                           T.C. Summary Opinion 2016-25



                          UNITED STATES TAX COURT



                DON STEPHEN MCAULIFFE, Petitioner v.
            COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 17215-08S.                         Filed May 26, 2016.



      Don Stephen McAuliffe, pro se.

      Sean P. Deneault, for respondent.



                               SUMMARY OPINION


      ARMEN, Special Trial Judge: This case was heard pursuant to the

provisions of section 7463 of the Internal Revenue Code in effect when the

petition was filed.1 Pursuant to section 7463(b), the decision to be entered is not


      1
          Unless otherwise indicated, all subsequent section references are to the
                                                                       (continued...)
                                         -2-

reviewable by any other court, and this opinion shall not be treated as precedent

for any other case.

      Respondent determined the following deficiency in, and additions to,

petitioner’s Federal income tax for 2003:

                                              Additions to Tax

      Deficiency           Sec. 6651(a)(1)     Sec. 6651(a)(2)     Sec. 6654(a)

          $18,774            $1,489.05           $1,522.14            $135.90

      At trial respondent conceded that petitioner overpaid his tax liability for

2003. After this and other concessions by respondent,2 the issue for decision is

whether refund or credit of the overpayment, the exact amount of which is

contested by the parties, is barred by the statute of limitations. If refund or credit

is barred, then entry of decision on the basis of respondent’s concessions would be

appropriate because the exact amount of the overpayment would be moot; on the



      1
       (...continued)
Internal Revenue Code in effect for 2003, the taxable year in issue.
      2
         Respondent concedes a portion of the deficiency and now asserts that the
amount of the deficiency remaining at issue is $10,291. In addition, respondent
acknowledges that petitioner is entitled to withholding credits of $12,156 for 2003
and thus concedes the existence of an overpayment for that year of $1,865, i.e.,
$12,156 ! $10,291. Finally, respondent concedes that petitioner is not liable for
the additions to tax under secs. 6651(a)(1) and (2) and 6654(a) because of the
overpayment in tax.
                                        -3-

other hand, if refund or credit is not barred, then further proceedings would be

required to determine the exact amount of the overpayment. Resolution of the

limitations issue turns on whether petitioner filed a Federal income tax return for

2003 and if so, when.

                                    Background

      Some of the facts have been stipulated, and they are so found. The Court

incorporates by reference the parties’ stipulation of facts and accompanying

exhibits.

      Petitioner was incarcerated at the Federal Correctional Institution in

Morgantown, West Virginia, at the time that the petition was filed with the Court.

Before his incarceration petitioner resided in the State of Ohio. After he was

released petitioner moved to the State of Florida.

Petitioner’s Conviction and Incarceration

      Petitioner was admitted to the practice of law in Ohio in 1972 and became a

judge of the Fairfield County Municipal Court in 1997.3

      On April 23, 2003, when petitioner was serving as a municipal court judge,

a Federal grand jury in Ohio indicted him on several Federal mail fraud and money


      3
         Fairfield County is in central Ohio and lies to the southeast of Columbus,
the State capital.
                                         -4-

laundering offenses for burning down his house and seeking the insurance

proceeds.4 Petitioner was taken into custody no later than April 28, 2003, and was

held without bail. After a nearly three-week jury trial, petitioner was found guilty

in February 2004 on all of the offenses charged. Ultimately, in December 2005

petitioner was sentenced by the District Court to a total of 156 months of

imprisonment.5

      Petitioner appealed the judgment of conviction but was unsuccessful.

United States v. McAuliffe, 490 F.3d 526 (6th Cir. 2007). Thereafter, having lost

his direct appeal, petitioner sought to collaterally attack his conviction by filing a

motion to vacate, set aside, or correct his sentence pursuant to 28 U.S.C. sec.

