                     115 T.C. No. 24



                 UNITED STATES TAX COURT



            HELEN S. HEALER, Petitioner v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No.   12867-99.                 Filed October 13, 2000.



     Petitioner (P) failed to file timely a Federal
income tax (tax) return (return) for 1996. On Apr. 28,
1999, respondent (R) timely mailed to P a notice of
deficiency (notice) which included a substitute for
return prepared by R pursuant to sec. 6020(b)(1),
I.R.C., for P’s tax year 1996 (R’s substitute for
return for P’s tax year 1996). As of the date of the
mailing of the notice, P had not filed a return for
1996. On July 16, 1999, P signed a return for 1996
(P’s 1996 return), which was received by R on July 19,
1999. On Aug. 4, 1999, after the petition was filed in
this case, P signed an amended return for 1996 (P’s
amended 1996 return), which she submitted to R. In P’s
1996 return, P’s amended 1996 return, and the petition,
P disputed each determination in the notice that ap-
pears in R’s substitute for return for P’s tax year
1996 (except P conceded in the petition and P’s amended
1996 return that her prepayment credits for 1996, which
are attributable to estimated tax payments for that
year, total $30,480). The parties now agree that,
                               - 2 -

     after taking into account P’s prepayment credits, P has
     overpaid her tax for 1996 (1996 overpayment). It is
     P’s position that sec. 6512(b)(3)(B), I.R.C., requires
     the application of the 3-year look-back period in sec.
     6511(b)(2)(A), I.R.C., and that consequently she is
     entitled to a refund of her 1996 overpayment.

          Held: Neither the amendment of sec. 6512(b)(3),
     I.R.C., nor its legislative history, effective for tax
     years that ended after Aug. 5, 1997, see Taxpayer
     Relief Act of 1997, Pub. L. 105-34, sec. 1282(a) and
     (b), 111 Stat. 1037-1038, permits the Court to deviate
     in this case from the holding in Commissioner v. Lundy,
     516 U.S. 235 (1996). Held, further, a substitute for
     return prepared by the Commissioner of Internal Revenue
     pursuant to sec. 6020(b)(1), I.R.C., does not consti-
     tute a return filed by the taxpayer for purposes of
     sec. 6511, I.R.C. Held, further, sec. 6512(b)(3)(B),
     I.R.C., requires the application in the instant case of
     the 2-year look-back period in sec. 6511(b)(2)(B),
     I.R.C. See Commissioner v. Lundy, supra. Held, fur-
     ther, P is not entitled to a refund of her 1996 over-
     payment. See sec. 6512(b)(3)(B); Commissioner v.
     Lundy, supra.



     Laurence L. Pillsbury, for petitioner.

     Taylor Cortright, for respondent.



                              OPINION


     CHIECHI, Judge:   Respondent determined the following defi-

ciency in, and additions under section 6651(a)(1) and (2)1 to,

petitioner’s Federal income tax (tax) for 1996:



     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year at issue. All
Rule references are to the Tax Court Rules of Practice and
Procedure.
                               - 3 -

                                       Additions to Tax
 Year     Deficiency      Sec. 6651(a)(1)         Sec. 6651(a)(2)
 1996     $34,417.00          $885.82                 $433.07

     The only issue remaining for decision is whether petitioner

is entitled to a refund of her overpayment of tax for 1996.       We

hold that she is not.

                            Background

     This case was submitted fully stipulated.     The facts that

have been stipulated are so found.     The following background

reflects facts stipulated by the parties and matters asserted on

brief that the parties do not dispute.

     Petitioner’s mailing address was in South Natick, Massachu-

setts, at the time the petition was filed.

     Petitioner received an automatic extension of time until

August 15, 1997, within which to file her tax return (return) for

1996.   Thereafter, she received a second extension until October

15, 1997, within which to file that return.     Petitioner did not

timely file her 1996 return on or before October 15, 1997.

     On April 28, 1999, respondent timely mailed to petitioner a

notice of deficiency (notice) for 1996, in which respondent made

the determinations that we have described above and that we

describe below.   As of the date of the mailing of the notice,

petitioner had not filed a return for 1996.

