                        T.C. Memo. 2008-291



                     UNITED STATES TAX COURT



   GALEN K. AND KATHERINE J. HEICHEL, ET AL.,1 Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket Nos. 13504-05L, 13505-05L,     Filed December 22, 2008.
                 13534-05L.



     Galen K. and Katherine J. Heichel, pro sese.

     Fred E. Green, Jr., for respondent.



                        MEMORANDUM OPINION

     SWIFT, Judge:   In these consolidated cases, petitioners

challenge respondent’s proposed levies under section 6330




     1
        Cases of the following petitioners are consolidated
herewith: Galen K. and Katherine J. Heichel, docket No. 13505-
05L; and Galen K. Heichel, docket No. 13534-05L.
                                 -2-

relating to petitioners’ outstanding Federal income taxes for

1999, 2000, 2001, and 2002.

     Petitioners argue that respondent abused his discretion in

refusing to credit $41,137 tax overpayments for 1986 through 1998

(non-CDP years) against petitioners’ $29,203 outstanding Federal

income taxes for 1999, 2000, 2001, and 2002 (CDP years).

Respondent argues that the $41,137 tax overpayments for the non-

CDP years are barred by the refund period of limitations under

section 6511 and are not available for credit against

petitioners’ $29,203 outstanding taxes for the CDP years.

     Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect for the years in issue.


                              Background

     The facts in this case have been fully stipulated.    At the

time the petition was filed, petitioners resided in Minnesota.

     For many years, although some Federal income taxes were

withheld from petitioners’ wages, petitioners did not file

Federal income tax returns.    For 1986 through 2001, respondent

prepared substitute individual Federal income tax returns for

petitioners, mailed to petitioners timely notices of deficiency,

and made timely deficiency assessments against petitioners.

     During 1994 through 2004, as a result of levies on

petitioners’ wages, respondent received funds on petitioners’

behalf and credited the funds against the outstanding Federal
                                 -3-

income taxes respondent had assessed against petitioners for 1986

through 2001.

     On May 17, 2004, petitioners untimely filed with respondent

joint Federal income tax returns for 1986 through 2002.

Respondent accepted these tax returns as correct, and respondent

made adjustments to petitioners’ tax accounts for each year

consistent with the taxes reported on petitioners’ late-filed

Federal income tax returns.

     In view of the above adjustments respondent made to

petitioners’ tax accounts, the funds respondent previously had

received and credited against petitioners’ adjusted Federal

income taxes resulted in overpayments for a number of the non-CDP

years.   Respondent credited the overpayments for the non-CDP

years which respondent concluded were allowable under the section

6511 refund period of limitations to other tax periods of

petitioners.

     Petitioners’ total $41,137 overpayments, however, for the

non-CDP years which respondent concluded were not allowable under

the section 6511 refund period of limitations were transferred to

an excess collections account.   The $41,137 overpayments

consisted solely of funds respondent had received on petitioners’

account before May 17, 2001.

     Also, after the above adjustments, petitioners still owed

$29,203 in Federal income taxes for the CDP years.   On August 7,
                                -4-

2004, with respect to 1999, on September 30, 2004, with respect

to 2000 and 2001, and on January 27, 2005, with respect to 2002,

respondent mailed to petitioners notices of intent to levy for

the $29,203 petitioners owed for the CDP years.   Petitioners

timely requested an Appeals Office collection hearing under

section 6330 relating to respondent’s proposed levies.

     At the Appeals Office hearing petitioners raised an issue as

to the appropriateness of the proposed levies in light of the

alternative or substitute assets that petitioners believed should

be available (namely, the $41,137 overpayments relating to the

non-CDP years).   See sec. 6330(c)(2)(A)(ii) and (iii).

     Because respondent received the $41,137 more than 3 years

before May 17, 2004, the date petitioners filed their Federal

income tax returns for the non-CDP years, respondent’s Appeals

Office concluded that the $41,137 was not available for refund or

credit against petitioners’ outstanding taxes for the CDP years.

Respondent’s Appeals Office issued notices of determination to

petitioners sustaining the proposed levies for the CDP years.