2255. Again, petitioner was unsuccessful. McAuliffe v. United States, 514

F. App’x 542 (6th Cir. 2013).

      Petitioner also challenged his Federal conviction while resisting

professional discipline by the State of Ohio. However, in 2009 the Supreme Court



      4
         The indictment included six counts: two counts of mail fraud, in violation
of 18 U.S.C. sec. 1341; one count of using fire to commit mail fraud, in violation
of 18 U.S.C. sec. 844(h)(1); one count of conspiring to use fire to commit mail
fraud, in violation of 18 U.S.C. sec. 844(m); and two counts of money laundering,
in violation of 18 U.S.C. sec. 1957.
      5
         Petitioner was also fined and ordered to pay restitution and to forfeit
certain property.
                                        -5-

of Ohio (1) overruled petitioner’s objections to the report and recommendations of

the Board of Commissioners on Grievances and Discipline, (2) concluded that

petitioner’s Federal crimes involved moral turpitude, and (3) permanently

disbarred him from the practice of law in Ohio. Disciplinary Counsel v.

McAuliffe, 903 N.E.2d 1209 (Ohio 2009).

      Petitioner was in Federal custody from the time of his arrest in late April

2003 until he was released by the Bureau of Prisons in August 2014. During most

of that period petitioner was housed at the Federal Correctional Institution in

Morgantown, West Virginia.

Petitioner’s Taxable (Calendar) Year 2003

      During 2003 petitioner received gross income of about $80,000, consisting

principally of compensation of $76,553.6 Accordingly, petitioner was obliged to

file an income tax return for 2003. See sec. 6012(a)(1)(A). However,

respondent’s records do not reflect that a return was timely filed.7 As will be

discussed infra, respondent’s records also reflect that the Internal Revenue Service


      6
         Respondent acknowledges that income tax of $12,156 was withheld from
petitioner’s compensation. Other than through withholding, petitioner paid no
income tax.
      7
        Respondent’s records do reflect the timely filing of a request for an
extension of time to file the 2003 return, see sec. 6081(a), with an extended due
date of August 15, 2004.
                                          -6-

received a Form 1040, U.S. Individual Income Tax Return, for 2003 in November

2008 while this case was pending before respondent’s Appeals Office.

      At trial petitioner testified as follows:

            After I was arrested, my tax affairs were handled by my
      attorney-in-fact, Craig Maxey, that I secured because I was in jail,
      and by Cindy Grimm. And so anything after April 28, [2003], my
      taxes were handled by them. And in fact, at that point in time my
      income taxes were the last thing I was thinking about. And I had
      absolutely no involvement in the taxes after the 28th of April [2003].

      The record does not reveal who Craig Maxey was other than petitioner’s so-

called attorney-in-fact. Petitioner described Cynthia (Cindy) Grimm as a full-time

parole officer and a part-time (seasonal) return preparer for H&R Block. It was

Ms. Grimm who obtained the extension of time to file petitioner’s 2003 return, see

supra note 7, and it was she to whom Mr. Maxey provided petitioner’s tax

information.8 Neither Ms. Grimm nor Mr. Maxey testified at trial. In lieu, the

parties stipulated that Ms. Grimm does not recall whether she filed petitioner’s

2003 return or sent it back to Mr. Maxey for filing. The parties also stipulated that

Ms. Grimm has stated that if she had filed petitioner’s 2003 return, she would have

done so electronically. Further, the parties stipulated that Mr. Maxey has stated

that he did not mail petitioner’s 2003 return to the Internal Revenue Service.


      8
          The record does not reveal how Mr. Maxey obtained that information.
                                         -7-

      In or about 2007 respondent commenced an examination for petitioner’s

2003 taxable year. Lacking a return, respondent proceeded by substitute for return

procedures, see sec. 6020(b), and proposed a deficiency in tax and additions to tax

under sections 6651(a)(1) and (2) and 6654(a). Ultimately, on May 5, 2008,

respondent sent a notice of deficiency to petitioner at his place of incarceration.

Petitioner received the notice of deficiency and timely commenced the instant

action on July 14, 2008.9 At trial petitioner testified that “I had never thought

about * * * [my] 2003 tax return until I received a notice of deficiency.”

      After this case was at issue, respondent’s Appeals Office contacted

petitioner. In its letter dated October 21, 2008, the Appeals Office advised

petitioner that “[o]ur records do not show the timely filing of your 12/31/2003

federal income tax return” and requested that he “Kindly send a copy of the

completed Form 1040 for this tax period.”

