                         T.C. Summary Opinion 2014-110



                         UNITED STATES TAX COURT



                AVA MAUREEN SAWYER, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 1165-07S.                         Filed December 23, 2014.



      Ava Maureen Sawyer, pro se.

      Adam P. Sweet, for respondent.



                              SUMMARY OPINION


      COLVIN, Judge: This case was heard pursuant to the provisions of section

7463 of the Internal Revenue Code in effect when the petition was filed.1



      1
        Subsequent section references are to the Internal Revenue Code in effect
for the year in issue, and Rule references are to the Tax Court Rules of Practice
and Procedure. Dollar amounts are rounded to the nearest dollar.
                                           -2-

Pursuant to section 7463(b), 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 determined a deficiency in petitioner’s Federal income tax for

2001 of $1,833 and additions to tax of $372 for failure to timely file under section

6651(a)(1) and $397 for failure to timely pay under section 6651(a)(2). After

concessions, the issues for decision are:

      1. Whether we have jurisdiction to decide whether petitioner’s income tax

liability for 2001 was discharged in her bankruptcy proceeding. We hold that we

do not.

      2. Whether we have jurisdiction to decide whether petitioner may claim an

$867 overpayment credit from the year 2000. We hold that we do not.

      3. Whether petitioner is liable for an addition to tax for failure to timely file

under section 6651(a)(1) and an addition to tax for failure to timely pay under

section 6651(a)(2). We hold that she is.

                                    Background

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

in Virginia when the petition was filed.
                                         -3-

A.      Events Related to 2000 and 2001

        Petitioner withdrew money from her individual retirement accounts (IRAs)

in 2000. During 2001 she made three withdrawals totaling $11,786 from her

IRAs. She did not reach age 55 in 2000 or 2001. Petitioner was not employed in

2000 or 2001.

        Petitioner wrote a check for $1,308 dated April 16, 2001, to the Internal

Revenue Service (IRS). The record does not disclose any specific statement of

petitioner’s intent regarding this remittance. When petitioner made this

remittance, she knew withdrawals from her IRAs in 2000 and 2001 would result in

early withdrawal penalties. Other than her IRA withdrawals she had almost no

other income for tax year 2000 or 2001. Respondent applied the April 16, 2001,

remittance to her 2000 tax year.

        Petitioner submitted a $180 payment with her request for an extension of

time to file her 2001 tax return. She did not timely file a tax return for 2000 or

2001.

B.      Respondent’s Proposed Assessment and Notice of Deficiency for 2001

        On March 20, 2006, respondent sent petitioner a proposed income tax

assessment for taxable year 2001. Because petitioner had not filed a tax return for
                                         -4-

2001, respondent prepared a substitute for return using information from third-

party reports. See sec. 6020(b).

      Respondent sent a notice of deficiency to petitioner for tax year 2001 on

October 16, 2006, determining that during 2001 petitioner had received a total

distribution of $11,786 from her IRAs and $25 of interest income.2 Respondent

determined that petitioner was entitled to a personal exemption and a standard

deduction and that she was liable for a 10% penalty on account of her early IRA

withdrawals. Finally, respondent determined that petitioner was liable for

additions to tax for failure to timely file under section 6651(a)(1) and failure to

timely pay under section 6651(a)(2). On January 16, 2007, petitioner timely filed

a petition with the Court.

C.    Bankruptcy Proceedings

      On October 17, 2007, petitioner filed for bankruptcy under chapter 13 with

the U.S. Bankruptcy Court for the Eastern District of Virginia. On November 1,

2012, petitioner received a discharge (not further described in the record) under

chapter 13 of the U.S. Bankruptcy Code.




      2
       Petitioner does not challenge respondent’s determination that she received
$11,786 of taxable IRA distributions subject to an early withdrawal penalty and
$25 of taxable interest income. We deem petitioner to have conceded these issues.
                                         -5-

D.      Petitioner’s Tax Returns for 2000 and 2001

        At the request of a U.S. attorney representing the IRS as a creditor, on April

11, 2007, petitioner submitted her 2000 and 2001 tax returns to him. Petitioner’s

2000 tax return was filed with the Commissioner on June 11, 2007. On that return

petitioner reported taxable IRA distributions, no other taxable income, and a tax

liability of $441 from early IRA distributions. Also on that return she reported

that $441 of the $1,308 payment she had made on April 16, 2001, reduced to zero

the amount of her unpaid tax for 2000, and she applied the remaining $867 to

2001.