     Included as part of the notice that respondent issued to
                                - 4 -

petitioner for her tax year 1996 was a three-page document

entitled “PROPOSED INDIVIDUAL INCOME TAX ASSESSMENT” which was

dated January 4, 1999, and the first page of which contained the

heading “TAX CALCULATION SUMMARY”.      Respondent had originally

prepared that document with respect to petitioner’s tax year 1996

in accordance with respondent’s automated substitute for return

procedures pursuant to respondent’s authority under section

6020(b)(1).   (For convenience, we shall refer to the three-page

document included as part of the notice that respondent issued to

petitioner for 1996 as respondent’s substitute for return for

petitioner’s tax year 1996.)

     In respondent’s substitute for return for petitioner’s tax

year 1996, respondent determined, inter alia, that for 1996

petitioner’s “total income” was $133,156, that there were no

adjustments to petitioner’s “total income”, and that, conse-

quently, petitioner’s “adjusted gross income” was equal to the

“total income” determined by respondent for that year (i.e.,

$133,156).    Respondent further determined in respondent’s substi-

tute for return for petitioner’s tax year 1996 that petitioner is

entitled to one personal exemption of $2,193 and a standard

deduction, including a deduction for individuals age 65 or older,

of $5,000, that petitioner’s “taxable income” for 1996 equaled

$125,963, that the tax before credits on that taxable income is

$34,417, and that the tax after prepayment credits of $30,480 is
                                 - 5 -

$3,937.

     On July 16, 1999, petitioner signed Form 1040, U.S. Individ-

ual Income Tax Return, for 1996 (petitioner’s 1996 return), which

respondent received on July 19, 1999.    In petitioner’s 1996

return, petitioner reported both “total income” and “adjusted

gross income” of $77,720, claimed a personal exemption of $2,550

and itemized deductions of $33,208, reported taxable income of

$41,962, and calculated the tax before credits on that taxable

income to be $8,633 and the overpayment after claimed prepayment

credits (i.e., estimated tax payments) of $30,750 to be $22,116,

which she claimed as a refund.

     On July 22, 1999, petitioner filed a petition with the

Court.    In the petition, petitioner alleged, inter alia, that

respondent’s determinations in the notice that appear in respon-

dent’s substitute for return for petitioner’s tax year 1996 are

erroneous (except for the amount of her prepayment credits) and

that for 1996, after taking into account prepayment credits of

$30,480, she has an overpayment of $21,915, which should be

refunded to her.

     On August 4, 1999, petitioner signed Form 1040X, Amended

U.S. Individual Income Tax Return, for 1996 (petitioner’s amended

1996 return), which she submitted to respondent.    In petitioner’s

amended 1996 return, petitioner made minor changes to peti-

tioner’s 1996 return, reporting “total income” and “adjusted
                                 - 6 -

gross income” of $77,550 and claiming itemized deductions of

$33,296 and prepayment credits of $30,480.

     The parties agree that petitioner’s prepayment credits for

1996 total $30,480 and are attributable to estimated tax payments

for that year.    The parties further agree that, without consider-

ing those prepayment credits for 1996, there is a reduced defi-

ciency of $21,507 in petitioner’s tax for 1996.      The parties also

agree that, after taking into account petitioner’s $30,480 of

prepayment credits, petitioner has overpaid her 1996 tax in the

amount of $8,973 (1996 overpayment).

                               Discussion

     Petitioner contends that she is entitled to a refund of her

1996 overpayment.    Respondent disputes that contention.    On the

record before us, we reject petitioner’s position.

     The Court has jurisdiction to determine the amount of an

overpayment of tax for a taxable year, and the amount so deter-

mined by the Court shall, when the decision of the Court becomes

final, be credited or refunded to the taxpayer.      See sec.

