                        T.C. Memo. 2008-103



                      UNITED STATES TAX COURT



               RICHARD A. PERKINS, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



    Docket No. 14587-06L.             Filed April 16, 2008.



    Richard A. Perkins, pro se.

    Christopher J. Sheldon, for respondent.



                        MEMORANDUM OPINION


     JACOBS, Judge:   The petition in this case was filed in

response to a Notice of Determination Concerning Collection

Action(s) Under Section 6320 and/or 6330 (notice of

determination).1   Pursuant to section 6330(d), petitioner seeks



     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code as amended.
                               - 2 -

our review of respondent’s determination to collect by levy

unpaid additions to tax and interest with respect to petitioner’s

income taxes for tax years 1995 and 2000.

                            Background

     Petitioner resided in Arizona at the time he filed his

petition.   Petitioner and his wife untimely filed joint returns2

for tax years 1995 and 2000 on which they reported taxes of

$4,219 and $5,892, respectively.   Respondent assessed the tax

shown on each return.   As of November 15, 2004, the date

respondent issued a Letter 1058, Final Notice of Intent to Levy

and Notice of Your Right to a Hearing (final notice of intent to

levy), for tax years 1995 and 2000, the unpaid balance of

petitioner’s tax liability (after taking into account withholding

credits, payments, additions to tax, and interest) was $361.49

for tax year 1995 and $1,262.18 for tax year 2000.3

     Petitioner filed a joint tax return for 1999 on February 26,

2004.4   The 1999 return showed, and respondent does not dispute,



     2
      Nothing in the record suggests that petitioner’s wife has
sought relief from joint liability for any taxes due. See sec.
6013(d)(3).
     3
      Petitioner filed his 1995 return on Dec. 1, 2003, and his
2000 return on Mar. 4, 2004. It appears that all unpaid balances
for both tax years are attributable to interest and additions to
tax. No notice of deficiency was issued with respect to such
additions to tax.
     4
      Petitioner did not request an extension of time to file his
1999 return.
                                 - 3 -

that petitioner overpaid his 1999 tax liability by $1,922.    All

petitioner’s 1999 tax payments were made through withholding

credits.

     Shortly after he filed his 1999 return, petitioner requested

that respondent apply the 1999 overpayment to his tax liabilities

for 1995 and 2000.   Petitioner discussed this proposal by

telephone with five different IRS representatives.5   Thereafter,

on May 6, 2004, petitioner wrote respondent stating that he had

been advised to write a letter “explaining the issues along with

pertinent documentation.”   The issue that petitioner referred to

concerned the application of the 1999 overpayment to offset the

penalty and additions to tax and interest for 2000.    Petitioner

wrote:   “I am not disputing the penalty & interest amount owed

($1224.38) for tax period 2000.”    Rather, petitioner stated that

he sought to avoid application of the period of limitations with

respect to claims for credit or refund for tax year 1999.    In

this regard, petitioner wrote:    “We moved 6 times (along with

boxing packing and storage involved) between 1999 and when we

found and filed our tax documents (02/22/2004) for 1999.”    No

other description of the circumstances surrounding the claim for




     5
      One such representative was the Appeals officer who
ultimately, in June of 2006, recommended disallowance of
petitioner’s claim concerning his 1999 overpayment.
                               - 4 -

credit or refund was offered in the May 6, 2004, letter, and no

documents were attached to the letter.   Petitioner addressed the

letter to respondent’s office in Holtsville, New York.

     Because petitioner failed to pay the balances of assessed

amounts for 1995 and 2000, respondent determined that enforced

collection action would be required.   In response to respondent’s

final notice of intent to levy for tax years 1995 and 2000, on or

about November 19, 2004, petitioner requested a hearing under

section 6330.6

     To his request for a section 6330 hearing petitioner affixed

a note stating:   “I am not disputing the penalty & interest

amounts owed for tax period 1995 ($345.83) & 2000 ($1,224.38).       I

am respectfully requesting that the IRS apply the overpayment

($1,992.00) for tax period 1999 to satisfy the amount owed for

tax period 1995 & 2000.”7   The section 6330 hearing was scheduled

for September 21, 2005, in Phoenix, Arizona.

