                        T.C. Memo. 1999-305



                      UNITED STATES TAX COURT



                EVELYN N. WILLIAMS, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent




     Docket No. 9165-98.            Filed September 16, 1999.




     Evelyn N. Williams, pro se.

     Catherine M. Thayer and Claire R. McKenzie, for respondent.



                        MEMORANDUM OPINION


     DAWSON, Judge:   This case was assigned to Special Trial

Judge Stanley J. Goldberg, pursuant to Rules 180, 181, and 183.1



     1
          Unless otherwise indicated, subsequent section
references are to the Internal Revenue Code in effect for the
years in issue, and all Rule references are to the Tax Court
Rules of Practice and Procedure.
                                    - 2 -

The Court agrees with and adopts the opinion of the Special Trial

Judge, which is set forth below.

                   OPINION OF THE SPECIAL TRIAL JUDGE

       GOLDBERG, Special Trial Judge:        Respondent determined the

following deficiencies in petitioner's Federal income taxes and

additions to tax:

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

            1993        $14,872               $2,138.25        $328.95
            1994         16,526                2,131.50         396.28
            1995         12,731                3,099.25         670.20

       After concessions by the parties, the issues for decision

are:    (1) Whether petitioner is entitled to refunds of any

overpayments made for the 1993, 1994, and 1995 tax years; (2)

whether petitioner is liable for an addition to tax pursuant to

section 6651(a)(1) for 1995; and (3) whether petitioner is liable

for an addition to tax pursuant to section 6654(a) for 1995.

       Some of the facts have been stipulated and are so found.

The stipulation of facts and the attached exhibits are

incorporated herein by this reference.          At the time the petition

was filed, petitioner resided in Elkhart, Indiana.          During the

years in issue, petitioner was married to James Williams (Mr.

Williams).

       In February 1997, petitioner was informed by the Internal

Revenue Service (IRS) that it had no record of petitioner's

filing her 1993, 1994, and 1995 Federal income tax returns.
                               - 3 -

     In the resulting exchange of letters between petitioner and

an IRS examiner in South Bend, Indiana, the IRS requested that

petitioner either (1) provide copies of her filed returns for the

years in issue, or (2) file the requested returns if petitioner

had failed to file them in the past.

     Petitioner responded by writing to the IRS contending that

she had filed returns for the years in issue.   Petitioner

promised the IRS that she would provide copies of the requested

returns.   Later, in a letter dated April 3, 1997, petitioner

informed the IRS examiner in South Bend, Indiana, that she had

sent copies of her "forms and schedules, including 1992, 1993 and

1994 F[orm] 1040X's based on a net operating loss carryback from

the tax year 1995" to the Cincinnati IRS Service Center.

Petitioner purportedly sent the documents to the Cincinnati

Service Center because she "received a similar demand letter from

the Cincinnati Service Center for some of the same information

sought by * * * [the IRS examiner in South Bend, Indiana]".

     Despite repeated requests, petitioner did not provide copies

of her tax returns for the years in issue to the IRS office in

South Bend, Indiana.   Ultimately, petitioner asked the IRS to

issue a notice of deficiency, and, in a subsequent notice of

deficiency dated February 19, 1998, respondent determined the

deficiencies listed above.
                               - 4 -

      On October 2, 1998, during a meeting with respondent's

counsel, Mr. Williams submitted copies of joint U.S. individual

income tax returns (Forms 1040) for the 1993, 1994, and 1995 tax

years, which reflected overpayments in the amounts of $1,214,

$4,440, and $2,978 for the 1993, 1994, and 1995 tax years,

respectively.   On each return, the claimed overpayment was to be

applied to the next taxable year's estimated tax.

1.   Parties’ Contentions

      Petitioner contends that she is entitled to a credit or

refund for overpayment of taxes for the 1993, 1994, and 1995 tax

years in the amounts of $1,214, $4,440, and $2,978, respectively.

      Her entitlement is based on the premise that she and Mr.

Williams made timely claims for refunds for overpayments on their

joint Federal income tax returns for 1993, 1994, and 1995, which

they allegedly filed on April 15, 1994, May 15, 1995, and

sometime in mid-August of 1996, respectively.   Petitioner

maintains that Mr. Williams sent their 1993 tax return by

certified mail and their 1994 tax return by express mail to the

Commissioner.   In support of her contention that the 1993 and

1994 returns were mailed on the above dates, petitioner submitted

a certified mail receipt dated April 15, 1994, and an express

mail receipt dated May 15, 1995.

      Respondent, on the other hand, argues that petitioner failed

to file income tax returns for the years in issue, and also
                              - 5 -

failed to file refund claims for the 1993, 1994, and 1995 tax

years prior to October 2, 1998, which date is subsequent to the

date the notice of deficiency was mailed.   Respondent contends

that petitioner's claims for a refund are therefore time barred,

pursuant to sections 6511(b)(2)(B) and 6512(b)(3)(B).   Further,

if petitioner’s claims for refund of overpayments made for the

1993 and 1994 tax years are time barred, respondent contends that

there is a deficiency for 1995 because there will be no

overpayment from previous tax years to apply to 1995.