6512(b)(1).     Section 6512(b)(3) imposes a limit on the amount of

any such credit or refund.     As pertinent here, that section

provides:

          (3) Limit on amount of credit or refund.–-No such
     credit or refund shall be allowed or made of any por-
     tion of the tax unless the Tax Court determines as part
     of its decision that such portion was paid--

            *       *      *       *        *    *       *
                               - 7 -

               (B) within the period which would be applica-
          ble under section 6511(b)(2), (c), or (d), if on
          the date of the mailing of the notice of defi-
          ciency a claim had been filed (whether or not
          filed) stating the grounds upon which the Tax
          Court finds that there is an overpayment * * *

     The parties agree that section 6512(b)(3)(B) requires us to

focus in the present case on section 6511(b)(2).   The dispute

here centers on whether section 6511(b)(2)(A) applies as peti-

tioner contends or whether section 6511(b)(2)(B) applies as

respondent contends.2   The Supreme Court of the United States

(Supreme Court) resolved an identical dispute in Commissioner v.

Lundy, 516 U.S. 235 (1996).

     As framed by the Supreme Court, the issue presented to it in

Commissioner v. Lundy, supra, was

     which of these two look-back periods [the 3-year look-
     back period in section 6511(b)(2)(A) or the 2-year
     look-back period in section 6511(b)(2)(B)] to apply
     when the taxpayer fails to file a tax return when it is
     due, and the Commissioner mails the taxpayer a notice
     of deficiency before the taxpayer gets around to filing
     a late return.

Id. at 243.   The Supreme Court held that section 6512(b)(3)(B)

requires that the 2-year look-back period in section

6511(b)(2)(B) be applied in such a situation.   See id.

     Shortly after the Supreme Court decided Commissioner v.



     2
      The parties agree that sec. 6511(b)(2)(C) does not apply in
the instant case. For convenience, we shall refer to the differ-
ent time periods specified in sec. 6511(b)(2)(A) and (B) as the
3-year look-back period and the 2-year look-back period, respec-
tively.
                                 - 8 -

Lundy, supra, Congress amended section 6512(b)(3) by adding the

following sentence at the end of that section:

     In a case described in subparagraph (B) where the date
     of the mailing of the notice of deficiency is during
     the third year after the due date (with extensions) for
     filing the return of tax and no return was filed before
     such date, the applicable period under subsections (a)
     and (b)(2) of section 6511 shall be 3 years.

Taxpayer Relief Act of 1997 (1997 Act), Pub. L. 105-34, sec.

1282(a), 111 Stat. 1037.   Congress made the foregoing amendment

effective for taxable years that ended after August 5, 1997.   See

1997 Act sec. 1282(b), 111 Stat. 1038.   (We shall refer to

section 6512(b)(3) as amended by the 1997 Act as amended section

6512(b)(3).)

     Petitioner acknowledges that Commissioner v. Lundy, supra,

holds that section 6512(b)(3)(B) requires the application of the

2-year look-back period in section 6511(b)(2)(B) in a situation

such as the one presented in the instant case.   Petitioner also

acknowledges that amended section 6512(b)(3) does not apply to

petitioner’s tax year 1996, the year at issue in this case.

Petitioner nonetheless maintains that the 3-year look-back period

in section 6511(b)(2)(A) applies in the instant case.    In support

of that position, petitioner advances petitioner’s interpretation

of amended section 6512(b)(3).    Based on that interpretation as

well as her interpretation of certain legislative history relat-

ing to amended section 6512(b)(3), petitioner argues:

          Congress obviously thought that taxpayers in
                              - 9 -

     petitioner’s circumstance were entitled to recover
     refunds in the Tax Court under section 6512(b)(3)(B) as
     the statute stood before the 1997 amendment. Congress
     clearly did not cover taxpayers in petitioner’s circum-
     stance under the amendment and yet Congress could not
     possibly have intended to give a 3-year look-back
     period only to late filers and nonfilers who never
     obtained an extension of time to file the return. The
     conclusion appears inescapable that Congress thought
     the statute in its pre-1997 form authorized refunds to
     taxpayers in petitioner’s position.

          Although this court is not at liberty to apply the
     paragraph added in 1997 to the 1996 tax year, a provi-
     sion which in all events is inapplicable to petitioner,
     this court surely is authorized to consider the 1997
     legislative history, that is, the practical interpreta-
     tion Congress made of the preexisting statute at that
     time. That legislative history compels a different
     construction of section 6512(b)(3)(B) than the one
     reached in Lundy.