     In the months preceding the scheduled hearing, respondent’s

settlement officer attempted to resolve petitioner’s case.     The

settlement officer reviewed the Internal Revenue Manual (IRM) in

evaluating petitioner’s claim that his 1999 overpayment should be


     6
      Petitioner’s wife ratified petitioner’s request for a sec.
6330 hearing on Sept. 7, 2005.
     7
      The amounts petitioner represented as owed do not include
the entire amount of interest that had accumulated on the
underpayments as of the date of the final notice of intent to
levy.
                                - 5 -

applied to amounts owed from 1995 and 2000.    IRM part

21.4.1.4.9.4(1) and (3) (October 1, 2003), which the settlement

officer consulted, provided,8 in relevant part, that “claims for

credit or refund of prepaid credits are required to be filed

within 3 years from the return due date or extended due date” but

that “RRA 98 allows the taxpayer to file for a claim after the

statute expiration date if the taxpayer was physically or

mentally disabled in financial matters.    These cases must be

referred to the Statute Unit for a determination.”    IRM part

21.4.4.3.1(1), which the settlement officer also consulted,

provides:    “the RSED [Refund Statute Expiration date] is

generally 3 years from the Return Due Date (RDD) for prepaid

credits if a return was filed”.

     During a telephone conversation on March 21, 2005,

petitioner asked the settlement officer whether there were

exceptions to the rules regarding the period of limitations

applicable to claims for credit or refund.    The settlement

officer advised petitioner that a medical disability causing him

to be unable to handle his financial matters would be one such

exception.    Petitioner was advised that such a disability would

have to be verified by a statement from petitioner’s physician.

Petitioner mentioned that he had in fact been diagnosed with



     8
      As discussed infra note 14, this portion of the IRM, which
was in effect as of Oct. 1, 2003, has since been revised.
                               - 6 -

mental illness.   The settlement officer specified that the

disability “had to be for the years in question” to which

petitioner responded that he did indeed have the disability “back

then.”

     It is apparent that both petitioner and respondent’s agents

perceived a linkage between respondent’s proceeding with enforced

collection action for 1995 and 2000 and petitioner’s entitlement

to a refund or credit for the 1999 overpayment.   Both parties

believed (erroneously, as explained infra) that petitioner’s

claim for credit or refund was not timely.   Furthermore, both

parties believed (also erroneously, as explained infra) that an

untimely claim for credit or refund might nevertheless be

permissible depending on petitioner’s physical or mental

condition as to his financial affairs at the time the 1999

return, and possibly the 1995 return and the 2000 return, was

due, as opposed to a later period; i.e., between February 26,

2001, and February 26, 2004.

     Following the March 21, 2005, telephone conversation with

petitioner, the settlement officer in Phoenix, Arizona, wrote to

respondent’s Statute Unit in Ogden, Utah (Statute Unit), to

inquire whether it possible to apply petitioner’s 1999

overpayment to his unpaid taxes for 1995 and 2000.   On August 30,

2005, the settlement officer was informed by an examiner for the

Statute Unit that petitioner’s credit or refund claim had been
                               - 7 -

disallowed and that petitioner had already been advised of this

decision in a letter dated August 29, 2005.

     In a letter dated September 8, 2005, an account manager in

respondent’s Statute Unit informed petitioner:

     Although we sympathize with your reasons for filing your
     return late, the law does not allow reasonable cause for
     filing your return more 3 years [sic] late. Internal
     Revenue Code 6511 states you must file your return within 3
     years of when you were required to file in order to receive
     a refund or to have your overpayment applied to another
     year.

     At the section 6330 hearing in Phoenix, Arizona, on

September 21, 2005, the settlement officer described to

petitioner the attempts she had made to accommodate his request

concerning his 1999 credit or refund claim.     Petitioner responded

that he had been informed by a settlement officer in Fresno,

California, that under special circumstances, “refunds can be

pulled out of excess collections”.     The settlement officer

explained that this avenue had already been explored and that

petitioner’s claim had been rejected because he had not provided

sufficient information.   At that point, petitioner reiterated

that he had been treated for mental illness and provided

additional information and documentation in support of his claim.

