitioner hired a management company to take care of the

Tennessee property and, with the help of neighbors, he managed the San Antonio

property.

      C. Charitable Contributions

      Petitioner attended a local church while he was stationed in South Korea.

Although he made cash contributions to the church and participated in charitable

events, he was unable to produce records or any written acknowledgment of his

cash contributions, nor did he retain records related to his participation in

charitable events.
                                         -5-

      D. Petitioner’s Injuries

      In the late 1990s petitioner was injured at the Joint Rangers Training School

at Fort Campbell. Petitioner also suffered significant injuries while he was

deployed in Iraq. As discussed below, at the time of trial petitioner continued to

receive medical treatment for some of his service-related injuries.

II. Delinquent Tax Returns

      Because of his frequent overseas deployments, petitioner did not always

receive his mail timely, and he was delinquent in filing his Federal income tax

returns. In late 2009, at the recommendation of friends, petitioner hired Letha

Rupert, a certified public accountant in Las Vegas, Nevada, to prepare his tax

returns for 2007 through 2010. Although petitioner provided Ms. Rupert with all

of the documents that he believed were necessary to prepare and file his tax

returns, he lost contact with her in 2011.2

      In October 2012 an Army legal assistance attorney wrote to Ms. Rupert and

informed her that petitioner had been contacted by the Internal Revenue Service

(IRS) about his delinquent tax returns and urged her to contact petitioner to assist

in resolving the matter.


      2
        It appears that sometime in 2011 Ms. Rupert was seriously injured as the
result of a physical assault.
                                         -6-

      On July 8, 2013, the IRS sent a letter to petitioner (and sent a copy to Ms.

Rupert) stating that, because he had not filed a Federal income tax return for 2009,

the IRS had prepared a substitute for return in accordance with the provisions of

section 6020(b).

      On July 24, 2013, petitioner sent an email to Ms. Rupert referring to

payments that he had remitted to the IRS in respect of his tax liability for 2008 and

his receipt of “another assessment for the 2010 tax year”.

III. Notice of Deficiency and Petition for Redetermination

      On September 9, 2013, respondent issued to petitioner a notice of deficiency

(and sent a copy to Ms. Rupert) determining a deficiency of $15,526 in his Federal

income tax for 2009 and additions to tax under section 6651(a)(1) and (2). On

December 13, 2013, petitioner (with Ms. Rupert’s assistance) filed a timely

petition for redetermination with the Court challenging the notice.

IV. Postpetition Developments

      Ms. Rupert passed away suddenly in May 2014. In the meantime petitioner

received a letter from the IRS Office of Appeals inviting him to discuss his case

with the aim of arriving at a basis for settlement. In June 2014 petitioner

submitted to the IRS a Form 1040, U.S. Individual Income Tax Return, for 2009,

claiming that he was due a refund on an overpayment of $6,438. He attached to
                                           -7-

the tax return a Schedule A, Itemized Deductions, claiming in relevant part a

deduction of $23,665 for charitable contributions, including $17,041 in cash that

he had purportedly contributed to the church he attended in South Korea. With the

exception of the $17,041 of charitable cash contributions, the IRS accepted

petitioner’s tax return as submitted and concluded that he had an overpayment of

$1,838 for 2009.

      On September 15, 2014, petitioner wrote to the IRS and requested a refund

for 2009. Petitioner’s letter states in pertinent part:

      1. I am asking that my credited tax return funds for 2009 be released
      from the Excess Collections Department and then paid out to me as I
      was deployed to Iraq during 2007 and forward deployed to a
      Hazardous Duty Armistice zone from AUG 2008-AUG 2011.
      Followed by an assignment in HI from 2011-2013.

      2. Due to the continued deployments, address changes, and overseas
      assignments I was experiencing considerable challenges in collecting
      my tax documents in order to accurately file. As such, in late 2010 I
      secured a former senior IRS agent to act on my behalf while I was
      deployed who began to build my file, submit the appropriate
      extensions, etc. Unfortunately, however, she did not file my taxes as
      she passed away from a massive heart attack prior to completing
      them. After extensive efforts on my part and the assistance of the
      Army’s Judge Advocate General I was able to secure my tax files and
      file my taxes upon returning to the Continental US in 2014.

      3. In light of my back-to-back deployments and the unusual
      extenuating circumstances with my account please grant my account
      an exception for the tax year 2009.
                                          -8-

By letter dated October 21, 2014, the IRS informed petitioner that his refund claim

was denied because it was untimely.

      Petitioner subsequently submitted to the IRS a letter signed by

Dr. Edward L. Baldwin, Jr., dated November 19, 2014. The letter describes in

general terms petitioner’s service-related injuries following his deployments to

Iraq and states that petitioner’s medical evaluations began in 2008, that he had

been under Dr. Baldwin’s care since October 7, 2014, and that he was expected to

remain in treatment over the next year. Dr. Baldwin’s letter does not speak to

petitioner’s ability to manage his personal financial affairs.

                                     Discussion

      The Court’s jurisdiction to determine an overpayment of tax and to order the

refund of that overpayment is prescribed in section 6512. In the case of a

deficiency proceeding initiated by a taxpayer under section 6213(a), if the Court

determines that there is no deficiency and further finds that the taxpayer has made

an overpayment of income tax for the same taxable period, the Court is vested

with jurisdiction under section 6512(b)(1) to determine the amount of the

overpayment; and when the Court’s decision becomes final, the taxpayer is

entitled to a credit or refund in the amount of the overpayment.
                                         -9-

      Section 6512(b)(3)(B), however, restricts the amount of any refund that the

Court may allow to the portion of any tax that 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)”.

