                   T.C. Memo. 2002-78



                UNITED STATES TAX COURT



LARRY J. SUMRALL AND PATRICIA A. SUMRALL, Petitioners v.
      COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 11058-97.              Filed March 28, 2002.



     Held: Petitioners did not make informal claims
for refund entitling them to refunds attributable to
NOL carrybacks from 1992 to 1989 and 1990.



Steven A. Wilson, for petitioners.

Mark H. Howard, for respondent.
                               - 2 -


             MEMORANDUM FINDINGS OF FACT AND OPINION

     HALPERN, Judge:   By notices of deficiency dated February 24,

1997, respondent determined deficiencies in, additions to, and

penalties with respect to petitioners’ Federal income taxes for

their taxable (calendar) years 1987 through 1991 (the audit

years), as follows:

                              Additions to Tax and Penalties
                               Sec.          Sec.      Sec.
     Year      Deficiency      6654      6653(b)(1)    6663
                                          1
     1987       $46,346       $2,587        $36,140     --
     1988        59,016        4,593         53,558     --
     1989        12,444        1,535          --      $9,333
     1990        67,887        5,393          --      50,915
     1991         9,371        1,104          --       7,028
     1
       Plus 50% of the interest due on underpayment of $48,187
     due to fraud. Sec. 6653(b)(1)(B).

     Because of the complicated procedural history of this case,

we set forth in some detail the disposition of various issues

that the parties, themselves, have agreed to or disposed of.     By

motion for leave to file amended answer, respondent informed the

Court that he had determined not to pursue the penalties

determined under sections 6653(b)(1) and 6663, for fraud.   We

interpret that as a concession, and we accept it.   By the amended

answer to amended petition, respondent admits that there are no

deficiencies in tax for 1989, 1990, and 1991, and, for 1987 and

1988, he claims additions to tax for delinquency under section

6651 and for negligence under section 6653(a).   By a stipulation

of settled issues, petitioners concede the claimed addition to
                                 - 3 -

tax for failure to file a return under section 6651(a)(1) for

1987.   On brief, respondent concedes the claimed addition to tax

for failure to pay under section 6651(a)(2) for 1987.    At trial,

petitioners conceded the claimed additions to tax for 1988 for

both delinquency under section 6651 and negligence under section

6653.   At trial, the parties stipulated that there are no

additions to tax under section 6654.     On brief, with respect to

the deficiencies in tax for 1987 and 1988, petitioners propose

that we find that, but for certain claimed credits and refunds

still in issue, there are deficiencies in tax of $9,232 and

$40,329 for those years, respectively.    Respondent agrees with

those proposed findings of fact, and we shall treat such

agreements as constituting a stipulation of settlement with

respect to those deficiencies, which we accept.    The parties

agree that petitioners have raised as issues in this case

overpayments on account of (1) withholding and refundable credits

for 1989, 1990, and 1991, and (2) net operating loss (NOL)

carrybacks from 1991 and 1992.    At trial, petitioners conceded

that there was no timely claim for any overpayment on account of

withholding and refundable credits for 1991.    On brief,

respondent concedes that petitioners submitted timely refund

claims for overpayments for 1989 and 1990 (except with respect to

NOL carrybacks), and states that the necessary computations to

satisfy those claims can be made under Rule 155.    We accept the
                               - 4 -

parties’ various concessions and leave the computations to be

disposed of pursuant to Rule 155.     The parties have stipulated

that petitioners are entitled to the following carryback

deductions on account of NOLs if they can establish that they

made timely claims for credit or refund (without distinction,

refund) of overpayments in tax attributable to those deductions:

     Loss Year       Carryback Year        Carryback Deduction
        1991             1988                   $14,113
        1992             1989                    31,113
        1992             1990                    12,810

On brief, respondent concedes that petitioners made a timely

claim for a refund attributable to an NOL carryback to 1988 from

1991.   We accept that concession.    The only issue remaining for

decision is whether petitioners made timely claims for refunds

attributable to NOL carrybacks to 1989 and 1990 from 1992.

     Unless otherwise indicated, 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.   Dollar amounts have been rounded to the nearest

dollar.

     Petitioners bear the burden of proof.     Rule 142(a).

                         FINDINGS OF FACT

     Some facts have been stipulated and are so found.     The

stipulations of fact, with attached exhibits, are incorporated

herein by this reference.
                               - 5 -

Residence

     At the time of the petition, petitioners resided in Reno,

Nevada.