          * * * In Commissioner v. Lundy, supra, 516 U.S.
     235, 248 (1996), the Court rejected a comparable con-
     struction in the course of reaching what it considered
     to be a superior interpretation. The Court, however,
     did not have the 1997 legislative history to consider
     in reaching its conclusion.

     The short answer to petitioner’s argument regarding amended

section 6512(b)(3) and its legislative history is that the

Supreme Court held in Commissioner v. Lundy, supra, that the 2-

year look-back period in section 6511(b)(2)(B) applies in a

situation such as that presented in the instant case.   Neither

amended section 6512(b)(3), which petitioner concedes does not

apply to her tax year 1996, nor its legislative history permits

us to deviate from that holding in the present case.    We reject

petitioner’s position that the 3-year look-back period in section

6511(b)(2)(A) applies in the instant case.
                                - 10 -

     Petitioner advances an alternative argument as to why the 3-

year look-back period in section 6511(b)(2)(A) applies in the

instant case.     Petitioner argues that, for purposes of section

6511(a), respondent’s substitute for return for petitioner’s tax

year 1996 constitutes a return filed by the taxpayer, here

petitioner, on or before April 28, 1999, the date on which

respondent issued the notice to her.     Consequently, according to

petitioner, the 3-year look-back period in section 6511(b)(2)(A)

applies in the instant case.     Respondent counters that a substi-

tute for return prepared by respondent pursuant to section

6020(b)(1) does not constitute a return filed by the taxpayer for

purposes of section 6511(a) and that therefore petitioner’s

alternative argument should be rejected.     We agree with respon-

dent.

     In support of her position that respondent’s substitute for

return for petitioner’s tax year 1996 constitutes a return filed

by the taxpayer for purposes of section 6511(a), petitioner

relies on section 6020(b)(2).     Section 6020(b) provides in

pertinent part:

     SEC. 6020.    RETURNS PREPARED FOR OR EXECUTED BY
                   SECRETARY.

          (b) Execution of Return by Secretary.--

               (1) Authority of secretary to execute
          return.–-If any person fails to make any return
          required by any internal revenue law or regulation
          made thereunder at the time prescribed therefor
          * * *, the Secretary shall make such return from
                              - 11 -

          his own knowledge and from such information as he
          can obtain through testimony or otherwise.

               (2) Status of returns.–-Any return so made
          and subscribed by the Secretary shall be prima
          facie good and sufficient for all legal purposes.

     In Flagg v. Commissioner, T.C. Memo. 1997-297, we rejected

the taxpayer’s argument that certain returns prepared by the

Commissioner of Internal Revenue (Commissioner) pursuant to

section 6020(b)(1) were returns for purposes of section 6511.     We

concluded in Flagg that such returns are not returns for purposes

of section 6511.   In support of that conclusion, we relied on

section 6501(b)(3) and several cases, including United States v.

Stafford, 983 F.2d 25, 27 (5th Cir. 1993), all of which held that

the Commissioner’s preparation of a substitute for return pursu-

ant to section 6020(b)(1) does not relieve the taxpayer of his or

her obligation to file a return.   See Flagg v. Commissioner,

supra.

     We reaffirm our conclusion in Flagg v. Commissioner, supra,

and hold that a substitute for return prepared by the Commis-

sioner pursuant to section 6020(b)(1) is not a return filed by

the taxpayer for purposes of section 6511.   In support of that
                             - 12 -

holding, we rely not only on section 6501(b)(3)3 and the


     3
      Sec. 6501(b)(3) provides:

          (3) Return executed by secretary.–-Notwithstanding
     the provisions of paragraph (2) of section 6020(b), the
     execution of a return by the Secretary pursuant to the
     authority conferred by such section shall not start the
     running of the period of limitations on assessment and
     collection.

