                         T.C. Memo. 1998-74



                       UNITED STATES TAX COURT



          CRAIG M. AND REBECCA MAXWELL, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 17052-96.                 Filed February 23, 1998.



     Craig M. Maxwell and Rebecca Maxwell, pro sese.

     Edwin A. Herrera and Ian Russell, for respondent.



                         MEMORANDUM OPINION


     LARO, Judge:    Craig M. and Rebecca Maxwell petitioned the

Court to redetermine respondent's determination of the following

deficiencies in their 1990 through 1993 Federal income taxes and

additions thereto:
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Craig M. Maxwell

                                           Additions to Tax
                                            Sec.        Sec.
     Year         Deficiency             6651(a)(1)     6654

     1990         $280,484               $42,621      $18,422
     1991            2,571                   643          149
     1992           68,868                17,205        3,003
     1993           70,431                17,153        2,869


Rebecca Maxwell

                                           Additions to Tax
                                            Sec.        Sec.
     Year         Deficiency             6651(a)(1)     6654

     1990         $137,827               $34,457       $9,074
     1991              904                   226           54
     1992           32,725                 8,181        1,427
     1993           29,976                 7,494        1,255


Following respondent's concessions we must decide whether

petitioners are entitled to refunds of overpayments for their

1990, 1992, and 1993 taxable years.       We hold they are not.

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.

                               Background

     All facts have been stipulated and are so found.          The

stipulated facts and the exhibits submitted therewith are

incorporated herein by this reference.       Petitioners resided in

Riverside, California, when they petitioned the Court.

     Petitioners delinquently filed Federal income tax returns

for each of the subject years.     Respondent received petitioners'
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1990 through 1992 Federal income tax returns on September 3,

1997, and respondent received petitioners' 1993 return 1 day

later. On May 6, 1996, the Commissioner had issued each

petitioner two notices of deficiency, one for 1990 and 1991, and

the other for 1992 and 1993.   Before doing so, the Commissioner

had prepared "returns" for each petitioner for each year in issue

under the authority of section 6020(b).

     For each subject year, petitioners' income tax liability,

tax payments, and overpayments are as follows:

                                  1990    1991   1992     1993

     Tax Liability             $169,829   $0      $0       $0

     Tax Payments
       Oct. 17, 1990              3,390   ---
       Feb. 3, 1991               9,000   ---
       Apr. 15, 1991            207,610   ---
       Apr. 15, 1993              ---     ---    100       ---
       Apr. 15, 1994              ---     ---    ---      3,641

         Total                  220,000      0    100     3,641

     Overpayment                 50,171      0    100     3,641

                           Discussion

     Respondent argues that petitioners are not entitled to a

refund of any of the overpayments because the disputed amounts

paid for each year were paid by petitioners more than 2 years

before the issuance of the notice of deficiency.       Petitioners

argue that they are entitled to a refund for 1990 because they

filed their 1990 Federal income tax return in 1997, a time that

is within 3 years of the time that the petition was filed
                                 - 4 -

herein.1   Petitioners argue that section 6512(b) and Commissioner

v. Lundy, 516 U.S. 235 (1996), have no bearing here because the

Commissioner agrees that petitioners are entitled to a refund for

1990.

     We agree with respondent.    Petitioners must demonstrate that

their claim for refund was timely.       Flagg v. Commissioner,

T.C. Memo. 1997-297.   Although section 6512(b)(1) bestows

jurisdiction on this Court to determine the existence and amount

of any overpayment of tax to be refunded for a year before us,

section 6512(b)(3)(B) prohibits the Court from awarding a refund

unless we determine that the refunded amount was paid

     within the period which would be applicable under
     section 6511(b)(2) * * * 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
     * * *

See also Commissioner v. Lundy, supra at 241-242.2      The relevant

provision of section 6511(b)(2) provides that when a claim for

refund is not filed within the 3-year period of section 6511(a),

the amount of the refund may not exceed the amount of tax paid


     1
       Petitioners' brief does not address any of the other years
in issue.
     2
       Contrary to petitioners' argument, this case is controlled
by the Commissioner v. Lundy, 516 U.S. 235 (1996) case. Although
sec. 1282(a) of the Taxpayer Relief Act of 1997, Pub. L. 105-34,
111 Stat. 788, 1037, recently amended sec. 6512(b)(3) in
response to the result in Lundy case, this amendment is
inapplicable to the instant proceeding because the amendment is
effective with claims for credit or refund for taxable years
ending after Aug. 5, 1997.
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within the 2 years preceding the claim for refund.       Sec.

6511(b)(2)(B).   Section 6511(a) states that a claim for refund

generally 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.

     We apply the established law on the refund of overpayments

to the stipulated amounts shown in the chart above.       The withheld

amounts were deemed withheld on April 15 of the filing years,

sec. 6513(a) and (b)(1), and, when respondent issued petitioners

the notices of deficiency, petitioners had not yet filed their

returns.   Thus, petitioners are limited to a refund of only the

amounts that they paid during the 2-year period prior to the time

that the notices of deficiency were issued.        Commissioner v.

Lundy, supra.    Because petitioners paid none of the disputed

amounts within this 2-year period, we hold that they are not

entitled to a refund of any of these amounts.

     In reaching our holdings herein, we have considered all

arguments made by petitioners for contrary holdings and, to the

extent not discussed above, find them to be irrelevant or without

merit.

     To reflect the foregoing,

                                              Decision will be entered

                                         stating that there is no

                                         deficiency or additions to tax

                                         for any of the subject years.