Returns

     Petitioners did not timely file Federal income tax returns

for any of the audit years (1987 through 1991) or for 1992 and

1993.

     In early 1993, the Internal Revenue Service (IRS) initiated

a criminal tax investigation (the criminal investigation) of

petitioner husband (petitioner), with respect to the audit years.

     On July 13, 1993, petitioners filed their Federal income tax

returns with respondent for the audit years.       Those returns show

tax liabilities as follows:

                     Year              Liability
                     1987               $1,841
                     1988               12,395
                     1989               10,251
                     1990               14,487
                     1991                9,942

     Petitioners requested an extension of time to file their

Federal income tax return for 1992.     Respondent approved the

request and extended the due date for the 1992 return to

October 15, 1993.   Petitioners made a joint return of Federal

income tax for 1992 by filing a Form 1040, U.S. Individual Income

Tax Return (the 1992 return), with the Internal Revenue Service

Center in Ogden, Utah (the Ogden Service Center), on October 7,

1996.   Among the attachments to the 1992 return is a single page,
                                - 6 -

“Page 2", of Form 1045, Application for Tentative Refund (the

Form 1045 page 2).    The Form 1045 page 2 is preprinted with a

schedule (Schedule A) on which (pursuant to instructions) is to

be computed an NOL.    On the Form 1045 page 2, petitioners

computed an NOL of $13,336.

     Petitioners filed their joint Federal income tax return for

1993 (the 1993 return) on October 7, 1996.

Dale K. Barker, Jr.

     Dale K. Barker, Jr., is a certified public accountant, who

was retained by petitioners in March 1993.    Mr. Barker was

retained, among other reasons, to prepare returns for the audit

years.   Mr. Barker prepared those returns.   He also prepared the

1992 and 1993 returns.

The Criminal Investigation

     Rick Raven is employed by the IRS as a Special Agent.     His

duties include the conduct of criminal investigations.    In

January 1993, Special Agent Raven began the criminal

investigation.   He was assisted in the criminal investigation by

Dick Stufflebeam, a Revenue Agent employed by the IRS.    Special

Agent Raven collected information concerning petitioner’s income

and expenses for the audit years.    He was not concerned with

whether any of petitioner’s tax liabilities for any of the years

under investigation could be reduced on account of NOL

carrybacks, since he believed that NOL carrybacks were not a
                                - 7 -

defense to a criminal charge.    As part of his investigation,

Revenue Agent Raven did not concern himself with petitioner’s tax

liability for 1992, since, as of the start of the criminal

investigation, no return for 1992 had yet become due.

     During his investigation, Special Agent Raven interviewed

Mr. Barker on one or more occasions, accompanied on at least one

occasion by Mr. Stufflebeam.    During the course of those

interviews, there was no discussion of NOLs.

     By letter dated February 14, 1996 (the February 14 letter),

Mr. Barker provided certain information to Donald C. Hill,

criminal tax counsel for petitioner.      Shortly after he received

the February 14 letter, Mr. Hill provided a copy to the U.S.

Attorney and employees of the IRS.      The February 14 letter

contains no claim for any refund, overpayment, or NOL carryback.

It does state:   “We may have some timing errors [in, according to

petitioner, “the returns for 1988 through 1990"] yet the tax

returns should be materially correct”.

     As a result of his investigation, Special Agent Raven

recommended the prosecution of petitioner for crimes connected

with his 1988, 1989, and 1990 income tax liabilities.      On

November 6, 1995, petitioner signed a plea agreement, agreeing to

plead guilty to one count of willfully failing to file an income

tax return for 1988, in violation of section 7203.      Judgment was

entered on March 12, 1996.
                              - 8 -



The Civil Investigation

       At the conclusion of the criminal investigation, Revenue

Agent Stufflebeam became responsible for resolving petitioners’

civil tax liabilities for the audit years.   In the process of

resolving those liabilities he received both written and oral

communications from Mr. Barker.   Mr. Barker did not file with him

any claim for an NOL carryback from 1992.

     By a letter dated May 1, 1996 (the May 1 letter), sent by

Mr. Barker to the Ogden Service Center, Mr. Barker advised the

IRS that he was preparing income tax returns for petitioners for

their 1991 through 1994 tax years, but that those returns were

“on hold to await the outcome of settlement with the Internal

Revenue Service out of the Reno area.”   He states:   “To finalize

these years there was required a settlement on the exact

inventory, and other critical capitalized amounts to present an

accurate return.”

