                  T.C. Summary Opinion 2010-32



                      UNITED STATES TAX COURT



                PHILIP EDWARD SAMS, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 1802-09S.                 Filed March 16, 2010.



     Philip Edward Sams, pro se.

     Daniel N. Price, for respondent.



     DAWSON, Judge:   This case was heard pursuant to the

provisions of section 7463 of the Internal Revenue Code in effect

at the time the petition was filed.1    Pursuant to section

7463(b), the decision to be entered is not reviewable by any




     1
      Unless otherwise indicated, section references are to the
Internal Revenue Code, as amended, and Rule references are to the
Tax Court Rules of Practice and Procedure.
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other court, and this opinion shall not be treated as precedent

for any other case.

     This proceeding was commenced in response to a Notice of

Determination Concerning Collection Action(s) Under Section 6320

and/or 6330 with respect to petitioner’s Federal income tax

liabilities for 2002, 2003, and 2004.     The issue presented for

decision is whether the Internal Revenue Service (IRS) Appeals

Office abused its discretion regarding its determination that

petitioner is not entitled to a claimed overpayment credit of

$2,918 from 2002 to be applied against his 2003 income tax

liability.

                             Background

     The parties did not submit a stipulation of facts with

exhibits.    Instead, respondent filed on August 7, 2009, pursuant

to Rule 91(f), a motion to show cause why proposed facts and

evidence should not be accepted as established for the purposes

of this case.   On August 10, 2009, the Court granted respondent’s

motion and issued an order for petitioner to show cause.     On

September 15, 2009, petitioner filed a detailed response to

respondent’s motion and to the Court’s order to show cause by

agreeing or accepting paragraphs 1 through 30 of respondent’s

Exhibit A, as well as attached Exhibits 1-J through 26-J.     But

petitioner objected to Exhibit 18-J and moved to strike it as

irrelevant and invasive of his privacy.     At trial the Court
                                - 3 -

denied petitioner’s motion to strike Exhibit 18-J.         Accordingly,

the facts, documents, and evidence in respondent’s proposed

stipulation of facts as well as Exhibits 1-J through 26-J were

deemed established, admitted, and made a part of the record.        In

addition, the Court admitted petitioner’s Exhibit 30-P.

       Petitioner resided in Texas when he filed his petition.      He

is an engineer who experienced some interruptions in his

employment with different corporations at various times.        He did

not file timely Federal income tax returns for 1999 through 2007.

He filed his returns for each of those years with IRS Appeals,

New Orleans Office, on July 31, 2008.

       Respondent generated substitutes for returns pursuant to

section 6020(b) for 2002, 2003, and 2004 and issued separate

notices of deficiency for each year determining that petitioner

was liable for the following income tax deficiency and additions

to tax:

                                        Additions to Tax
                              Sec.              Sec.
Year        Deficiency     6651(a)(1)        6651(a)(2)       Sec. 6654

2002         $2,616          $588.60           $536.28           ---
2003          5,469         1,178.27            756.75         $133.95
2004          5,204           130.72             49.38           ---

Petitioner received the notices of deficiency but did not

petition this Court for redeterminations.      Therefore the taxes

due were assessed.    The IRS then proceeded to collect by levy the

balances due for 2002 through 2004.      On February 14, 2008, the
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IRS sent petitioner a Final Notice-Notice of Intent to Levy and

Notice of Your Right to a Hearing.        Petitioner timely requested a

collection due process hearing, and petitioner was granted a

collection due process telephone hearing on December 15, 2008.

Petitioner had requested in the late-filed returns, including

those for 2002, 2003, and 2004, that overpayments resulting from

excess wage withholding and estimated tax payments from each

preceding year be credited to each succeeding year.         The

pertinent information relating to petitioner’s claimed

overpayments is as follows:

     Tax             Date Return              Claimed Overpayment
     Year              Filed                    From Prior Year

     1999             7/31/2008                      $294
     2001             7/31/2008                       247
     2002             7/31/2008                     2,918
     2003             7/31/2008                     2,583
     2004             7/31/2008                        35

     On January 15, 2009, the IRS sent petitioner a notice of

determination regarding the proposed levy action.       It stated that

the proposed levy action would not be taken and that collection

action would be temporarily suspended pending an improvement in

petitioner’s financial situation.     The attachment to the notice

of determination, prepared by Settlement Officer Richard J.

Wempe, shows that there is no current balance of tax due for 2002

and 2004.   It also contains the following analysis of

petitioner’s claimed overpayment credit:
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     2. Issues raised by the taxpayer:

     Challenges to the existence or amount of the liability:
     Prior to the CDP hearing the taxpayer filed amended tax
     returns with the Service Center. Those returns led to
     adjustments to the SFR assessments that were previously
     made. Taxpayer now contests the Service’s failure to
     post credits (See “Other issues” below).

     Other Issues:
     Taxpayer contends that overpayments from other periods
     (years 1999 and 2001) are sufficient to pay the
     outstanding balance.

     My analysis:
     Taxpayer argues for the offset of overpayments from
     years 1999 & 2001 to the remaining unpaid liability.
     The law (IRC Sec. 6511) provides for a period of three
     (3) years from the due date of a tax return during
     which a taxpayer can file a return claiming return of
     an overpayment of tax. Beyond that timeframe the
     overpayment is no longer refundable or available for
     offset to other liabilities.