     In the light of this new information and documentation, the

settlement officer decided to recommend that the Statute Unit

reconsider petitioner’s request concerning his 1999 credit or

refund claim.   The settlement officer’s recommendation, made on
                                - 8 -

or about September 21, 2005 (immediately following the section

6330 hearing), cited a provision of the IRM which “allows a

taxpayer to file a claim after the statute expiration date if the

taxpayer was physically or mentally disabled in financial

matters.”9   The settlement officer attached to her recommendation

two supporting documents that petitioner had provided.    The

settlement officer’s letter closed with the following paragraph:

     Please review this information and advise me if you can
     reconsider this taxpayer’s claim for a refund offset. If
     additional information is required, please call the taxpayer
     and request the necessary documentation. He is cooperative.

     One of the two supporting documents described the services

provided to petitioner by Saint Vincent Hospital Primary Care

Network on four separate occasions between April 19 and June 11,

2002.    These services consisted of an initial visit with a

therapist followed by a psychiatric interview on May 3, 2002, one

session of psychotherapy on May 28, 2002, and one session of

individual therapy on June 11, 2002.    The other supporting

document was a copy of a lab work order form reflecting

petitioner’s office visit to Dr. Rupa Kneip on November 30, 2003,

and noting petitioner’s symptoms of anxiety and depression.

     Before the Statute Unit responded to the settlement

officer’s request for reconsideration, the Field Director of



     9
      The cited IRM provision, pt. 25.6 (May 17, 2004), contains
a detailed description of the substantiation requirements in
support of a claim of financial disability.
                               - 9 -

respondent’s accounts management office in Holtsville, New York

(Holtsville office), responded to petitioner’s claim for credit

or refund in a letter dated February 1, 2006.   That letter

informed petitioner that his claim was not allowed because “to

claim that overpayment as a credit or to obtain a refund, you

have to file your tax return within 3 years from its due date.”

The letter explained that if petitioner could show that he was

financially disabled, he might qualify for relief “from the time

limitations for filing a claim set by law.”   Petitioner was

advised that he could appeal the Holtsville office’s denial of

his claim, and that the Holtsville office would consider

petitioner’s explanation before forwarding petitioner’s request

to respondent’s Office of Appeals (which, the letter noted, is

separate from the Holtsville office).

     On February 17, 2006, the Statute Unit notified petitioner

that it had forwarded the request for reconsideration to the

Ogden, Utah, Office of Appeals, but that the request had been

returned to it because a specific request from petitioner (rather

than from the settlement officer) was required.   The letter

stated:   “If you feel the financial disability criteria is

applicable you will need to specifically request an appeal on

that basis.”   Petitioner replied in writing: “Please consider

this letter a specific request from me to consider a
                              - 10 -

reinstatement of refund for Tax Period Dec. 31, 1999 for a

reasonable cause for filing late (exception - illness).”

     Petitioner, on March 3, 2006, submitted all of the

correspondence he had received from respondent’s various offices

to the settlement officer in Phoenix, Arizona.   The settlement

officer’s notes indicate:   “It appears both Brookhaven and Ogden

are working the same issue and giving [the taxpayer] conflicting

information.”   In a conversation with a representative at the

Ogden, Utah, office, on the same day, the settlement officer was

told that “the communication lines really broke down on this.”

     Respondent’s Phoenix Office of Appeals ultimately denied

petitioner’s claim concerning his 1999 overpayment.    The Appeals

team manager’s letter of disallowance, dated June 8, 2006, states

that petitioner’s claim was denied because “you did not file your

1999 return within 3 years of its due date, and you could not

show that you were financially disabled on the due date.”    The

case notes of the Appeals officer assigned to evaluate

petitioner’s claim for credit or refund reflect a conversation,

on February 6, 2006,10 between petitioner and the Appeals officer

and contain the note:   “I spoke w/ Richard Perkins.   He was




     10
      It appears that petitioner also spoke to the same Appeals
officer when he first inquired, in May of 2004, about the
possibility of applying the 1999 overpayment to his 1995 and 2000
taxes. See supra note 5.
                               - 11 -

treated for mental illness in 2003.     He was not financially

disabled on 4/15/2000.   Nor could he show why [petitioner’s

spouse] couldn’t file the 1999 return timely.”

     On June 29, 2006, respondent issued a notice of

determination sustaining the proposed levy, signed by the same

Appeals team manager who had sustained the denial of petitioner’s

claim concerning his 1999 overpayment.     The notice of

determination reiterates that the Appeals officer who denied the

claim concerning the 1999 overpayment “decided that the taxpayer

was not treated for mental illness until 2003 and he could not

show why his spouse couldn’t have filed the 1999 return timely.”