In sum, section 6512 incorporates “the look-back provisions from * * * [section]

6511(b)(2), and directs the Tax Court to determine the applicable period by

inquiring into the timeliness of a hypothetical claim for refund filed ‘on the date of

the mailing of the notice of deficiency’.” Commissioner v. Lundy, 516 U.S. 235,

241-242 (1996) (quoting section 6512(b)(3)(B)).

      There is no dispute that no portion of petitioner’s overpayment was paid

within the applicable lookback period. Where (as here) the taxpayer has not filed

a tax return as of the date the IRS mails a notice of deficiency and the notice of

deficiency is mailed more than three years after the tax constituting the

overpayment was paid, the Tax Court normally lacks jurisdiction to determine an
                                        -10-

overpayment.3 See Brosi v. Commissioner, 120 T.C. 5, 8-10 (2003); Haller v.

Commissioner, T.C. Memo. 2010-147.

      Petitioner relies, however, on a narrow exception to the general rules

governing the timeliness of refund claims. Specifically, petitioner asserts that he

was “financially disabled” within the meaning of section 6511(h), and, therefore,

the normal period for seeking a refund for 2009 was suspended. Section 6511(h)

provides in relevant part as follows:

            SEC. 6511(h). Running of Periods of Limitation Suspended
      While Taxpayer Is Unable to Manage Financial Affairs Due to
      Disability.--

                    (1) In general.--In the case of an individual, the running
             of the periods specified in subsections (a), (b), and (c) shall be
             suspended during any period of such individual’s life that such
             individual is financially disabled.

                   (2) Financially disabled.--

                         (A) In general.--For purposes of paragraph (1), an
                   individual is financially disabled if such individual is

      3
       Petitioner’s overpayment is attributable to tax withheld from his wages
(and remitted to the Department of the Treasury) for 2009. For purposes of sec.
6511, petitioner is deemed to have paid that tax on April 15, 2010. See sec.
6513(b)(1). The notice of deficiency was mailed to petitioner on September 9,
2013--more than three years after petitioner’s tax was deemed to have been paid.
There is no indication that petitioner requested or was granted any extension of
time to file his tax return for 2009. Finally, the tax in question was not paid during
the two-year period before the notice of deficiency was mailed on September 9,
2013. See, e.g., Haller v. Commissioner, T.C. Memo. 2010-147.
                                         -11-

                   unable to manage his financial affairs by reason of a
                   medically determinable physical or mental impairment of
                   the individual which can be expected to result in death or
                   which has lasted or can be expected to last for a
                   continuous period of not less than 12 months. An
                   individual shall not be considered to have such an
                   impairment unless proof of the existence thereof is
                   furnished in such form and manner as the Secretary may
                   require.

                          (B) Exception where individual has guardian,
                   etc.--An individual shall not be treated as financially
                   disabled during any period that such individual’s spouse
                   or any other person is authorized to act on behalf of such
                   individual in financial matters.

      The Secretary has delineated the form and manner of proof necessary for a

taxpayer to establish a qualifying physical or mental impairment under section

6511(h). See Rev. Proc. 99-21, 1999-1 C.B. 960. Specifically, a taxpayer must

present a physician’s written statement setting forth: (1) a description of the

taxpayer’s physical or mental impairment; (2) the physician’s medical opinion that

the taxpayer’s physical or mental impairment prevented him from managing his

financial affairs; (3) the physician’s medical opinion that the impairment was or

could be expected to result in death or lasted (or could be expected to last) for a

continuous period of not less than 12 months; and (4) the specific period during

which the taxpayer was prevented by such physical or mental impairment from
                                         -12-

managing his financial affairs. Id. sec. 4(1), 1999-1 C.B. at 960; see Brosi v.

Commissioner, 120 T.C. at 11.4

      As previously mentioned, the record includes a written statement from

Dr. Baldwin, petitioner’s treating physician at the time of trial. Dr. Baldwin’s

letter describes in general terms petitioner’s service-related injuries and states that

his medical evaluations began in 2008, that he had been under Dr. Baldwin’s care

since October 7, 2014, and that he was expected to remain in treatment over the

next year. Dr. Baldwin’s letter does not speak to petitioner’s ability to manage his

personal financial affairs.

      The Court is certainly sympathetic to petitioner’s situation. The record

reflects that although he took reasonable steps to prepare and file his 2009 tax

return in time to claim a refund, circumstances (including his deployment to South

Korea and Ms. Rupert’s difficulties) conspired against him. Unfortunately, we are

unable to conclude that he qualifies for the specific relief prescribed in section

6511(h).

      Although we have no doubt that petitioner’s injuries may have been a factor

in his decision to hire Ms. Rupert, we conclude, after considering all the facts and

      4
        We note that there is no evidence that any person was authorized to act on
petitioner’s behalf in financial matters during the period in question. See
Rev. Proc. 99-21, sec. 4(2), 1999-1 C.B. 960, 960.
                                        -13-

circumstances, that petitioner was not financially disabled during the period in

question. Petitioner testified that he was capable of managing one of his rental

properties and overseeing the management of another. The record also indicates

that petitioner was able to pay his bills and manage financial transactions such as

paying his rent while he was stationed in South Korea. Finally, Dr. Baldwin did

not offer an opinion that petitioner’s condition prevented him from managing his

personal financial affairs.

      In sum, we conclude that the Court lacks jurisdiction under section 6512(b)

to determine an overpayment for the taxable year 2009. Consequently, the

question whether petitioner is entitled to a deduction for charitable contributions

in excess of the amount respondent allowed is moot.

      To reflect the foregoing,


                                               An appropriate decision will be

                                       entered.
