                        T.C. Memo. 2005-57



                      UNITED STATES TAX COURT



         JOSEPH T. HAYES AND MARILYN HAYES, Petitioners v.
            COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 7699-02L.            Filed March 28, 2005.


     Joseph T. Hayes and Marilyn Hayes, pro sese.

     Theresa G. McQueeney, for respondent.



              MEMORANDUM FINDINGS OF FACT AND OPINION


     THORNTON, Judge:   Pursuant to section 6330(d), petitioners

seek review of an Appeals Office determination sustaining a

proposed levy.1




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

                        FINDINGS OF FACT

     The parties have stipulated most of the relevant facts,

which we incorporate herein by this reference.      When petitioners

filed their petition, they resided in Flushing, New York.

1994 Tax Year

     On their joint Form 1040, U.S. Individual Income Tax Return,

for 1994 (Form 1040), petitioners reported a $9,223 amount due

but made no remittance with their return.      Respondent assessed

the amount reported on the return.      On February 26, 1996,

respondent levied petitioner husband’s retirement account and

applied the proceeds to satisfy petitioners’ then-outstanding

1994 balance and to generate a $1,224.24 refund.2

     After an examination, respondent issued a notice of

deficiency, determining a $3,010 deficiency in petitioners’ 1994

Federal income tax liability.   Petitioners did not petition the

Tax Court to redetermine the deficiency.      On June 2, 1997,

respondent assessed the $3,010 additional tax.

1996 Tax Year

     On their joint Form 1040 for 1996, petitioners reported a

$1,588 amount due but made no remittance with their return.

Respondent assessed the amount reported on the return.



     2
       The refund was apparently attributable to certain payments
that had been made on petitioners’ 1994 account after the return
was filed but before the levy proceeds were applied.
                                - 3 -

     After an examination, respondent issued a notice of

deficiency, determining a $4,921 deficiency in petitioners’

Federal income tax for 1996.   Petitioners did not petition the

Tax Court to redetermine the deficiency.   On February 15, 1999,

respondent assessed the $4,921 additional tax.

1997 Tax Year

     On their joint Form 1040 for 1997, petitioners reported

total tax of $1,046, withholding credits of $464, an estimated

tax penalty of $29, and an amount due of $611.   Petitioners

remitted the $611 with their 1997 return; however, respondent

applied this payment against petitioners’ outstanding 1994

balance and assessed the amount reported on their 1997 return,

plus penalties and interest.

Collection Action

     On March 6, 2000, respondent issued to petitioners a Letter

1058, Final Notice - Notice of Intent to Levy and Notice of Your

Right to a Hearing for the tax years 1994, 1996, and 1997.

Petitioners requested and received the referenced hearing.     On

April 11, 2002, respondent issued to petitioners a Notice of

Determination Concerning Collection Action(s) Under Section 6320

and/or 6330, sustaining respondent’s proposed levy.

                               OPINION

     If a taxpayer fails to pay any Federal income tax liability

within 10 days of notice and demand, the Secretary is authorized
                                - 4 -

to collect the tax by levy on the taxpayer's property.        Sec.

6331(a).    Upon request, the taxpayer is entitled to an

administrative hearing before the Appeals Office of the Internal

Revenue Service.    Sec. 6330(b)(1).    If dissatisfied with the

Appeals Office determination, the taxpayer may seek judicial

review in the Tax Court or a Federal District Court, as

appropriate.    Sec. 6330(d).

     Respondent’s position before trial, as reflected in his

pretrial memorandum, was that petitioners had never paid the $611

amount due as shown on their joint 1997 return.      At the

commencement of trial, respondent’s counsel stated that as she

was reviewing respondent’s transcripts of petitioners’ accounts

in preparation for trial, she had discovered that “it appears as

though the taxpayer sent in his 1997 return with a payment of

$611.    We’re not sure as to why, but that payment got applied to

1994 rather 1997.”3

     On the basis of all the evidence, we have found, as

respondent’s counsel has suggested, that petitioners remitted the

$611 payment with their 1997 return.      Respondent has offered no

explanation or justification for applying the $611 remittance to


     3
       Respondent’s counsel represented that this matter could be
resolved administratively. After the trial, we allowed the
parties an opportunity to attempt to resolve this case
administratively. After a prolonged attempt to reach an offer in
compromise, the parties reported to the Court that they were
unable to reach any agreement.
                                 - 5 -

petitioners’ 1994 account; respondent has cited, and we are aware

of, no authority for this action.    Cf. Hill v. United States, 263

F.2d 885, 887 (3d Cir. 1959) (“We do not have any doubt that in

the ordinary case where a taxpayer fills out his form, makes out

his check and sends them in that he intends the remittance to be

in discharge of his liability and that the Collector receives it

in the same way.”); Baimbridge v. United States, 335 F. Supp. 2d

1084, 1095 (S.D. Cal. 2004) (“Delivery of a check with a tax

return is generally sufficient to designate the payment toward

the liability for the period of the return.”).   Petitioners’ $611

payment fully satisfied their 1997 tax liability.4   Accordingly,

respondent’s proposed levy is not sustained insofar as it relates

to petitioners’ 1997 tax year.

     Petitioners have not challenged their underlying tax

liabilities for 1994 and 1996.    At trial, petitioner husband made

a generalized request for relief from penalties and interest.

Petitioners have not alleged, however, and the record does not

reveal any basis for granting petitioners any relief in this

regard with respect to their 1994 and 1996 tax years.

Petitioners have not otherwise alleged, and the record does not



     4
       We are mindful that the Secretary may credit an
overpayment, including interest thereon, against any Federal
income tax liability of the person who made the overpayment.
Sec. 6402(a). Petitioners, however, did not overpay their 1997
Federal income tax liability.
                              - 6 -

suggest, any reason why respondent’s proposed levy with respect

to their 1994 and 1996 tax years should not proceed.5

     In light of the foregoing,


                                      Decision will be entered

                              for respondent with respect to

                              petitioners’ 1994 and 1996 tax

                              years and for petitioners with

                              respect to petitioners’ 1997 tax

                              year.




     5
       At trial, respondent’s counsel suggested that as a result
of moving petitioners’ $611 payment from 1994 to 1997,
petitioners’ 1994 balance would increase accordingly. We note,
however, that respondent’s proposed levy with respect to
petitioners’ 1994 taxes does not presently encompass any
liabilities resulting from reversal of the $611 credit to
petitioners’ 1994 account.