                            Discussion

     Petitioners argue that for purposes of the refund period of

limitations under section 6511 the $41,137 non-CDP-year

overpayments should not be treated as “payments of tax” until

May 17, 2004, the day on which petitioners acknowledged their

Federal income tax liabilities via the late filing of their 1986
                                 -5-

through 2002 Federal income tax returns and therefore that the

$41,137 should be refundable under section 6511 and available to

pay off petitioners’ outstanding $29,203 Federal income taxes for

the CDP years.

     Section 6511 contains detailed limitations on the allowance

of credits and refunds generally.      Section 6511(a) sets out

the time periods for filing a claim for credit or refund of

overpayments.    Section 6511(b)(2) limits the amount of tax to be

refunded to two so-called look-back periods:      (1) For claims

filed within 3 years of filing a return, the refund is generally

limited to the portion of the tax paid within the 3 years

immediately before the claim was filed; (2) for claims not filed

within 3 years of filing the return, the refund is

generally limited to the portion of the tax paid during the

2 years immediately before the claim was filed.      See Commissioner

v. Lundy, 516 U.S. 235, 240 (1996).

     Petitioners argue that under Risman v. Commissioner, 100

T.C. 191 (1993), a remittance of funds by a taxpayer to

respondent will not be treated as a payment of tax subject to the

refund period of limitations until the taxpayer intends that the

remittance satisfies what the taxpayer acknowledges is an

existing tax liability.   As stated, petitioners argue that the
                                 -6-

$41,137 should be treated as paid no earlier than May 17, 2004,

when petitioners acknowledged their tax liabilities by the late

filing of their Federal income tax returns.

     We disagree.   A taxpayer does not control the treatment and

application of funds remitted to respondent involuntarily.

Rather, respondent is permitted to treat funds involuntarily

remitted as a payment of taxes and to apply the funds to any tax

liability respondent sees fit.    Slodov v. United States, 436 U.S.

238, 252 n.15 (1978).

     Accordingly, funds remitted to respondent involuntarily by

way of levy on petitioners’ wages and applied by respondent to

petitioners’ outstanding tax liabilities are treated as taxes

paid by the taxpayer on the date of respondent’s levy.      Risman v.

Commissioner, supra, does not hold to the contrary.    As

respondent explains on brief:    “The levied payments applied to

the non-CDP years * * * were confiscated to satisfy properly

assessed tax liabilities.   The tax liabilities for each of the

non-CDP years had been assessed prior to receipt of the levy

payments.   The levied payments were received to satisfy an

existing tax liability.”    See also Baral v. United States, 528

U.S. 431 (2000).

     Respondent received petitioners’ non-CDP-year $41,137

overpayments by levy before May 17, 2001, and accordingly refunds
                                 -7-

were, at the time petitioners filed their tax returns on May 17,

2004, barred by the period of limitations under section 6511.

     All other issues petitioners raised have been considered and

are rejected.   We conclude that respondent’s Appeals Office

committed no error in sustaining respondent’s proposed levies.2

     To reflect the foregoing,


                                       Decisions will be entered

                                 for respondent.




     2
        It is unclear whether respondent herein still raises an
issue as to the applicability to the facts of this case of our
holding in Greene-Thapedi v. Commissioner, 126 T.C. 1 (2006), to
the effect that we do not have jurisdiction in collection cases
under secs. 6320 and 6330 to determine and order overpayments to
taxpayers once respondent’s proposed collection action has been
conceded or found to be moot. Respondent cites Greene-Thapedi in
his opening brief but not in his reply brief. In any event,
Greene-Thapedi is distinguishable in that in the instant case
respondent’s proposed levy action is not moot. Respondent still
seeks to collect from petitioners by levy $29,203, and
petitioners are not asking us to determine an overpayment or to
order a refund. Rather, as explained, petitioners are asking us
to apply $41,137 overpayments to their $29,203 outstanding tax
liabilities in lieu of approving respondent’s levies on
petitioners’ other property. This case simply involves
petitioners’ contention under sec. 6330(c)(2)(A)(ii) and (iii)
that alternative or substitute assets are available to respondent
that obviate the need for additional levies and that respondent’s
proposed levies therefore are not appropriate. See Greene-
Thapedi, supra at 11 n.19.
