                        T.C. Memo. 1997-39



                      UNITED STATES TAX COURT



                BARRY S. MICHELSON, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent

              SHELLEY A. MICHELSON, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent


Docket Nos. 7250-94, 21182-94.        Filed January 22, 1997.



Barry S. Michelson, pro se.

Shelley A. Michelson, pro se.

Carmino J. Santaniello, for respondent.


                        MEMORANDUM OPINION


     RAUM, Judge:   The Commissioner determined deficiencies in

petitioners' 1991 Federal income taxes as follows:
                                  - 2 -


 Petitioner          Deficiency       Sec. 6651(a)(1)   Sec. 6654(a)
 Barry Michelson           $979            $244.75           -0-
 Shelley Michelson       50,870           8,168.00        $1,450

Pursuant to respondent's uncontested motion, the cases have been

consolidated for "trial, briefing and opinion."      At issue is

whether either petitioner is entitled, under sections 6402 and

6511(a), to a refund of overpayment of taxes withheld from

petitioner Shelley A. Michelson's wages, dividends, and interest.

Petitioners will sometimes be referred to simply as Barry and

Shelley, respectively.    The facts have been stipulated.1    Unless

otherwise indicated, all section references are to the Internal

Revenue Code in effect for the year in issue.

     Petitioners are husband and wife.      They resided in Stamford,

Connecticut, when they filed their respective petitions in these

cases.   Petitioners filed a timely request for an automatic 4-

month extension of time to file their 1991 return.      As a result

of the extension, their return was due on August 15, 1992, a

Saturday.   The following Monday, August 17, 1992, was not a legal

holiday in the District of Columbia or the State of




     1
      The Court ordered simultaneous briefs. However, although
the Government filed its opening brief, the Court has been
informed that petitioners do not intend to file any brief.
                               - 3 -


Massachusetts.2   See sec. 7503.    However, petitioners did not

file their 1991 joint return until October 26, 1994, after

individual notices of deficiency had already been issued to each

spouse.

     During the taxable year 1991, Barry was a self-employed

consultant.   On Schedule C of their 1991 return, petitioners

reported a net $24,572 loss with respect to Barry's consulting

activities.   During 1991, Barry received compensation in the

total amount of $634, summarized as follows:

Employer                    Amount             Withholdings
City of Stamford             $165                  -0-
Town of Greenwich             469                  -0-



     During 1991, Shelley received wages from AMBAC Indemnity in

the total amount of $100,571.97, from which her employer withheld

Federal income taxes in the amount of $17,831.11.     She received

dividends from Manufacturer's Hanover Trust, as transfer agent,

in the amount of $652, from which Manufacturer's withheld Federal

income taxes in the amount of $128.     She also received interest

income from Citybank in the amount of $1,203, from which the bank

withheld Federal income taxes in the amount of $240.


     2
      Although petitioners resided in Connecticut, their return
was to be filed with the Andover Service Center in Andover,
Massachusetts. Whether the filing date is a legal holiday is
determined by reference to the State where the internal revenue
district office is located. Sec. 7503.
                               - 4 -


     Petitioners had not yet filed their 1991 return when the

notices of deficiency were issued.     A separate individual notice

of deficiency was sent to Barry on February 23, 1994, and a

separate individual notice of deficiency was sent to Shelley on

August 18, 1994.   The statutory notice to Barry was issued by the

Andover Service Center.   The statutory notice to Shelley was sent

by the Hartford District Director.     Both statutory notices were

based upon wage and other information obtained by the IRS from

third party sources.

     On their 1991 return, petitioners reported taxable income in

the amount of $46,180 and Federal income tax withholdings in the

amount of $18,199, resulting in a claimed overpayment of $9,690.

The Commissioner accepted the 1991 return as filed, but

disallowed as untimely petitioners' claim for refund reflected on

that return.

     The Government has conceded that there is no deficiency in

income tax due from either petitioner for 1991, and that neither

petitioner is liable for the additions to tax under sections

6651(a)(1) and 6654(a).   At issue is whether either petitioner is

entitled to a refund of the $9,690 overpayment.

