                        T.C. Memo. 1999-335


                      UNITED STATES TAX COURT



                MARK E. SCHROEDER, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 1486-98.                      Filed October 7, 1999.



     Mark E. Schroeder, pro se.

     Rick V. Hosler, for respondent.



              MEMORANDUM FINDINGS OF FACT AND OPINION


     COLVIN, Judge:   Respondent determined deficiencies in

petitioner's Federal income taxes of $9,161 for 1992, $10,588 for

1993, $9,426 for 1994, and $15,492 for 1995, and additions to tax

of $1,095 for 1992, $912 for 1993, $584 for 1994, and $1,362 for

1995 under section 6651(a) for failure to file a timely income

tax return.
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     Respondent concedes that petitioner overpaid Federal income

taxes for 1992, 1993, 1994, and 1995, and that he is not liable

for additions to tax under section 6651(a)(1) for 1992, 1993,

1994, and 1995.     After concessions, the issues for decision are:

     1.   Whether petitioner's refunds of overpayments for 1992,

1993, 1994, and 1995 are barred by the statute of limitations

under section 6511.     We hold that section 6511 bars petitioner's

refunds for 1992, 1993, and 1994, but that petitioner is eligible

for a refund of his 1995 overpayment.

     2.   Whether petitioner is entitled to receive refunds of

his overpayments for 1992, 1993, or 1994 under the doctrine of

equitable recoupment.     We hold he is not.

     3.   Whether respondent's levy on petitioner's individual

retirement account in 1995 in the amount of $26,861 was a taxable

distribution.     We hold that it was.

     Section references are to the Internal Revenue Code in

effect for the years in issue.     Rule references are to the Tax

Court Rules of Practice and Procedure.

                         I.   FINDINGS OF FACT

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

A.   Petitioner

     Petitioner lived in Arizona when he filed his petition in

this case.
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     Petitioner worked for Fairchild Data Corp. (Fairchild) for

about 12 years.    Fairchild withheld from petitioner's wages

Federal income taxes of $4,780 for 1992, $6,939 for 1993, and

$7,089 for 1994.    In July 1995, Fairchild laid off petitioner.

Fairchild paid petitioner $36,119 in 1995, of which $4,671 was

withheld for Federal income taxes.     About $14,000 of the $36,119

was severance pay.

     In 1995, petitioner had an individual retirement account

(IRA) at Mellon Bank N.A., trustee for Fairchild Industries, Inc.

Sometime in 1995, respondent served Mellon Bank or Fairchild with

a notice of levy against the account, and Mellon Bank distributed

$26,861 from the account to respondent.    Of this amount, $5,372

was withheld for Federal income taxes.    Mellon Bank reported to

respondent that it had made a $26,861 taxable distribution from

petitioner's IRA in 1995.

B.   Petitioner's Federal Income Tax Returns for 1992-95 and the
     Notices of Deficiency

     Petitioner did not file Federal income tax returns (Forms

1040) for 1992, 1993, 1994, and 1995.

     Fairchild reported on an information return sent to

respondent that it had paid petitioner taxable wages of $36,119

in 1995.

     On October 24, 1997, respondent sent two notices of

deficiency to petitioner:    one for 1992, 1993, and 1994, and one

for 1995.   Respondent determined that petitioner's filing status
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was single and allowed petitioner one exemption.   At a time not

specified in the record, respondent conceded that petitioner was

married and entitled to use joint tax rates for the years at

issue and that petitioner had four dependent children and was

entitled to claim four exemptions for them.

     Petitioner had deficiencies in income taxes of $4,661 for

1992, $5,426 for 1993, $4,781 for 1994, and $6,529 for 1995.

These deficiency amounts do not take into account prepayment

credits of $4,780 for 1992, $6,939 for 1993, $7,089 for 1994, and

$10,043 for 1995.

     Petitioner made no income tax payments for 1992, 1993, 1994,

or 1995 after he received the notices of deficiency.

