                  T.C. Summary Opinion 2004-15



                     UNITED STATES TAX COURT



                HARRIS RABINOVICH, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 14998-02S.            Filed February 11, 2004.


     Harris Rabinovich, pro se.

     Russell K. Stewart, for respondent.



     PANUTHOS, Chief Special Trial Judge:   This case was heard

pursuant to the provisions of sections 6330(d) and 7463.1   The

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

this opinion should not be cited as authority.




     1
        Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended, and all Rule references
are to the Tax Court Rules of Practice and Procedure.
                                - 2 -

     Respondent issued petitioner a Notice of Determination

Concerning Collection Action(s) Under Section 6320 and/or 6330

for unpaid Federal income tax and related liabilities for 1997.2

     The issue for decision is whether respondent abused his

discretion in determining that certain asserted overpayments are

not available as a collection alternative to offset petitioner’s

unpaid Federal income tax and related liabilities for 1997.

                            Background

     Some of the facts have been stipulated, and they are so

found.   Petitioner resided in Philadelphia, Pennsylvania, at the

time the petition was filed.

     In April 1986, petitioner sent respondent a check dated

April 8, 1986, in the amount of $5,000 (hereinafter 1986 payment)

along with Form 4868, Extension of Time To File U.S. Individual

Income Tax Return,3 for the 1985 taxable year.   The 1986 payment

reflected the “Income tax balance due” that petitioner was to

“Pay in full with” Form 4868.

     Respondent then sent petitioner a notice dated June 1, 1987,

notifying petitioner (1) that he and Ms. Ilene Block had made

errors on the Form 1040, U.S. Individual Income Tax Return, that


     2
        As of May 31, 2002, the unpaid amount for the 1997
taxable year was $8,377.73.
     3
        The purpose of Form 4868 is “to ask for an automatic 4-
month extension to file Form 1040A or Form 1040.” A condition
for having the extension granted is payment of the “Income tax
balance due”, which in this case was $5,000.
                                - 3 -

they filed for the 1985 taxable year and (2) that they were

entitled to a refund of $9,967.81 after having made total

payments and credits of $33,817.32 on the basis of the following:

     Tax withheld                          $11,709.55
     Estimated tax payments                 17,107.77
     Other credits                             -0-
     Other payments                          5,000.00
       Total payments and credits           33,817.32

The record is unclear as to whether petitioner received any

portion of the refund of $9,967.81 or whether this amount was

credited to a subsequent taxable year.   The record is also

unclear as to when the 1985 return was actually filed, but on the

basis of the notice, we presume petitioner filed the return

sometime before June 1, 1987.

     Petitioner also sent respondent a check dated February 8,

1995, in the amount of $10,000 (hereinafter 1995 payment) as

payment of taxes for the 1994 taxable year.   Petitioner, however,

did not file a Federal income tax return for the 1994 taxable

year until May 14, 1997, at which time petitioner had a reported

tax liability of $32,490.86 and credits of $43,677.64 for that

taxable year.   The credits for the 1994 taxable year include the

1995 payment.   That payment is reflected in respondent’s literal

transcripts of petitioner’s tax accounts, which show a posting of

$10,000 on February 23, 1995.
                                - 4 -

     Consistent with petitioner’s request, the excess credits for

the 1994 taxable year--$11,186.78--were carried over and applied

to the 1995 taxable year.    However, the Federal income tax return

for the 1995 taxable year was not filed until August 14, 2001, at

which time petitioner had a reported tax liability of $29,065.18

and total credits (including the carried-over amount) of

$41,814.78 for that taxable year.

     A portion of the excess credits for the 1995 taxable year–-

$9,377.604--was carried over and applied to the 1996 taxable

year, the Federal income tax return for which was not filed until

either August 2001 (according to petitioner) or March 26, 2002

(according to respondent).   For the 1996 taxable year, petitioner

had a reported tax liability of $33,210 and total credits of

$37,632.

     Respondent did not apply the excess credits–-$4,422–-from

the 1996 taxable year to the 1997 taxable year.   Petitioner did

not file his Federal income tax return for the 1997 taxable year

until October 3, 2001, when he had credits of $28,743 that were

insufficient to cover the reported tax liability of $34,456.