     Section 6402 provides:

     In the case of any overpayment, the Secretary, within
     the applicable period of limitations, may credit the
     amount of such overpayment, including any interest
     allowed thereon, against any liability in respect of an
     internal revenue tax on the part of the person who made
     the overpayment and shall, subject to subsections (c)
                               - 5 -


     and (d), refund any balance to such person.   [Emphasis
     added.]

It has long been recognized by this Court that a husband and wife

are treated as separate taxpayers even where they have filed a

joint return.   Rodney v. Commissioner, 53 T.C. 287, 307 (1969).

Since petitioners must be treated as separate taxpayers, and

since their notices of deficiency were issued at different times,

we must determine separately each petitioner's eligibility for a

refund of the overpayment.

1.   Barry

     "Where spouses claim a refund under a joint return, the

refund is divided between the spouses, with each receiving a

percentage of the refund equivalent to his or her proportion of

the withheld tax payments."   Gordon v. United States, 757 F.2d

1157, 1160 (11th Cir. 1985); Gens v. United States, 230 Ct. Cl.

42, 673 F.2d 366 (1982); see also Rosen v. United States, 397 F.

Supp. 342, 344 (E.D. Pa. 1975).   Rev. Rul. 80-7, 1980-1 C.B. 296,

as amplified by Rev. Rul. 85-70, 1985-1 C.B. 361, sets out a

formula for determining each spouse's share of the overpayment.

     The parties have stipulated that no taxes were withheld from

Barry's wages for 1991, and that all of the taxes responsible for

the overpayment were withheld from Shelley's income.   Since all

of the taxes were withheld from her income, Barry has no interest

in any portion of the overpayment and thus is not entitled to a
                                   - 6 -


refund.   We note that this result is consistent with Rev. Rul.

74-611, 1974-2 C.B. 399.

2.   Shelley

     Since the overpayment was attributable entirely to taxes

withheld from Shelley's income, she alone has any interest in the

refund of the overpayment.     However, she must demonstrate that

her claim for refund was timely.

     Section 6512(b)(3) provides:

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

                       *   *   *   *   *   *   *

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

Section 6511(b)(2)(B) provides that when a claim for refund is

not made within the 3-year period described in section 6511(a),

the amount of the credit or refund may not exceed the amount of

tax paid within the 2 years preceding the claim for refund.

     Section 6511(a) provides that a claim for refund must be

made within 3 years from the time the return was filed or "if no

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

the tax was paid."   Under sections 6513(a) and (b)(1), the taxes

attributable to Shelley's income were deemed withheld on April
                                 - 7 -


15, 1992.3    And, pursuant to section 6513(a), petitioners'

extension to August 17, 1992, did not change the due date of the

tax from April 15, 1992.     The notice of deficiency was issued to

Shelley on August 18, 1994.     Petitioners thereafter, on October

26, 1994, filed their 1991 return, which served as their claim

for refund.     Under section 6511(a), if the 3-year period from

filing the return applies, Shelley is entitled to a refund.     If

the 2-year period applies, the limitations period has expired,

and Shelley is barred from receiving a refund.




     3
      Section 6513.    Time Return Deemed Filed and Tax Considered
                       Paid

     (a)     Early Return or Advance Payment of Tax.--

          For purposes of section 6511, any return filed before
     the last day prescribed for the filing thereof shall be
     considered as filed on such last day. For purposes of
     section 6511(b)(2) and (c) and section 6512, payment of any
     portion of the tax made before the last day prescribed for
     the payment of the tax shall be considered made on such last
     day. For purposes of this subsection, the last day
     prescribed for filing the return or paying the tax shall be
     determined without regard to any extension of time granted
     the taxpayer and without regard to any election to pay the
     tax in installments.