                           II.   OPINION

A.   Whether Petitioner Is Entitled To Receive Refunds for
     Overpayment of Taxes for 1992, 1993, 1994, and 1995

     The Tax Court has jurisdiction to award to a taxpayer a

refund of overpaid taxes if the Commissioner issued the notice of

deficiency within the later of 2 years after the tax was paid or

3 years after the return was filed.    See secs. 6511(b)(2)(A) and

(B), 6512(b)(3)(B); Commissioner v. Lundy, 516 U.S. 235, 241-242

(1996).   The 2-year period applies (and the 3-year period does

not) if the taxpayer did not file his or her income tax return

before the Commissioner issued a notice of deficiency for that

year.   See secs. 6511(b)(2)(B), 6512(b)(3); Commissioner v.

Lundy, supra at 243.   Petitioner did not file returns for the
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years at issue.     Thus, we may award a refund of tax only for

those amounts paid within the 2 years preceding the date

respondent issued the notices of deficiency.

     Respondent mailed the notices of deficiency on October 24,

1997.     We may order a refund of any overpayments petitioner made

within the 2 years preceding October 24, 1997.     Petitioner's

payments of taxes for 1992, 1993, and 1994 were made by Fairchild

through withholding.     Withheld income taxes are deemed paid on

April 15 of the year following the taxable year.     See sec.

6513(b)(1).     Thus, petitioner is deemed to have paid income tax

for 1992 on April 15, 1993, for 1993 on April 15, 1994, and for

1994 on April 15, 1995, all of which dates are more than 2 years

before October 24, 1997.     Thus, we lack jurisdiction to order a

refund of petitioner's overpayments for those years.

Commissioner v. Lundy, supra at 243.     However, petitioner paid or

is deemed to have paid income tax for 1995 on April 15, 1996,

which payment is less than 2 years before October 24, 1997.

Petitioner is entitled to receive a refund of his overpayment of

tax for 1995.

B.      Whether Equitable Recoupment Applies

     Petitioner relies on Rothensies v. Electric Storage Battery

Co., 329 U.S. 296 (1946), and Bull v. United States, 295 U.S.

247, 261 (1935), for the proposition that equitable recoupment
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entitles petitioner to a refund of the excess withholding for

1992, 1993, and 1994.

     We disagree.   Equitable recoupment does not apply here.

“[A] claim of equitable recoupment will lie only where the

Government has taxed a single transaction, item, or taxable event

under two inconsistent theories.”      United States v. Dalm, 494

U.S. 596, 605 n.5 (1990) (citing Rothensies v. Electric Storage

Battery Co., supra).    Here, respondent has not used inconsistent

theories of taxation.    Thus, equitable recoupment does not apply.

C.   Whether Petitioner Is Taxable on the IRA Distribution

     A distribution from an IRA is generally includable in income

by the recipient in the year in which the distribution is

received.   See sec. 408(d)(1); Aronson v. Commissioner, 98 T.C.

283, 287 (1992).

     A distribution was made to respondent from petitioner's IRA

in 1995.    Petitioner contends that he is not taxable on the

distribution because he did not receive the funds or benefit

therefrom and because the distribution was involuntary.

Petitioner also contends that respondent improperly levied his

IRA because respondent caused the distribution from the account

to be a lump-sum distribution and not a monthly annuity payment.

We disagree.   A taxpayer constructively receives an IRA

distribution when his or her account is levied and is taxed on it

even though the funds are paid to a third party.     See Larotonda
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v. Commissioner, 89 T.C. 287, 291 (1987); Vorwald v.

Commissioner, T.C. Memo. 1997-15.     Once the Commissioner issues

the notice of levy, the Commissioner "steps into the shoes of the

taxpayer and acquires 'whatever' rights to the property the

taxpayer had."   United States v. Bell Credit Union, 860 F.2d 365,

368 (10th Cir. 1988) (quoting United States v. National Bank of

Commerce, 472 U.S. 713, 713 (1985)).

     We sustain respondent's determination that petitioner

constructively received, and must include in income, the $26,861

distribution from his IRA in 1995.

     To reflect concessions and the foregoing,


                                           Decision will be entered

                                      under Rule 155.