     4
        According to respondent, the remaining excess credits–-
$3,372–-were erroneously applied to the 1998 taxable year.
Respondent contends that he is not seeking recovery of this
erroneous application.
                                 - 5 -

     We summarize the foregoing chronology with the following

table:

                                            Tax
        Year     Date Return Filed       Liability     Credits

        1994   5/14/1997                 $32,490.86   $43,677.64
        1995   8/14/2001                  29,065.18    41,814.78
        1996   8/2001 or 3/26/2002        33,210.00    37,632.00
        1997   10/3/2001                  34,456.00    28,743.00

     Respondent seeks to collect the balance of the unpaid tax

liability, plus any accrued interest and additions to tax, for

1997.    Respondent issued petitioner a notice of intent to levy on

or about April 20, 2002.

     At a hearing before respondent’s Appeals officer,5

petitioner was presented with literal transcripts of his tax

accounts for the years 1994 through 1998.       On August 28, 2002,

the Appeals Office issued the Notice of Determination Concerning

Collection Action(s) Under Section 6320 and/or 6330, notifying

petitioner of the determination to proceed with collection of the

1997 income tax liability.

     In his petition to this Court, filed September 20, 2002,

petitioner alleged in part:

          I sent a check in the amount of $5,000. 4/4/86 to
     the Internal Revenue Service which was never
     acknowledged. I have sent letters to the Internal
     Revenue Service for years asking about this money.



     5
        The parties did not provide us with a copy of the Form
12153, Request for a Collection Due Process Hearing, submitted by
petitioner.
                               - 6 -

     * * * The Internal Revenue Service claims that there is
     a statute of limitations on this issue. * * *

          I had an overpayment of $ 11,404.[6] on my 1994 tax
     return. I designated this money to be applied to my
     1995 taxes and if there were more overpayments to
     subsequent years. This money was confiscated by the
     Internal Revenue Service as a refund. I am not allowed
     to use this money to pay income taxes for years 1995-
     1998. * * * All that I am asking is that I be able to
     use the money that I sent to the Internal Revenue
     Service to pay my taxes and not to have to pay my taxes
     twice.

     Petitioner does not dispute the existence or amount of the

underlying tax liability for 1997.     Indeed, petitioner testified

at the time of trial:   “I want to acknowledge the fact that I was

delayed in filing returns for 1995, ‘96, ‘97, ‘98; that I owed

tax for those years, penalties and interest”.    Rather, petitioner

contends that he has two sources of overpayments–-the 1986

payment and the 1995 payment--to offset his unpaid Federal income

tax and related liabilities for 1997.7




     6
        At the time of trial, petitioner asserted that the source
of the overpayment for the 1994 taxable year was the 1995
payment.
     7
        Petitioner does not raise in his petition the issue
whether the $4,422 of excess credits from the 1996 taxable year
should be available to offset his outstanding liabilities for
1997. Any issue not raised in the petition as an assignment of
error shall be deemed to be conceded. Rule 331(b)(4). Even if
petitioner had raised the issue, we conclude that the look-back
provisions of sec. 6511(b), as we shall explain later, would bar
application of his 1996 overpayment to his outstanding
liabilities for 1997 when his return for that taxable year was
filed Oct. 3, 2001.
                                 - 7 -

      Respondent contends that the statute of limitations under

section 6511 bars application of these overpayments to offset

petitioner’s unpaid liabilities for 1997.    Thus, respondent

contends that the Appeals officer did not abuse his discretion in

making the determination under section 6330.

                              Discussion

1.   Nature of the Arguments Under Section 6330(c)(2)

      Under section 6330, a taxpayer is entitled to notice and an

opportunity for a hearing before certain lien and levy actions

are taken by the Commissioner in the process of collecting unpaid

Federal taxes.    At the hearing, the Commissioner (or his Appeals

officer in particular) must obtain verification that the

requirements of any applicable law or administrative procedure

have been met.    Sec. 6330(c)(1).   The Commissioner, however, need

not rely upon a particular document to satisfy the verification

requirement.     Roberts v. Commissioner, 118 T.C. 365, 371 n.10

(2002), affd. 329 F.3d 1224 (11th Cir. 2003); Weishan v.