No other basis for the denial of petitioner’s claim concerning

the 1999 overpayment is articulated in the Appeals officer’s

notes or in the notice of determination.

     Petitioner timely petitioned this Court for review of

respondent’s determination.    In his petition, petitioner requests

abatement of penalties and interest for 2000, and refund of the

overpayment for 1999.    The petition reiterates that petitioner

moved six times between 1999 and 2004, that petitioner asked

respondent to apply his 1999 overpayment to his 1995 and 2000

taxes, and that petitioner had been diagnosed and treated for

depression, anxiety, and other mental illness during 2002 through

2003.

     At trial petitioner introduced additional evidence

pertaining to his claim of mental disability, consisting of notes
                                - 12 -

compiled by a therapist and a psychiatrist at Saint Vincent

Behavioral Health Clinic.    The notes contain detailed

descriptions of petitioner’s mental health difficulties, and

reflect a diagnosis of bipolar disorder and depression.      The

notes describe the medication that was prescribed to treat these

conditions and petitioner’s progress and setbacks as he used the

medication.    Petitioner had not submitted these medical records

to respondent before trial because he was embarrassed by their

contents and believed that the documents he had already submitted

were sufficient substantiation of his claim that he had been

financially disabled.    Petitioner testified that he had also been

treated by another psychiatrist from whom he had never requested

substantiating documentation.

                             Discussion

     Section 6331(a) authorizes the Secretary to levy upon

property and property rights of a taxpayer liable for taxes who

fails to pay those taxes within 10 days after notice and demand

for payment.    Section 6331(d) provides that the levy authorized

in section 6331(a) may be made with respect to any unpaid tax

only after the Secretary has notified the person in writing of

his intention to make the levy at least 30 days before any levy

action is begun.    Section 6330 elaborates on section 6331 and

provides that upon a timely request a taxpayer is entitled to a

collection hearing before the IRS Office of Appeals.      Sec.

6330(a)(3)(B), (b)(1).    A request for a collection hearing must
                                - 13 -

be made within the 30-day period commencing on the day after the

date of the section 6330 notice.    Sec. 6330(a)(3)(B); sec.

301.6330-1(b)(1), Proced. & Admin. Regs.

     If a section 6330 hearing is requested, the hearing is to be

conducted by the Office of Appeals, and, at the hearing, the

Appeals officer conducting it must verify that the requirements

of any applicable law or administrative procedure have been met.

Sec. 6330(b)(1), (c)(1).    The taxpayer may raise at the hearing

“any relevant issue relating to the unpaid tax or the proposed

levy”.    Sec. 6330(c)(2)(A).

     At the conclusion of the hearing, the Appeals officer must

determine whether and how to proceed with collection and take

into account:    (i) The relevant issues raised by the taxpayer,

(ii) challenges to the underlying tax liability by the taxpayer,

where permitted, and (iii) whether any proposed collection action

balances the need for the efficient collection of taxes with the

legitimate concern of the taxpayer that the collection action be

no more intrusive than necessary.    Sec. 6330(c)(3).

     Within 30 days after the Office of Appeals issues a notice

of determination, the taxpayer may appeal the determination to

the Tax Court if we have jurisdiction over the underlying tax

liability, sec. 6330(d)(1), as we do in the instant case.11    Our


     11
      We note that the Pension Protection Act of 2006, Pub. L.
109-280, sec. 855(a) and (b), 120 Stat. 1019, amended sec.
6330(d)(1) to provide that for determinations made after Oct. 16,
                                                   (continued...)
                                - 14 -

review will be de novo where the underlying tax liability is at

issue.    Sego v. Commissioner, 114 T.C. 604, 610 (2000).   For

purposes of these provisions, “underlying tax liability” includes

additions to tax.    Katz v. Commissioner, 115 T.C. 329, 339

(2000).    Where the underlying tax liability is not at issue, we

review the Commissioner’s determination for abuse of discretion.

Goza v. Commissioner, 114 T.C. 176, 181 (2000).    An abuse of

discretion is defined as any action that is unreasonable,

arbitrary or capricious, clearly unlawful, or lacking sound basis

in law, taking into account all the facts and circumstances.