     (b)     Prepaid Income Tax.--For purposes of section 6511 or
             6512--

               (1) Any tax actually deducted and withheld at the
             source during any calendar year under chapter 24 shall,
             in respect of the recipient of the income, be deemed to
             have been paid by him on the 15th day of the fourth
             month following the close of his taxable year with
             respect to which such tax is allowable as a credit
             under section 31. [Sec. 6513(a) and (b)(1).]
                                - 8 -


       This case is governed by Commissioner v. Lundy, 516 U.S.

___, 116 S. Ct. 647 (1996).    In Lundy, income taxes of the

taxpayers (husband and wife) were withheld from their wages

during 1987.    On September 26, 1990, the Commissioner issued a

notice of deficiency to the taxpayer-husband.      Three months

later, on December 22, 1990, the taxpayers filed their 1987 joint

return.    Id. at ___, 116 S. Ct. at 649.

       The Court framed the issue as follows:    "[W]e must determine

which of these two look-back periods 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 ___, 116 S. Ct. at

652.    The Supreme Court held that the 2-year period applied:

            We reach this conclusion by following the
       instructions set out in section 6512(b)(3)(B). The
       operative question is whether a claim filed "on the
       date of the mailing of the notice of deficiency" would
       be filed "within 3 years from the time the return was
       filed." * * * In the case of a taxpayer who does not
       file a return before the notice of deficiency is
       mailed, the claim described in section 6512(b)(3)(B)
       could not be filed "within 3 years from the time the
       return was filed." No return having been filed, there
       is no date from which to measure the 3-year filing
       period described in section 6511(a). Consequently, the
       claim contemplated in section 6512(b)(3)(B) would not
       be filed within the 3-year window described in section
       6511(a), and the 3-year look-back period set out in
       section 6511(b)(2)(A) would not apply. The applicable
       look-back period is instead the default 2-year period
       described in section 6511(b)(2)(B), which is measured
       from the date of the mailing of the notice of
       deficiency, see section 6512(b)(3)(B). The taxpayer is
       entitled to a refund of any taxes paid within two years
                                 - 9 -


     prior to the date of the mailing of the notice of
     deficiency.

Id. at ___, 116 S. Ct. at 652.

     The Lundy Court also stated that:

     [A] delinquent filer's entitlement to a refund in Tax
     Court depends on the date of the mailing of the notice
     of deficiency. Section 6512(b)(3)(B) tolls the
     limitations period, in that it directs the Tax Court to
     measure the look-back period from the date on which the
     notice of deficiency is mailed and not the date on
     which the taxpayer actually files a claim for refund.
     But in the case of delinquent filers, section
     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.

Id. at ___, S. Ct. at 653.

     Here, the notice of deficiency, dated August 18, 1994, was

mailed to Shelley more than 2 years after the taxes were deemed

paid on April 15, 1992.   Under Lundy, since no tax return or

claim for refund was filed until after the notice of deficiency

was issued, Shelley is not entitled to a refund.    See Lundy v.

Commissioner, 516 U.S. ___, 116 S.Ct. at 653.    We anticipated

that result in Allen v. Commissioner, 99 T.C. 475 (1992), affd.

23 F.3d 406 (6th Cir. 1994).    We there commented upon the

seemingly harsh consequences:

          As is true in many of the cases in this field, the
     result may seem harsh in view of an actual overpayment,
     but petitioner failed to file his income tax return
     more promptly, and the statute is precise. The unhappy
     result for petitioner is the consequence of a "problem
     of * * * [his] own creation". Berry v. Commissioner,
                             - 10 -


     97 T.C. 339, 345 (1991). The situation is not an
     unfamiliar one, and has been before us in a variety of
     other circumstances. Cf., e.g., White v. Commissioner,
     72 T.C. 1126, 1130-1134 (1979); Hosking v.
     Commissioner, 62 T.C. 635, 642-644 (1974); and a number
     of memorandum opinions cited in Berry v. Commissioner,
     supra at 345 n.7.

Id. at 480.

     Since, as we have already concluded above, neither Barry nor

Shelley is entitled to a refund in these cases,

                            Decisions will be entered

                      for respondent.