Commissioner, T.C. Memo. 2002-88, affd. 66 Fed. Appx. 113 (9th

Cir. 2003); Duffield v. Commissioner, T.C. Memo. 2002-53; Kuglin

v. Commissioner, T.C. Memo. 2002-51.

      It is well established that the Commissioner may rely upon

literal transcripts of account to satisfy the section 6330(c)(1)

verification requirement.     McIntosh v. Commissioner, T.C. Memo.

2003-279; see also Hauck v. Commissioner, T.C. Memo. 2002-184
                                - 8 -

(and cases cited therein), affd. 64 Fed. Appx. 492 (6th Cir.

2003).   In the present case, respondent satisfied the

verification requirement when petitioner was presented with

literal transcripts of his tax accounts for the years 1994

through 1998.

      Besides satisfying the verification requirement, the

Commissioner also must take into consideration in his

determination any issues raised by the taxpayer under section

6330(c)(2) and whether any proposed collection action balances

the need for the efficient collection of taxes with the

legitimate concern of the taxpayer that any collection action be

no more intrusive than necessary.    Sec. 6330(c)(3).   Under

section 6330(c)(2), the taxpayer may raise any relevant issue

relating to the unpaid tax or the proposed levy, including but

not limited to challenges to the appropriateness of the

collection actions and offers of collection alternatives.

2.   Standard of Review

      This Court has jurisdiction to review the Commissioner’s

administrative determination under section 6330.    Sec. 6330(d).

Where, as here, the validity of the underlying tax liability is

not at issue, we review the determination for abuse of

discretion.     Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza

v. Commissioner, 114 T.C. 176, 183 (2000).
                                   - 9 -

      The only relevant issue raised by petitioner is whether the

1986 payment, the 1995 payment, or any overpayment associated

with petitioner’s 1994 tax return constitutes a valid collection

alternative to satisfy his unpaid Federal income tax and related

liabilities for 1997.      Respondent determined that none of these

sources of payment is a valid collection alternative because the

period of limitations under section 6511 expired so as to bar any

credits or refunds.

3.   Statute of Limitations Under Section 6511

          A claim for credit or refund of an overpayment of any tax8

shall be filed by the taxpayer within 3 years from the time the

return was filed or 2 years from the time the tax was paid,

whichever of those periods expires later, or if no return was

filed by the taxpayer, within 2 years from the time the tax was

paid.      Sec. 6511(a).   A taxpayer’s claim for credit or refund is

timely if it is filed within 3 years from the date his income tax

return is filed, regardless of when the return is filed.      See

Rev. Rul. 76-511, 1976-2 C.B. 428; see also Commissioner v.

Lundy, 516 U.S. 235, 239-240 (1996); Omohundro v. United States,

300 F.3d 1065, 1069 (9th Cir. 2002).



      8
        The record clearly indicates that petitioner’s
remittances to respondent in 1986 and 1995 constitute payments of
tax and not deposits in the nature of a cash bond. Such a
deposit is not subject to a claim for credit or refund. Rev.
Proc. 84-58, 1984-2 C.B. 501.
                              - 10 -

     However, the amount of credit or refund is not unlimited and

is subject to 2 “look-back” periods.     Commissioner v. Lundy,

supra.   Under the 3-year look-back period, if the claim was filed

within 3 years of the filing of the return, then the taxpayer is

entitled to a refund of taxes paid within 3 years immediately

preceding the filing of the claim.     Sec. 6511(b)(2)(A).   Under

the 2-year look-back period, if the claim was not filed within

that 3-year period, then the taxpayer is entitled to a refund of

only those taxes paid during the 2 years immediately preceding

the filing of the refund claim.   Sec. 6511(b)(2)(B).    And if no

claim is filed, the credit or refund cannot exceed the amount

that would be allowable under section 6511(b)(2)(A) or (B) if a

claim were filed on the date the credit or refund is allowed.

Sec. 6511(b)(2)(C).

     Moreover, in the case of any overpayment by a taxpayer, the

Commissioner generally may, within the applicable period of

limitations, credit the amount of such overpayment against any

tax liability of that taxpayer.   Sec. 6402(a).