     Taxpayer filed tax returns for years 1999 & 2001 in
     July, 2008. Those returns showed overpayments in the
     amount of $294 & $2,671, respectively. Offset of those
     overpayments was correctly disallowed. Those returns
     were not filed by the taxpayer until well after the
     statutory time for claiming refund of the overpayments
     in those years.

                           Discussion

     At trial petitioner conceded that Settlement Officer Wempe

did not abuse his discretion in determining that the proposed

levy action should not be taken and that the collection action

should be temporarily suspended pending an improvement in

petitioner’s financial condition.   Petitioner stated:

     But my contention is that on that point, the decision
     whether to proceed on levy, there is no disagreement
     between the IRS and myself on that point. Mr. Wempe
     and I were in agreement with his conclusions. He felt
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     that I had provided the information that he required.
     I met his statutory requirements to do that.

     We agree and sustain respondent’s determination that the

levy upon petitioner’s assets should not be made.

     Petitioner claims he is entitled to an overpayment credit of

$2,918 from 2002 to be applied against his 2003 income tax

liability.   Respondent contends that the credit is not allowable

because, as Settlement Officer Wempe determined, it is time

barred.   Neither party has addressed this Court’s jurisdiction in

this proceeding to decide the credit issue.

     During the collection hearing a taxpayer has the right to

challenge the existence and amount of the underlying tax

liability only if he or she did not receive a notice of

deficiency or did not otherwise have an opportunity to dispute

the tax liability.   Sec. 6330(c)(2)(B).   However, if the taxpayer

received a notice of deficiency or otherwise had an opportunity

to dispute the tax liability, the Appeals officer has discretion

to consider a claim as to the existence or amount of the

underlying tax liability.    Sec. 301.6330-1(e)(3), Q&A-E11,

Proced. & Admin. Regs.2     However, if the taxpayer received a

     2
      Sec. 301.6330-1(e)(3), Q&A-E11, Proced. & Admin. Regs.,
provides the following illustrative question and answer:

     Q-E11. If an Appeals officer considers the merits of a
     taxpayer’s liability in a CDP [collection due process]
     hearing when the taxpayer had previously received a
     statutory notice of deficiency or otherwise had an
                                                   (continued...)
                               - 7 -

notice of deficiency or otherwise had an opportunity to dispute

the underlying tax liability, the Court does not have

jurisdiction to decide the amount of the underlying tax liability

even if the Appeals officer exercised his/her discretion to do

so.   See Behling v. Commissioner, 118 T.C. 572 (2002).

      Petitioner received a notice of deficiency, and his claim of

entitlement to credit for overpayment of prior years’ taxes could

have been raised in a deficiency proceeding.   His entitlement to

the credits is determinative of the amount of the underlying

liability.   The Court does not have jurisdiction in this

collection proceeding to decide the amount of the underlying tax

      2
       (...continued)
      opportunity to dispute the liability prior to the
      issuance of a notice of intention to levy, will the
      Appeals officer’s determination regarding those
      liability issues be considered part of the Notice of
      Determination?

      A-E11. No. An Appeals officer may consider the
      existence and amount of the underlying tax liability as
      a part of the CDP hearing only if the taxpayer did not
      receive a statutory notice of deficiency for the tax
      liability in question or otherwise have a prior
      opportunity to dispute the tax liability. * * * In the
      Appeals officer’s sole discretion, however, the Appeals
      officer may consider the existence or amount of the
      underlying tax liability, * * * at the same time as the
      CDP hearing. Any determination, however, made by the
      Appeals officer with respect to such a precluded issue
      shall not be treated as part of the Notice of
      Determination issued by the Appeals officer and will
      not be subject to any judicial review. * * * Even if a
      decision concerning such precluded issues is referred
      to in the Notice of Determination, it is not reviewable
      by the Tax Court because the precluded issue is not
      properly part of the CDP hearing.
                              - 8 -

liability even though Settlement Officer Wempe exercised his

discretion to do so.3

     At trial petitioner stated:   “There really is no other issue

of difference between the IRS Office of Appeals position and my

position, other than the disallowance of these credits.    There

was no disagreement with regard to levy or other issues that

might have been looked at by Appeals.”   Consequently, because

there are no tax liabilities remaining for 2002 and 2004, those

years will be dismissed as moot, see Greene-Thapedi v.

Commissioner, 126 T.C. 1 (2006), and decision will be entered

sustaining respondent’s determination that the levy upon

petitioner’s property to collect his unpaid tax liability for

2003 should not proceed because of his current financial

situation.




     3
      Although we do not have jurisdiction over petitioner’s
claimed credits, we observe that the amount of an overpayment for
a tax year that is recoverable and may be credited to a later
year is limited to the amount paid within 3 years before the
filing of the claim. Sec. 6511(b)(2)(A). Petitioner’s withheld
and estimated taxes were deemed paid on the date his income tax
returns were due without regard to any extensions. He claimed
the overpayments on returns filed more than 3 years after the
date the returns were due. Thus, since the withheld and
estimated taxes were deemed paid more than 3 years before he
filed the returns, he is not entitled to a credit for any
overpayment of those taxes.
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To reflect the foregoing,

                                         An appropriate order of

                                    dismissal and decision will be

                                    entered.