     On June 18, 1996, Revenue Agent Stufflebeam memorialized in

handwritten notes (the June 18 notes) a phone conversation that

had taken place that day between himself and Mr. Barker.   As

memorialized in the June 18 notes:    Mr. Barker stated that, based

on the cost of goods sold used in the criminal case against

petitioner, petitioners would have NOL carrybacks in later years.

Revenue Agent Stufflebeam told Mr. Barker that he could complete
                                - 9 -

the audit in 60 to 90 days if he could get certain additional

requested documents and the returns for the later years.

       During the course of Mr. Stufflebeam’s civil examination of

the audit years, he did not also examine the 1992 return.    He did

not receive a copy of it from the Ogden Service Center when, on

October 7, 1996, it was filed there, nor was he provided a copy

of it by petitioner or Mr. Barker.

                               OPINION

I.    Introduction

       We must determine whether petitioners made timely claims for

refunds attributable to net operating loss (NOL) carrybacks from

1992 to 1989 and 1990.    If they did, then the parties are in

agreement that the amounts of such carrybacks are $31,113 and

$12,810 to 1989 and 1990, respectively.

II.    Code and Regulations

       Section 172(a) allows an NOL deduction for a taxable year

equal to the aggregate of the NOL carryovers and carrybacks to

that year.    Every taxpayer claiming an NOL deduction for any

taxable year must file with his return for such year a statement

computing the amount of the NOL deduction claimed and setting

forth certain pertinent information.     Sec. 1.172-1(c), Income Tax

Regs.    If the taxpayer is entitled in computing his NOL deduction

to a carryback that he is not able to ascertain at the time he

files his return, he must compute his NOL deduction without
                               - 10 -

regard to such carryback.   See sec. 1.172-1(d), Income Tax Regs.

When the taxpayer ascertains the NOL carryback, he may within the

applicable period of limitations file a claim for refund of the

overpayment, if any, resulting from the failure originally to

compute the NOL deduction for the taxable year with the inclusion

of the carryback.   Id.

     Section 301.6402-2(b)(1), Proced. & Admin Regs., sets forth

the following general requirements concerning the contents of a

claim for refund:

       (b) Grounds set forth in claim. (1) No refund or
     credit will be allowed after the expiration of the
     statutory period of limitation applicable to the filing
     of a claim therefor except upon one or more of the
     grounds set forth in a claim filed before the
     expiration of such period. The claim must set forth in
     detail each ground upon which a credit or refund is
     claimed and facts sufficient to apprise the
     Commissioner of the exact basis thereof. * * *

     An individual makes a claim for refund of an overpayment of

income taxes for a taxable year on a Form 1040X, Amended U.S.

Individual Income Tax Return (Form 1040X).   See sec. 301.6402-

3(a)(2), Proced. & Admin. Regs.   Alternatively, the taxpayer may

file an application under the provisions of section 6411 for a

tentative carryback adjustment attributable to an NOL.   Sec.

1.172-1(d), Income Tax Regs.   A tentative carryback adjustment

can result in a refund’s being paid within 90 days.   Sec.

6411(b).
                                  - 11 -

       An individual makes application for a tentative carryback

adjustment by filing Form 1045, Application for Tentative Refund

(Form 1045).       Sec. 1.6411-1(b)(1), Income Tax Regs.   As pertinent

to this case, section 6411(a) provides that an application for a

tentative carryback adjustment does not constitute a claim for

refund.

       Section 6511(d)(2) provides the applicable period of

limitations to file a claim for refund of the overpayment

attributable to a NOL carryback.       As pertinent to the facts

before us, such period ends 3 years after the due date (including

extensions) for filing the return for the taxable year (here,

1992) of the NOL.       See sec. 6511(d)(2)(A).1

III.       Discussion

       A.     Introduction

       Petitioners requested, and were granted, an extension of

time to file their Federal income tax return for 1992 until

October 15, 1993.       Because of such extension, they had until

October 15, 1996, to file claims for refunds attributable to NOL

carrybacks from 1992 to 1989 and 1990.       Petitioners did not


       1
        Petitioners acknowledge that the time has passed for
them to avail themselves of a tentative carryback adjustment.
Application for such adjustment must be made on or after the date
of filing the tax return for the year of the NOL but no later
than 12 months from the end of such year. Sec. 6411(a); sec.
1.6411-1(c), Income Tax Regs. The 1992 Form 1040, with the
Form 1045 page 2 attached, was filed on Oct. 7, 1996, well past
the end of 1992.
                                    - 12 -

comply with sec. 301.6402-3(a)(2), Proced. & Admin. Regs., and

make such claims by filing Forms 1040X for 1989 and 1990.