     Petitioner contends that respondent did not acknowledge the

1986 payment.   While respondent’s notice dated June 1, 1987,

indicates otherwise,9 even if petitioner’s contention had merit,

section 6511(a) bars application of the 1986 payment to offset


     9
        The notice to petitioner clearly indicates “Other
Payments” of “$5,000.00”.
                               - 11 -

the outstanding liability for 1997.     For section 6511(a) to not

serve as a bar, petitioner needed to file either a claim for

credit or a claim for refund within the later of 3 years of when

he filed his 1985 return or 2 years of the 1986 payment.      He did

neither.

       Petitioner also contends that his 1995 payment is another

source of overpayment that may be applied to offset his

outstanding liability for 1997.    However, the record indicates

that this amount was part of the $11,186.78 of excess credits for

the 1994 taxable year used to offset the tax liability for 1995.

This offset was consistent with petitioner’s request and was done

by respondent under the authority of section 6402(a).    If

petitioner intended the 1995 payment to be used as an offset of

his 1997 outstanding liability, then section 6511(a) serves as a

bar.    Petitioner failed to file a claim for credit or refund by

May 14, 2000.10   Even if we were to treat the 1994 return as a

claim for credit or refund instead of as a return, petitioner

would run afoul of the 2-year look-back period under section

6511(b)(2)(B), because the 1995 payment of February 23, 1995, did

not fall within the 2-year period immediately preceding the

filing of his claim on May 14, 1997.



       10
        May 14, 2000, represents the date that is 3 years from
the date the 1994 return was filed. Two years from petitioner’s
1995 payment is Feb. 23, 1997.
                               - 12 -

     Under certain circumstances, the period of limitations under

section 6511(a) may be tolled or the harshness of the statute may

be mitigated.   If the taxpayer is “financially disabled” as

defined under section 6511(h)(2), then the running of the periods

specified in section 6511 may be suspended.    Sec. 6511(h)(1).

Otherwise, the period of limitations under section 6511(a) may

not be tolled on grounds of equity.     United States v. Brockamp,

519 U.S. 347, 354 (1997); Kreiger v. United States, 539 F.2d 317,

320-321 (3d Cir. 1976).   In the alternative, section 6511 may be

mitigated under the provisions of sections 1311 through 1314 or

by application of the judicial doctrines of recoupment, setoff,

and estoppel.   See, e.g., Allison v. United States, 379 F. Supp.

490, 496-497 (M.D. Pa. 1974) (regarding mitigation provisions of

sections 1311 through 1314).   In the present case, there is no

evidence of financial disability warranting tolling of the

periods of limitation under section 6511.    Nor is there any

evidence of circumstances warranting application of either the

mitigation provisions or the judicial doctrines of recoupment,

setoff, and estoppel.

     Accordingly, we conclude that section 6511 bars application

of the 1986 payment, the 1995 payment, or any overpayments

associated with the 1994 return to petitioner’s outstanding
                               - 13 -

liabilities for 1997.11   This conclusion may seem harsh, but the

purpose of the statute of limitations is “to promote justice by

preventing surprises through the revival of claims that have been

allowed to slumber until evidence has been lost, memories have

faded, and witnesses have disappeared.”    Order of R.R.

Telegraphers v. Ry. Express Agency, Inc., 321 U.S. 342, 348-349

(1944).   It must be noted that statutes of limitations in the

Internal Revenue Code do not operate solely against taxpayers.

For example, taxpayers may plead the expiration of a period of

limitations under section 6501 when the Commissioner fails to act

within the prescribed assessment period.

4.   Conclusion

     There is no basis in the record for the Court to conclude

that respondent abused his discretion with respect to any of the

matters in issue.   Accordingly, for the reasons discussed above,

respondent’s determination to proceed by levy with the collection

of petitioner’s outstanding liability for 1997 should be

sustained, and we so hold.

     We have considered all of petitioner’s arguments and

contentions that are not discussed herein relating to whether

respondent may proceed with collection with respect to

petitioner’s outstanding liability for 1997, and we conclude

     11
        As we indicated earlier, it appears that respondent has
accounted for all of these payments and has used them to offset
petitioner’s tax liabilities.
                             - 14 -

those arguments and contentions are without merit and/or

irrelevant.

     Reviewed and adopted as the report of the Small Tax Case

Division.

     To give effect to the foregoing,

                                         Decision will be entered

                                   for respondent.