See, e.g., Thor Power Tool Co. v. Commissioner, 439 U.S. 522,

532-533 (1979).    If infected by an error of law, the

determination of the Appeals officer may be set aside

irrespective of the standard of review.    Swanson v. Commissioner,

121 T.C. 111 (2003).

     As discussed infra, the outcome in this case is not affected

by the standard of review or by whether we consider the evidence

petitioner submitted at trial, consisting of notes compiled by a

therapist and a psychiatrist pertaining to petitioner’s mental

health, or petitioner’s testimony that he was also treated by

another psychiatrist from whom he had not requested

substantiating documentation.


     11
      (...continued)
2006, the Tax Court has jurisdiction to review the Commissioner’s
collection activity regardless of the type of underlying tax
involved.
                              - 15 -

     In this proceeding, petitioner seeks abatement of the

section 6651(a)(1) addition to tax for late filing, the section

6651(a)(2) addition to tax for failure to pay the tax when due,

and the 6654 addition to tax for failure to pay estimated taxes,

all pertaining to tax year 2000.   We construe petitioner’s

position in this regard to be that he should not be held liable

for the additions to tax for 2000.12

     Section 301.6330-1(f)(2), A-F5, Proced. & Admin Regs.,

provides that in seeking Tax Court review of a notice of

determination, the taxpayer can ask the Court to consider only an

issue that was raised in the taxpayer’s section 6330 hearing.

See Giamelli v. Commissioner, 129 T.C. 107, 113 (2007); Magana v.

Commissioner, 118 T.C. 488, 493 (2002).   Petitioner did not

dispute his liability for the underlying tax for either 1995 or

2000; indeed, he conceded his liability for the underlying tax in

his correspondence of May of 2004 (with respect to 2000), and

again in his November 2004 request for a section 6330 hearing

(with respect to both 1995 and 2000).   Therefore, we cannot

consider petitioner’s liability for the underlying tax for either

1995 or 2000 even though raised in the petition.




     12
      We recognize that we do not have jurisdiction, in this
collection review proceeding, to order a refund or credit of
taxes paid. Greene-Thapedi v. Commissioner, 126 T.C. 1 (2006).
But we are not foreclosed from considering whether petitioner has
paid more than was owed in determining whether the proposed levy
collection action may proceed. Id. at 11 n.19.
                              - 16 -

     In evaluating respondent’s determination, we have

jurisdiction to consider the taxpayer’s tax liabilities for years

that were not the subject of the notice of determination insofar

as they are relevant to computing the taxpayer’s tax liability

for years that are the subject of the notice of determination.

Freije v. Commissioner, 125 T.C. 14, 27 (2005).      Indeed, in this

case, respondent, in sustaining the proposed levy to collect

taxes for tax years 1995 and 2000 (and throughout the development

of petitioner’s case), considered petitioner’s claim that he was

financially disabled in 1999 (so that his 1999 overpayment,

otherwise barred by the period of limitations, was available to

pay the 1995 and 2000 liabilities), and it is respondent’s

determination that we review.13   See sec. 6330(d)(1)(A).

     Section 6511(a) provides:

     SEC. 6511.   LIMITATIONS ON CREDIT OR REFUND.

          (a) Period of Limitation on Filing Claim.–-Claim for
     credit or refund of an overpayment of any tax imposed by
     this title in respect of which tax the taxpayer is required
     to file a return shall be filed by the taxpayer within 3
     years from the time the return was filed or 2 years from the
     time the tax was paid, whichever of such period expires the
     later * * *




     13
      In addition, petitioner’s claim that his 1999 overpayment
was available to extinguish his 1995 and 2000 liabilities may be
fairly construed as proposing a collection alternative, an issue
that is expressly contemplated by sec. 6330(c)(2)(A)(iii) as
appropriate in a sec. 6330 hearing. Respondent does not dispute
that petitioner overpaid his 1999 tax.
                                - 17 -

     Petitioner’s 1999 return, filed February 26, 2004,

constituted his claim for credit or refund.    Thus, the 3-year

period of section 6511(a) was met although, as discussed infra,

the 2-year period of section 6511(a) was not.     See Commissioner

v. Lundy, 516 U.S. 235 (1996).14

     Section 6511(b)(2)(A) provides:

     SEC. 6511.    LIMITATIONS ON CREDIT OR REFUND.