Nevertheless, petitioners claim that they filed “timely, valid[,]

informal claims” to carry back their 1992 NOL to 1989 and 1990:

“Petitioners informal claims for * * * 1992 consist of oral and

written communications with Respondent, which placed Respondent

on notice that Petitioners were claiming net operating losses in

* * * 1992.”     Respondent answers that petitioners’ oral and

written communications did not constitute adequate notice that

petitioners were requesting refunds and, thus, do not constitute

informal claims for refund.

     B.   Discussion

            1.    Informal Claims

     It is well established that an informal claim for refund

(i.e., one that does not comply with the formal requirements of

the statute and regulations) will suffice as long as it requests

a refund and fairly advises respondent of the nature of the

taxpayer’s claim.      United States v. Kales, 314 U.S. 186, 194

(1941).   As we summarized in Turco v. Commissioner, T.C. Memo.

1997-564:    There are no bright line rules as to what constitutes

an informal claim.      Rather, each case must be decided on its own

particular set of facts.      The relevant question is whether

respondent knew or should have known that a refund claim was

being made.      Also, an informal claim must have some written
                                 - 13 -

component.    E.g., Hollie v. Commissioner, 73 T.C. 1198, 1212

(1980); Jackson v. Commissioner, T.C. Memo. 2002-44.

             2.   Petitioners’s Argument

     Petitioners ask us to assemble the following pieces into

informal claims for refund for 1989 and 1990:     The Form 1045

page 2, attached to the 1992 return (filed October 7, 1996),

Mr. Barker’s June 18, 1996, telephone conversation with Revenue

Agent Stufflebeam (the June 18 conversation), memorialized in the

June 18 notes, and the provisions of section 172(b), specifying

the years to which an NOL is to be carried.     Taken separately, or

together, however, such pieces do not constitute informal claims

for refund.

             3.   The Form 1045 Page 2

     The instructions accompanying Form 1045 provide that it is

to be used by an individual to apply for a quick refund resulting

from an NOL carryback.     The instructions state that the

application is not treated as a claim for credit or refund, which

claim, by an individual, is to be made by filing a Form 1040X.

The instructions further state that the form is to be filed with

the Internal Revenue Service Center for the place where the

taxpayer lives.     The instructions warn:   “Caution!   Do not mail

Form 1045 with your * * * [year] income tax return.”

     In New England Elec. Sys. v. United States, 32 Fed. Cl. 636,

641 (1995), the U.S. Court of Federal Claims stated that, in
                               - 14 -

addition to a written component, an informal claim must have two

additional components:    “First, an informal claim must provide

the Commissioner of the IRS with notice that the taxpayer is

asserting a right to a refund.    Second, the claim must describe

the legal and factual basis for the refund.”

     At best, the Form 1045 page 2 informs the Commissioner of

the possibility that petitioners have one or more claims for

refund (which possibility arises by operation of law if a

taxpayer has an NOL).    See sec. 172(b)(1).   The form does not,

however, assert the right to any refund, nor does it provide the

legal and factual basis for any refund, since it fails to specify

any refund year or the particulars in any refund year that would

entitle petitioners to a refund.    By itself, the Form 1045 page 2

does not constitute an informal claim for refund, since it lacks

one or more of the components of an informal claim for refund.2

          4.    The June 18 Conversation

     Nor do we believe that the Form 1045 page 2 perfected an

informal claim initiated by Mr. Barker during the June 18

conversation.   Respondent proposes a finding with respect to the

June 18 conversation.    Petitioners have no objection to that


     2
        Indeed, courts have held that the full Form 1045 does not
constitute an informal claim for refund, since it is insufficient
to put the Service on notice that a claim for refund is being
made. E.g., Kirsh v. United States, 131 F. Supp. 2d 389, 392
(S.D.N.Y. 2000); Kamens v. United States, 50 AFTR 2d 82-5567,
82-2 USTC par. 9540(W.D. Mo. 1982).
                                - 15 -

finding, and we think it fairly reflects the testimony of Revenue

Agent Stufflebeam and Mr. Barker.    The proposed finding is:

     Mr. Barker said that based on the cost of goods sold
     used in the criminal case for Mr. Sumrall, the
     petitioners would have net operating loss carrybacks in
     later years. Mr. Stufflebeam told Mr. Barker that he
     could complete the audit in 60 to 90 days if he could
     get the additional requested documents and the returns
     for later years.