        Respondent received petitioner’s 2001 tax return in 2007 before filing the

answer on December 4, 2007. On that return petitioner reported $11,036 of

taxable IRA distributions, $923 of tax as a result of early distributions from an

IRA, $867 of overpayment from 2000 applied to 2001, and $180 paid with a

request for an extension of time to file.3




        3
       Petitioner’s tax return also reflects $31 of taxable interest income and $181
of capital gain. Respondent does not challenge these amounts.
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                                     Discussion

A.    Burden of Proof

      The taxpayer generally bears the burden of proving that the Commissioner’s

deficiency determination is in error. Rule 142(a)(1). The burden of proving a

factual issue relating to tax liability shifts to the Commissioner under certain

circumstances. Sec. 7491(a). Petitioner has not shown and does not contend that

section 7491 applies. Thus, petitioner bears the burden of proving that

respondent’s determinations in the notice of deficiency are in error. See Rule

142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).

B.    Effect of Bankruptcy

      Petitioner contends that her 2001 tax liability was discharged by the

bankruptcy court. She claims that as a result of that discharge respondent is barred

from pursuing a deficiency against her. We have said that this Court lacks

jurisdiction to decide whether a tax debt may be or has been discharged:

             In exercising our jurisdiction to redetermine deficiencies, we
      are without jurisdiction to “allow or disallow a claim against a
      debtor’s estate * * * or to discharge taxes as a bankruptcy court
      might.” Fotochrome, Inc. v. Commissioner, 57 T.C. 842, 847 (1972).
      In Graham [v. Commissioner, 75 T.C. 389 (1980)], when confronted
      with the identical argument, we held that we lacked “the requisite
      subject matter jurisdiction to decide whether the petitioner’s
      deficiencies * * * were discharged in the bankruptcy proceeding.” 75
      T.C. at 399. Accordingly, we are without subject matter jurisdiction
                                         -7-

      and petitioners, if they wish a ruling on their dischargeability
      position, would be required to seek the jurisdiction of the bankruptcy
      court. [Neilson v. Commissioner, 94 T.C. 1, 9 (1990).]

Thus, we hold that we lack jurisdiction to decide whether the bankruptcy court

discharged petitioner’s tax liability for 2001.

C. Availability of Credit for Petitioner’s Remittance on April 16, 2001

      Petitioner claims a credit for $867 as a result of the remittance she made on

April 16, 2001. Respondent asserts that petitioner is not entitled to that credit

because respondent properly applied the $1,308 remittance to her 2000 tax year

and any overpayment for 2000 is time barred under section 6511.

      Respondent applied petitioner’s $1,308 remittance toward her 2000 tax

liability. There is no evidence that when petitioner made the remittance she

intended it to apply to 2001 or that she intended to make a tax deposit. See

Risman v. Commissioner, 100 T.C. 191, 197 (1993) (stating that “[a] taxpayer’s

intent to have a remittance treated as a payment or as a mere deposit is generally to

be established by all of the relevant facts and circumstances”);4 Deaton v.

Commissioner, T.C. Memo. 2005-1, aff’d, 440 F.3d 223 (5th Cir. 2006). Thus, to


      4
       We note that several appellate courts have expressed disagreement with
other aspects of the Court’s reasoning in Risman v. Commissioner, 100 T.C. 191
(1993), i.e., with respect to where a remittance is made in conjunction with a
request for an extension.
                                        -8-

the extent the 2000 remittance exceeds petitioner’s 2000 tax liability, it was an

overpayment of tax for 2000.

      Our jurisdiction to decide a taxpayer’s tax liability “extends to the entire

subject matter of the correct tax for the taxable year”. Naftel v. Commissioner, 85

T .C. 527, 533 (1985). In deciding a taxpayer’s tax liability for a year over which

we have jurisdiction, section 6214(b) provides that we lack “jurisdiction to

determine whether or not the tax for any other year * * * has been overpaid or

underpaid”.

