                        T.C. Memo. 2010-219



                       UNITED STATES TAX COURT



                 WILLIAM M. PERRY, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 27540-08.              Filed October 7, 2010.



     Robert B. Jackson and William A. Roberts, for petitioner.

     Duy P. Tran, for respondent.



                         MEMORANDUM OPINION


     VASQUEZ, Judge:    This case is before the Court on

petitioner’s motion to restrain collection of taxes and to order

respondent to refund an overpayment pursuant to Rule 55.

Unless otherwise indicated, all Rule references are to the Tax

Court Rules of Practice and Procedure, and all section references

are to the Internal Revenue Code, as amended.
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                            Background

     In a notice of deficiency mailed to petitioner on August 11,

2008, respondent determined a $9,219 deficiency in petitioner’s

2002 Federal income tax and additions to tax pursuant to section

6651(a)(1) and (2) of $754 and $838, respectively.   In October

2008 respondent applied petitioner’s 2007 overpayment of $4,416

to offset part of the 2002 deficiency.1

     On November 12, 2008, petitioner filed a timely petition in

the Tax Court to contest the 2002 deficiency.2   On March 30,

2009, petitioner filed this motion pursuant to Rule 55 to enjoin

respondent from applying the 2007 overpayment to his 2002

deficiency and to order respondent to refund the 2007

overpayment.   We must decide whether respondent violated the

restrictions on collection and assessment in section 6213(a) when

he offset petitioner’s 2007 overpayment against the deficiency

for 2002.

                            Discussion

     Petitioner takes the position that section 6213(a) prohibits

the Commissioner from engaging in all collection activities,

including offsets, during the period in which the taxpayer may

petition the Tax Court (i.e., 90 or 150 days after the notice of



     1
        On Mar. 24, 2008, petitioner timely filed his 2007 tax
return showing a $4,416 overpayment.
     2
         At the time the petition was filed, petitioner resided in
Texas.
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deficiency is mailed), or if the taxpayer files a petition, until

our decision becomes final.   Petitioner argues that the offset

violated section 6213(a) because it was performed during the 90-

day period within which respondent was barred from collecting.

As a result, petitioner maintains that the Court must enjoin

respondent from making the offset and order him to refund the

2007 overpayment.

     Respondent objects to petitioner’s motion on the grounds

that the offset does not violate section 6213(a) because an

offset is not an assessment, a levy, or an in-court collection

proceeding.

     Section 6402(a) expressly authorizes the Commissioner to

credit an overpayment against any tax liability of the taxpayer.

Section 301.6402-1, Proced. & Admin. Regs., similarly provides

that the Commissioner may offset an overpayment against “any

outstanding liability”.3




     3
        We need not address respondent’s argument that a
“liability” for purposes of sec. 6402(a) arises when a notice of
deficiency is issued. This Court lacks jurisdiction to grant the
relief petitioner requests in his motion (i.e., to enjoin the
offset and compel respondent to refund the 2007 overpayment)
regardless of the definition of the term “liability”. Our
authority to enjoin the Commissioner’s collection activities and
order him to refund amounts collected is limited. See secs.
6213(a), discussed infra, 6512(b)(1), (2), (4), 6214(b).
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     Section 6213(a) provides, in relevant part:

          SEC. 6213(a). Time for Filing Petition and Restriction
     on Assessment.–-Within 90 days, or 150 days if the notice is
     addressed to a person outside the United States, after the
     notice of deficiency authorized in section 6212 is mailed
     (not counting Saturday, Sunday, or a legal holiday in the
     District of Columbia as the last day), the taxpayer may file
     a petition with the Tax Court for a redetermination of the
     deficiency. * * * [N]o assessment of a deficiency in respect
     of any tax * * * and no levy or proceeding in court for its
     collection shall be made, begun, or prosecuted until * * *
     [the notice of deficiency] has been mailed to the taxpayer,
     nor until the expiration of such 90-day or 150–day period,
     as the case may be, nor, if a petition has been filed with
     the Tax Court, until the decision of the Tax Court has
     become final. * * * [T]he making of such assessment or the
     beginning of such proceeding or levy during the time such
     prohibition is in force may be enjoined by * * * the Tax
     Court, and a refund may be ordered by * * * [the Tax Court]
     of any amount collected within the period during which the
     Secretary is prohibited from collecting by levy or through a
     proceeding in court * * * [Emphasis added.]

Though section 6213(a) does not specifically prohibit offsets,

petitioner argues that the “underlying, fundamental principle” of

the statute is that the Commissioner, during the period in which

the statute’s restriction is in effect, is prohibited from

collecting, by any means, including an offset, a deficiency that

a taxpayer may dispute in the Tax Court.    A plain reading of the

statute, however, does not support petitioner’s argument.

     Section 6213(a) limits the Commissioner’s authority with

respect to premature assessments, levies, and in-court collection

proceedings, none of which occurred here.   The parties agree that

respondent did not assess the 2002 deficiency.   Furthermore, an

offset under section 6402(a) is distinguishable from, and does
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not constitute, a levy.   See, e.g., Sage v. United States, 908

F.2d 18, 27 (5th Cir. 1990) (“The Supreme Court has held that a

levy is a means by which the Internal Revenue Service may acquire

possession of a taxpayer’s property * * *; a ‘set-off’, on the

other hand, is the application of funds already in the

Government’s possession against a taxpayer’s outstanding tax

liability.”); Boyd v. Commissioner, 124 T.C. 296, 300 (2005) (“A

levy is distinguishable from an offset.”), affd. 451 F.3d 8 (1st

Cir. 2006); Bullock v. Commissioner, T.C. Memo. 2003-5 (“An

offset under section 6402 is distinguishable from, and does not

constitute, a levy action.”); Trent v. Commissioner, T.C. Memo.

2002-285 (“A levy must be distinguished from an offset of an

overpayment or refundable credit, * * * The Commissioner * * *

may engage in nonlevy collection actions, such as offsetting

overpayments from other tax years after the requesting spouse

files for relief.”).   Finally, an offset, which is an

administrative “bookkeeping operation” of applying a credit from

one year against a deficiency in another year, is not a

“proceeding in court” for the collection of a deficiency.4    See

Fulgoni v. United States, 23 Cl. Ct. 119, 126 (1991) (“The




     4
        The in-court collection proceedings that sec. 6213(a)
refers to include those brought by the U.S. Government in the
District Courts pursuant to secs. 7401 and 7403. The District
Courts of the United States have jurisdiction over such tax
collection suits. See 28 U.S.C. secs. 1340, 1345 (2006); see
also sec. 7402(a).
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administrative offset was a simple bookkeeping operation of

applying a credit for 1986 against a debt for 1980.”).

     On the basis of the foregoing, respondent did not violate

section 6213(a).   Accordingly, we will deny petitioner’s motion.

In reaching our holdings, we have considered all arguments made,

and, to the extent not mentioned, we conclude that they are moot,

irrelevant, or without merit.

     To reflect the foregoing,


                                          An appropriate order will

                                     be entered.