          (b) Limitation on Allowance of Credits and Refunds.--

                   *     *      *        *    *       *        *

                  (2) Limit on amount of credit or refund.--

                       (A) Limit where claim filed within 3-year
                  period.-–If the claim was filed by the taxpayer
                  during the 3-year period prescribed in subsection
                  (a), the amount of the credit or refund shall not
                  exceed the portion of the tax paid within the
                  period, immediately preceding the filing of the
                  claim, equal to 3 years plus the period of any
                  extension of time for filing the return. * * *

Therefore, the amount of 1999 tax overpayment petitioner can

obtain as a credit or refund cannot exceed the portion of the tax

which he paid for tax year 1999 within the 3 years preceding




     14
      Part of the reason that respondent’s agents consistently
reached the conclusion that petitioner’s claim for credit or
refund was not timely is the language of the then-current IRM pt.
21.4.1.4.9.4 (1) and (2), which, as described supra, stated that
claims for credit or refund of prepaid credits are required to be
filed within 3 years from the return due date. The same IRM part
was revised as of Oct. 1, 2006, to state, consistently with sec.
6511(a), that claims for credit or refund are required to be
filed within 3 years from the time the return was filed, or two
years from the time the tax was paid, whichever is later.
                                - 18 -

February 26, 2004, the date his claim for credit or refund was

filed; i.e., 1999 tax payments made after February 26, 2001 and

before February 26, 2004.

     All of petitioner’s 1999 tax was paid through wage

withholdings, which, under section 6513(b)(1), are deemed to have

been paid “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”, i.e.; on April 15, 2000.

Therefore, unless an exception applies, none of petitioner’s 1999

tax overpayment is subject to credit or refund because the tax

was deemed paid more than 3 years before the claim for credit or

refund was filed.     Petitioner fails to satisfy the provisions of

section 6511(b)(2)(A) by approximately 10 months and 11 days.

     Section 6511(h)(1) provides that the running of the period

specified in section 6511(b) shall be suspended during any period

of an individual’s life in which the individual is financially

disabled.   See Brosi v. Commissioner, 120 T.C. 5 (2003).    Section

6511(h)(2) provides:

     SEC. 6511.   LIMITATIONS ON CREDIT OR REFUND.

         (h) Running of Periods of Limitation Suspended While
    Taxpayer Is Unable to Manage Financial Affairs Due to
    Disability.--

                  *      *      *        *    *      *      *

               (2) Financially disabled.--

                    (A) In general.–-* * * [A]n individual is
               financially disabled if such individual is unable
               to manage his financial affairs by reason of a
                              - 19 -

               medically determinable physical or mental
               impairment of the individual which can be expected
               to result in death or which has lasted or can be
               expected to last for a continuous period of not
               less than 12 months. An individual shall not be
               considered to have such an impairment unless proof
               of the existence thereof is furnished in such form
               and manner as the Secretary may require.

                    (B) Exception where individual has guardian,
               etc.--An individual shall not be treated as
               financially disabled during any period that such
               individual’s spouse or any other person is
               authorized to act on behalf of such individual in
               financial matters.

     As directed by section 6511(h), the Commissioner has

prescribed guidelines that are to be used in deciding whether a

taxpayer is financially disabled.   According to Rev. Proc. 99-21,

sec. 4, 1999-1 C.B. 960, 960, the taxpayer must provide a

physician’s written statement that includes:   (1) The name and

description of the taxpayer’s physical or mental impairment, (2)

the physician’s medical opinion that the impairment prevented the

taxpayer from managing his financial affairs, (3) the physician’s

medical opinion that the impairment was or can be expected to

result in death, or lasted or can be expected to last for 12

months or more, and (4) the specific time period during which the

taxpayer was prevented by such physical or mental impairment from

managing the taxpayer’s financial affairs.15   The physician’s




     15
      Additionally, the taxpayer must certify that no person,
including the taxpayer’s spouse was authorized to act on behalf
of the taxpayer in financial matters during the relevant period.
                                  - 20 -

statements must be submitted with the credit or refund claim.

Id.

      Respondent’s denial of petitioner’s claim for relief from

the period of limitations of section 6511(b)(2)(A) was based on

the supposition that petitioner was not treated for mental

illness (and did not suffer from mental illness) until 2003,

rather than at the time the return was due.      Not only was this

supposition incorrect, because petitioner was in fact treated for

mental illness beginning in April of 2002 (and had submitted

substantiation of this fact), but it is an insufficient basis, as

a matter of law, upon which to deny petitioner relief from the

period of limitations of section 6511(b)(2)(A).