     Put simply, we think that Mr. Barker told Revenue Agent

Stufflebeam that, based on information gathered during the

criminal investigation, petitioners expected to report losses for

subsequent years that would carry back and reduce petitioners’

income for one or more of the audit years.     Petitioners may,

thus, have asserted a right to a refund.     Nevertheless, Revenue

Agent Stufflebeam was examining petitioners’ returns for 1987

through 1991, petitioners had not yet filed their returns for

1992 and 1993 (or any amended returns for any year under

examination), and Revenue Agent Stufflebeam told Mr. Barker that

he would consider any carrybacks resulting from losses when he

received returns showing such losses.

     To make an informal claim for refund, a taxpayer not only

must assert his right to a refund for a year, but he must

describe the legal and factual basis of the claim.      New England

Elec. Sys. v. United States, supra.      Petitioners have not shown

that they adequately described the factual basis of their claim

to Revenue Agent Stufflebeam.    Revenue Agent Stufflebeam
                              - 16 -

undoubtedly had knowledge of the years under examination, but

petitioners did not tell him that the subsequent year from which

a loss would carry back was 1992, or identify the year or years,

among those under examination to which the loss would be carried

back, or, more importantly, give him any particulars of that loss

other than that it was expected to be based on the cost of goods

sold used in the criminal case against petitioner.   To constitute

a claim for refund, a taxpayer must give the Commissioner

adequate notice of the grounds, including the factual basis, for

the claim before the expiration of the period of limitations so

that the Commissioner can, if he wishes, initiate an examination

of the bona fides of the claim.   See Estate of Mueller v.

Commissioner, 107 T.C. 189, 213 (Beghe, J., dissenting), affd.

153 F.3d 302 (6th Cir. 1998); see also Am. Radiator & Standard

Sanitary Corp. v. United States, 162 Ct. Cl. 106, 318 F.2d 915,

920 (1963).3   Petitioners did not, through the June 18

conversation, give respondent adequate notice that they had

claims for refund or of the grounds underlying such claims.


     3
        The facts of this are distinguishable from those of Am.
Radiator & Standard Sanitary Corp. v. United States, 162 Ct. Cl.
106, 318 F.2d 915, 921 (1963), in which the Court of Claims found
an informal claim for refund with respect to retroactive
inventory adjustments where the revenue agent had knowledge of
the taxpayer’s desire for a refund, the approximate total amount
of the refund expected, and the cost of the later year inventory
replacement giving rise to the earlier year adjustments and
refunds. The equivalent of that last component is missing in
this case.
                                 - 17 -

          5.    Revenue Agent Stufflebeam’s Request

     Revenue Agent Stufflebeam asked for a copy of any loss year

return.   Petitioners did not, however, give him a copy of the

1992 return, nor did he receive one from the Ogden Service

Center, where the original was filed on October 7, 1996.

     Petitioners have not persuaded us that it was Revenue Agent

Stufflebeam’s duty to put someone on lookout for the 1992 return

at the Ogden Service Center or that it was someone’s duty at the

service center to separate the Form 1045 page 2 from the 1992

return and forward it to the revenue agent.     In Kidde Indus.,

Inc. v. United States, 40 Fed. Cl. 42, 65-66 (1997), the U.S.

Court of Federal Claims found that it was not necessary for a

taxpayer to direct the information that constitutes an informal

claim to the precise IRS official who will consider that claim so

long as it is given to an official whose general responsibilities

and interactions with the taxpayer are sufficient to put the IRS

on notice of the pertinent claim.     The facts of that case are

distinguishable from the facts before us.     The 1992 return was

not directed to an official whose general responsibilities and

interactions with petitioners were sufficient to put the IRS on

notice of a refund claim.

           6.   Other Contacts

     Finally, petitioners have not shown that, on or before

October 15, 1996 (the last day for making a claim for a refund
                              - 18 -

attributable to an NOL carryback from 1992), they provided

information to any other official at the IRS so as to put

respondent on notice that petitioners had claims for refunds

attributable to carrybacks of the 1992 NOL.   They did not provide

such information to Special Agent Raven, nor did they convey it

by the February 14 letter or otherwise.

      C.   Conclusion

      Petitioners did not make informal claims for refunds

attributable to NOL carrybacks from 1992 to 1989 and 1990 before

the expiration on October 15, 1996, of the period for doing so.

IV.   Conclusion

      Petitioners are not entitled to NOL carrybacks in the

amounts of $31,113 and $12,810, to 1989 and 1990, respectively.


                                          Decision will be entered

                                    under Rule 155.