      In November 2008 petitioner responded in writing to respondent’s Appeals

Office, stating in part:

            With regards to the information which you have requested, I
      have enclosed a copy of my 2003 tax return which was apparently

      9
         In the petition, petitioner disputed respondent’s deficiency determination
but did not expressly claim an overpayment. Indeed, petitioner demonstrated his
lack of knowledge about his 2003 tax year by stating that “I do not know if I was
scheduled to receive a refund or owed and paid taxes.”
                                        -8-

      timely filed by my attorney-in-fact Craig Maxey * * *. The enclosed
      copy bears a stamped signature but the first time that I saw this return
      was when I received a copy several days ago from Mr. Maxey
      [pursuant to my request].

      As indicated, the Form 1040 as furnished by petitioner did not bear his

actual signature but rather a stamped signature.10 Also, the Form 1040 bears Ms.

Grimm’s actual signature as the return preparer. The Form 1040 reports zero

taxable income and zero total tax and claims an overpayment equal to the amount

of tax withheld from petitioner’s compensation for the year.11

      Finally, the record includes incomplete extracts of a transcript dated May

30, 2012, from the Ohio Department of Taxation for petitioner’s 2003 Ohio tax

year. The extracts do not definitively establish when the Ohio return was filed.

Nor do the extracts serve to establish whether a Federal return was filed for 2003,

although they do include a reference to the amount of petitioner’s adjusted gross

income as reported on the aforementioned Federal Form 1040 that was furnished

to the Appeals Office in November 2008. The record indicates that the Ohio

Department of Taxation issued petitioner a State income tax refund for tax year


      10
         At trial petitioner testified that Ms. Grimm possessed his personal
signature stamp and used it for both tax and nontax purposes.
      11
          The Form 1040 reported zero taxable income and zero total tax on the
basis of a variety of claimed losses, including a purported business loss of $52,056
for “excavation”.
                                        -9-

2003 in or about July 2012 and subsequently sent him a Form 1099-G, Statement

for Recipients of State Income Tax Refunds, for tax year 2012 reporting that

refund.

                                     Discussion

      As previously stated, respondent concedes that petitioner overpaid his

income tax for 2003 in an amount equal to the difference between his withholding

($12,156) and the deficiency in tax remaining in issue ($10,291), i.e., by $1,865.

However, respondent contends that refund or credit of an overpayment--regardless

of the amount--is barred by the statute of limitations. On the other hand, petitioner

contends that there is no deficiency for that year and that he overpaid his tax by

the entire amount of his withholding. In order to resolve the matter of a refund or

credit, we must first decide whether petitioner filed an income tax return for 2003

and if so, when.

      The record demonstrates that petitioner himself never prepared or signed an

income tax return for 2003. Indeed, petitioner candidly admits that after he was

taken into custody in April 2003 “my income taxes were the last thing I was

thinking about” and that “I had absolutely no involvement in the taxes”. Rather,

petitioner contends that his “tax affairs” were handled by Mr. Maxey and Ms.

Grimm and that they in concert were supposed to have prepared, signed, and filed
                                        - 10 -

a 2003 return on his behalf. However, petitioner never saw a 2003 return until

November 2008 and thus does not know whether Mr. Maxey and Ms. Grimm did

what he thinks they were supposed to have done. Petitioner surmises that they did,

largely on the basis of the filing of a 2003 Ohio State income tax return and the

receipt of a refund for that year from the Ohio Department of Taxation. However,

the incomplete extracts of the transcript from the Ohio Department of Taxation for

petitioner’s 2003 Ohio tax year do not definitively establish when the Ohio return

was filed, nor do those extracts serve to establish whether a Federal return for

2003 was filed. Further, the Ohio refund for petitioner’s 2003 Ohio tax year was

not paid by the State until the summer of 2012, a matter that is unexplained by the

record.

      But more fundamentally, although Mr. Maxey may have gathered

petitioner’s tax information for 2003 and although Ms. Grimm may have prepared

a Federal return for that year, the fact of the matter is that Ms. Grimm does not

recall whether she filed the Federal return or sent it back to Mr. Maxey for him to

file. And Mr. Maxey states that he did not mail a return to the Internal Revenue

Service.
                                        - 11 -

      In sum, on the record before us, we cannot conclude that either Ms. Grimm

or Mr. Maxey filed a 2003 Federal return for petitioner.12 Rather, the record

demonstrates that respondent received a 2003 Form 1040 in November 2008 after

petitioner had commenced the instant action.