      Section 6511(h) suspends the period of limitations set forth

in section 6511(b)(2)(A) during any period of an individual’s

life in which he is financially disabled.      Whether petitioner

filed his 1999 return within 3 years of the date the return was

due, whether petitioner was financially disabled on the date the

return was due, and whether petitioner’s spouse could have filed

a timely return might all be relevant to an inquiry as to whether

petitioner is liable for additions to tax for failure to timely

file a return and/or to pay the tax when due, see sec. 6651(a),

but none of these considerations sufficiently addresses the

relevant issues encompassed by section 6511(h).16     Respondent’s


      16
           Respondent has not attempted to demonstrate, nor is there
                                                        (continued...)
                               - 21 -

Appeals officer should have ascertained:    (1) Whether and for how

long petitioner was financially disabled at any time between

February 26, 2001, and February 26, 2004,17 and; (2) whether

petitioner’s financial disability, if any, suspended the period

of limitations under section 6511(b)(2)(A) for a sufficient

amount of time to enable petitioner to obtain a credit or refund

for taxes paid on April 15, 2000.18

       At trial respondent contended that petitioner did not

present satisfactory evidence of his treatment for mental illness

as prescribed by the Secretary in Rev. Proc. 99-21, 1999-1 C.B.

960.    However, this lack of substantiation did not appear to play

any role in respondent’s Appeals officer’s decision to deny

petitioner’s claim concerning his 1999 overpayment.    There is no

evidence that respondent’s Appeals officer, in denying



       16
      (...continued)
evidence, that petitioner, if financially disabled, was not
entitled to the suspension of the period of limitations due to
operation of the exception found in sec. 6511(h)(2)(B).
        17
      Even if, as respondent supposed, petitioner’s claim for
credit or refund had not fallen within the 3-year period of sec.
6511(a), proper application of sec. 6511(h) might have provided
relief from that period of limitations as well. See sec.
6511(h)(1).
        18
      We note that IRM pt. 25.6.6.8.1(6) (May 17, 2004) provides
that an individual with a mental impairment who consults with a
psychiatrist automatically has proof that the impairment
continued for the entire period of consultation. The
documentation petitioner submitted to the settlement officer
established that he had consulted a psychiatrist as early as May
5, 2002, and was still seeking professional help for anxiety and
depression as late as Nov. 20, 2003.
                              - 22 -

petitioner’s claim that his 1999 overpayment should be applied to

1995 and 2000, ever inquired as to whether the requirements of

Rev. Proc. 99-21, supra, had been met or advised petitioner of

the existence of Rev. Proc. 99-21, supra, in order to permit

petitioner to comply with its provisions.

     It is possible that petitioner would have been able to

produce the physician’s attestation and otherwise comply with the

provisions of Rev. Proc. 99-21, supra, to show that he was

financially disabled.   Respondent’s Appeals officer apparently

did not consider this possibility because he misapprehended the

applicable law (i.e., the Appeals officer believed that

petitioner’s financial disability would have to have existed on

April 15, 2000, when the 1999 return was due and that petitioner,

in order to obtain a credit or refund for 1999, was required to

file the return within 3 years of the date the return was due or

show reasonable cause why the return was not timely filed).

     The Appeals officer’s verification that the requirements of

applicable law had been met was incorrect.   Accordingly,

respondent’s proposed enforcement action to collect by levy the

1995 and 2000 assessments may not proceed.

     We shall remand the determination for 1995 and 2000 to

respondent’s Office of Appeals for reconsideration of

petitioner’s claim that he was financially disabled within the

meaning of section 6511(h), so that his overpayment of tax for

1999 should have been applied to offset his 1995 and 2000 tax
                               - 23 -

liabilities.19   We express no opinion as to whether petitioner was

financially disabled within the meaning of section 6511(h) and if

so, the effect on petitioner’s entitlement to an offset of his

1999 overpayment against his 1995 and 2000 tax liabilities.

     To reflect the foregoing,


                                         An appropriate order

                                    will be issued.




     19
      In the course of his reconsideration, respondent might
wish to consider whether petitioner had reasonable cause for his
failure to file timely returns for 1995 and 2000 and whether the
assessment of an addition to tax under sec. 6654(a) for 2000 was
appropriate.