      Section 6214(b) provides our authority for “computing, as distinguished

from ‘determining,’ the correct tax liability for a year not in issue when such a

computation is necessary to a determination of the correct tax liability for a year

that has been placed in issue.” Lone Manor Farms, Inc. v. Commissioner, 61 T.C.

436, 440 (1974), aff’d without published opinion, 510 F.2d 970 (3d Cir. 1975).

      Petitioner contends that the overpayment from her 2000 tax year (over

which we lack jurisdiction in this case) is creditable to 2001. We disagree.

Section 6214(b) provides that we may not redetermine an overpayment for a year

over which we lack jurisdiction; similarly, we lack jurisdiction to credit any such

overpayment to 2001. Solberg v. Commissioner, T.C. Memo. 2011-221; Porter v.

Commissioner, T.C. Memo. 2010-54.
                                        -9-

D. Additions to Tax

      Section 7491(c) places on the Commissioner the burden of producing

evidence of liability for additions to tax. To meet that burden, the Commissioner

must produce evidence showing that it is appropriate to impose the particular

addition to tax, but the Commissioner need not produce evidence relating to

defenses such as reasonable cause or substantial authority. Higbee v.

Commissioner, 116 T.C. at 446; H.R. Conf. Rept. No. 105-599, at 241 (1998),

1998-3 C.B. 747, 995. Once the Commissioner meets the burden of production,

the taxpayer must, in order to avoid liability for additions to tax, produce evidence

that the Commissioner’s determination is incorrect; e.g., that the failure was due to

reasonable cause and not willful neglect. United States v. Boyle, 469 U.S. 241,

245 (1985); Higbee v. Commissioner, 116 T.C. at 446; H.R. Conf. Rept. No. 105-

599, supra at 241, 1998-3 C.B. at 995. Reasonable cause exists if the taxpayer

exercised ordinary business care and prudence but nevertheless could not file the

return or pay the tax when due. Boyle, 469 U.S. at 246; Bank of the West v.

Commissioner, 93 T.C. 462, 471 (1989).
                                         - 10 -

      1. Failure To File

      Section 6651(a)(1) imposes an addition to tax for failure to file timely a

required tax return. Respondent has met the burden of production with respect to

this addition to tax because petitioner was required to file but did not timely file a

return for 2001.5 To prevail, petitioner must show that the untimely filing was due

to reasonable cause and not willful neglect. Petitioner claims that she did not

timely file her 2001 return because in 2001 and 2002 she was consumed with a

protracted, personal legal dispute. We acknowledge that petitioner was involved

in a protracted personal legal dispute, but we do not believe it justified late filing

of her 2001 return. We sustain the section 6651(a)(1) addition to tax for 2001.

      2. Failure To Pay

      Section 6651(a)(2) provides for an addition to tax where there is a failure to

timely pay the amount of tax shown on a return. A return properly prepared by the

Secretary under section 6020(b) is treated as the return filed by the taxpayer for

purposes of determining an addition to tax under section 6651(a)(2). Sec.

6651(g)(2). The 2001 substitute for return meets the requirements of section

6020(b). Petitioner made an estimated tax payment of $180 for the 2001 tax year.


      5
       The record establishes that petitioner’s income exceeded the income
threshold for nonfilers for 2001. See sec. 6012(a)(1).
                                        - 11 -

We held above that the Court lacks jurisdiction to decide whether petitioner may

apply an $867 overpayment credit to her 2001 tax year. There is no evidence that

petitioner made any other payments applicable to her 2001 tax year. The record

establishes that she has not fully paid her tax liability for 2001. Consequently,

respondent has met the burden of production with respect to the section 6651(a)(2)

addition to tax.

      Petitioner contends that she is not liable for the addition to tax for failure to

timely pay for 2001 because she believed she had fully paid that tax liability. We

disagree. As stated above, there is no evidence that petitioner intended the April

16, 2001, remittance to apply to her income tax liability for 2001. We find

petitioner has failed to show she had reasonable cause for failing to timely pay her

2001 tax liability, and we sustain the section 6651(a)(2) addition to tax for 2001.

      To reflect the foregoing,


                                                      Decision will be entered under

                                                 Rule 155.