Allowance of Refund or Credit

      We turn now to whether refund or credit of the overpayment for 2003--

regardless of amount--is barred by the statute of limitations.

      Section 6512(b)(1) authorizes the Court to determine the amount of an

overpayment of tax in respect of a taxable year for which a deficiency has been

determined. However, section 6512(b)(3) imposes a limit on the amount of any

overpayment that may be credited or refunded. As relevant herein, section

6512(b)(3) provides as follows:




      12
            Thus, we need not decide whether any such return, which would have
been unseen and unsigned by petitioner, would have been a valid return. See sec.
6061; sec. 1.6061-1, Income Tax Regs.; see also Olpin v. Commissioner, 270 F.3d
1297, 1300 (10th Cir. 2001) (“The general rule when a tax return is unsigned is
that it is invalid.”), aff’g T.C. Memo. 1999-426; Mohamed v. Commissioner, T.C.
Memo. 2013-255 (stating that to be valid a return must generally be signed by the
taxpayer and not by the taxpayer’s agent).
                                          - 12 -

      SEC. 6512. LIMITATIONS IN CASE OF PETITION TO TAX
                 COURT.

             (b) Overpayment Determined by Tax Court.--

                           *    *     *       *    *   *     *

                    (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) * * *, 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) is entitled “Limit on amount of credit or refund.” In a

case such as the instant one, where the date of the mailing of the notice of

deficiency (May 5, 2008) is beyond the third year after the due date for filing the

2003 return (August 15, 2004, as extended) and no return was filed by the

taxpayer before that date (i.e., before May 5, 2008), section 6511(b)(2)(B) applies

to limit the amount of any refund or credit that may be made or allowed. See

Commissioner v. Lundy, 516 U.S. 235 (1996); Healer v. Commissioner, 115 T.C.

316, 319-320 (2000); cf. sec. 6512(b)(3) (final flush language); Zarky v.

Commissioner, 123 T.C. 132 (2004). In that regard section 6511(b)(2)(B)
                                       - 13 -

provides that “the amount of the credit or refund shall not exceed the portion of

the tax paid during the 2 years immediately preceding the filing of the claim.”

Therefore, because petitioner’s claim for refund is deemed to have been filed on

May 5, 2008, see sec. 6512(b)(3)(B), only tax paid during the immediately

preceding two-year period may be refunded or credited.

      Petitioner paid no income tax other than through withholding from his

compensation. Income tax withheld by a taxpayer’s employer is deemed to have

been paid by the taxpayer on April 15 of the year immediately following the

calendar year for which the tax was withheld. Sec. 6513(b)(1). Therefore,

petitioner is deemed to have paid the withheld tax for which he seeks a refund on

April 15, 2004. This date, however, is not within the two-year lookback period

immediately preceding the date of the notice of deficiency (May 5, 2008), which is

the date of petitioner’s deemed claim for refund or credit. Therefore, because

petitioner did not pay any income tax during the two-year lookback period, he is

not entitled to refund or credit of an overpayment for 2003 regardless of its

amount. See Commissioner v. Lundy, 516 U.S. at 253; see also sec.

6511(b)(2)(B); Hart v. Commissioner, T.C. Memo. 1999-186.

      Finally, we regard as unavailing any suggestion that it would be unfair, in

view of respondent’s concession that petitioner overpaid his tax liability for 2003,
                                         - 14 -

to bar refund or credit of petitioner’s overpayment. Suffice it to say that the

Supreme Court of the United States has clearly instructed that limitations on

allowance of refunds and credits prescribed by sections 6511 and 6512 shall be

given effect, consistent with congressional intent, without regard to an

individual’s perceived notion of fairness. Commissioner v. Lundy, 516 U.S. 235.

        To give effect to our disposition of the disputed issue, as well as

respondent’s concessions, and because the exact amount of the overpayment is

moot,


                                                  Decision will be entered reflecting

                                         (1) a reduced deficiency of $10,291,

                                         (2) no additions to tax under sections

                                         6651(a)(1) and (2) and 6654(a), and (3) an

                                         overpayment of $1,856 the refund or credit

                                         of which is barred by the statute of

                                         limitations.