     Although sec. 6511 does not expressly provide a rule similar
to sec. 6501(b)(3) for purposes of sec. 6511, we attach no
significance to that omission in considering whether a substitute
for return prepared by the Commissioner pursuant to sec.
6020(b)(1) constitutes a return filed by the taxpayer for pur-
poses of sec. 6511. That is because of the obvious interplay
between secs. 6501 and 6511. In this connection, the following
statements of the Supreme Court in Commissioner v. Lundy, 516
U.S. 235, 244-245 (1996), are instructive:

     in the case where the taxpayer has filed a timely tax
     return and the IRS is claiming a deficiency in taxes
     from that return, the interplay of §§ 6512(b)(3)(B) and
     6511(b)(2) generally ensures that the taxpayer can
     obtain a refund of any taxes against which the IRS is
     asserting a deficiency. In most cases, the notice of
     deficiency must be mailed within three years from the
     date the tax return is filed. See 26 U.S.C. §§ 6501(a)
     * * *. Therefore, if the taxpayer has already filed a
     return (albeit perhaps a faulty one), any claim filed
     “on the date of the mailing of the notice of defi-
     ciency” would necessarily be filed within three years
     from the date the return is filed. In these circum-
     stances, the applicable look-back period under §
     6512(b)(3)(B) would be the 3-year period defined in §
     6511(b)(2)(A) * * *.

          Therefore, in the case of a taxpayer who files a
     timely tax return, § 6512(b)(3)(B) usually operates to
     toll the filing period that might otherwise deprive the
     taxpayer of the opportunity to seek a refund * * *.

          Section 6512(b)(3)(B) treats delinquent filers of
     income tax returns less charitably. Whereas timely
     filers are virtually assured the opportunity to seek a
                                                   (continued...)
                                - 13 -

several cases cited in Flagg.    We also rely on section 6020(a)

and Millsap v. Commissioner, 91 T.C. 926 (1998), which we decided

after we issued our Opinion in Flagg v. Commissioner, supra.

     Section 6020(a) states:

     SEC. 6020.    RETURNS PREPARED FOR OR EXECUTED BY
                   SECRETARY.

          (a) Preparation of Return by Secretary.–-If any
     person shall fail to make a return required by this
     title or by regulations prescribed thereunder, but
     shall consent to disclose all information necessary for
     the preparation thereof, then, and in that case, the
     Secretary may prepare such return, which, being signed
     by such person, may be received by the Secretary as the
     return of such person. [Emphasis added.]

Petitioner did not sign respondent’s substitute for return for

petitioner’s tax year 1996.    That substitute for return was not

received by respondent as the return of petitioner pursuant to

section 6020(a).    In fact, in petitioner’s 1996 return, peti-

tioner’s amended 1996 return, and the petition, petitioner

disputed each determination in the notice that appears in respon-

dent’s substitute for return for petitioner’s tax year 1996

(except petitioner conceded in the petition and petitioner’s


     3
      (...continued)
     refund in the event they are drawn into Tax Court
     litigation, a delinquent filer’s entitlement to a
     refund in Tax Court depends on the date of the mailing
     of the notice of deficiency. * * * in the case of
     delinquent filers, § 6512(b)(3)(B) establishes only a
     2-year look-back period, so the delinquent filer is not
     assured the opportunity to seek a refund in Tax Court:
     If the notice of deficiency is mailed more than two
     years after the taxes were paid, the Tax Court lacks
     jurisdiction to award the taxpayer a refund.
                              - 14 -

amended 1996 return that her prepayment credits for 1996 total

$30,480).

     In Millsap v. Commissioner, supra, we held that substitute

for returns prepared by the Commissioner pursuant to section

6020(b)(1) do not constitute separate returns for purposes of

section 6013(b), even though section 6020(b)(2) literally treats

such returns as “prima facie good and sufficient for all legal

purposes.”

     We hold that the 2-year look-back period in section

6511(b)(2)(B) applies for purposes of section 6512(b)(3)(B).    We

further hold that petitioner is not entitled to a refund of her

1996 overpayment.4   See sec. 6512(b)(3)(B); Commissioner v.

Lundy, 516 U.S. 235 (1996).

     To reflect the foregoing,

                                    Decision will be entered under

                                    Rule 155.




     4
      We have considered all of the contentions and arguments of
petitioner that are not discussed herein, and we find them to be
without merit and/or irrelevant.