     As previously stated, respondent, after searching IRS

records, did not find any record that petitioner filed her 1993,

1994, and 1995 tax returns prior to the mailing of the notice of

deficiency covering those years.2   Therefore, respondent contends

that the date of filing of petitioner's 1993, 1994, and 1995 tax

returns should be October 2, 1998, the date Mr. Williams provided

respondent with copies of petitioner's returns for the years in

issue.

     We now consider, in turn, whether in each of the years in

issue a timely claim for refund of any overpayment was made.




     2
          Respondent did find a request by petitioner for an
automatic extension of time to file petitioner's 1993 return.
The request for the automatic 4-month extension of time permitted
petitioner to file her 1993 income tax return on or before Aug.
15, 1994.
                                - 6 -

2.   Discussion of Facts and Applicable Law

      A.   1993 Taxable Year

      At trial, petitioner presented a certified mail receipt

dated April 15, 1994, in support of her position that the 1993

income tax return was timely filed.     The receipt showed total

postage and fees paid in the amount of $2.29.     The postage and

fees were listed as follows:    $.29 postage, $1.00 certified fee,

and $1.00 return receipt fee.   Petitioner contends that the

certified mail receipt establishes the timely mailing of her 1993

Federal tax return.    Petitioner relies on section 7502(c), which

provides in relevant part:

      (c) Registered and Certified Mailing.--

           (1) Registered mail.--For purposes of this
      section, if any such return, claim, statement, or other
      document, or payment, is sent by United States
      registered mail--

                (A) such registration shall be prima facie
      evidence that the return, claim, statement, or other
      document was delivered to the agency, officer, or
      office to which addressed, and

                (B) the date of registration shall be deemed
      the postmark date.

           (2) Certified mail.--The Secretary is authorized
      to provide by regulations the extent to which the
      provisions of paragraph (1) of this subsection with
      respect to prima facie evidence of delivery and the
      postmark date shall apply to certified mail.

      Respondent contends that petitioner's April 15, 1994,

certified mailing did not contain petitioner's 1993 tax return.

Rather, respondent contends that petitioner mailed only the
                                - 7 -

Application for Automatic Extension of Time to File U.S.

Individual Income Tax Return (Form 4868), on April 15, 1994.    As

evidence, respondent submitted petitioner's 1993 Form 4868 which

the IRS found in its records while searching for petitioner's

returns for the years in issue.

     Petitioner stated that Mr. Williams mailed the completed

Form 4868 in the same envelope as the 1993 return by mistake, and

that the IRS lost the 1993 income tax return while retaining the

1993 Form 4868.

     We do not find petitioner's contentions plausible.

Petitioner's 1993 income tax return, as given to respondent on

October 2, 1998, totals 12 pages3 and would have required basic

postage in excess of $.29, even at 1994 postal rates.

     Though Mr. Williams testified that Form 4868 was only

completed as a contingency, we do not find his testimony

credible.   Petitioner and Mr. Williams signed Form 4868 on April

11, 1994, and April 13, 1994, respectively.   Petitioner's 1993

return was supposedly completed on April 15, 1994, yet

petitioner's Form 4868, purportedly completed in roughly the same

timeframe as petitioner's 1993 return, contains conflicting

figures.4   Further, if their joint income tax return was mailed

     3
          The mailing in question would have consisted of 13
pages if Form 4868 had been included as petitioner contends.
     4
            Petitioner's 1993 return listed total tax payments in
                                                     (continued...)
                               - 8 -

as claimed, we are perplexed as to why it was necessary for

petitioner and Mr. Williams to mail a Form 4868 simultaneously

with their return.   On the record, we find Mr. Williams’

testimony wanting.

     Moreover, petitioner has not dealt honestly with the IRS in

the past.   In a letter dated April 3, 1997, petitioner claimed

that she had already sent copies of her 1992, 1993, and 1994

amended tax returns to the Cincinnati IRS Service Center.     That

statement later turned out to be false.    Mr. Williams admitted

that petitioner had not sent copies of the amended returns to the

Cincinnati Service Center and also admitted that petitioner had

never filed amended returns for the years in issue.

     At trial, petitioner testified that she had no actual

knowledge of the mailing of the 1993 tax return.    Petitioner

testified that Mr. Williams handled the preparation and mailing

of tax returns.   Because of this, petitioner was unable to

establish that the certified mail receipt was for postage for an

envelope containing her 1993 tax return.    Mr. Williams’ testimony

as to the amount of postage and to the contents of the envelope

is not believable under these facts.

     Finally, petitioner had a history of failing to file returns

with the IRS.   A search of IRS records showed that the IRS filed



     4
      (...continued)
the amount of $6,378, but petitioner's 1993 Form 4868 listed
total tax payments in the amount of $8,100.
                                - 9 -

substitute returns for petitioner for tax years 1988 though 1995.

Petitioner did not challenge the veracity of IRS records for tax

years other than those in issue.    We do not believe that the IRS

lost petitioner's Federal income tax returns year after year.

     On the basis of the record, we find that the certified mail

sent to the IRS by petitioner on April 15, 1994, did not contain

petitioner's 1993 tax return but contained only Form 4868, an

application for an extension of time to file her 1993 income tax

return.    Petitioner may not rely on the presumption in section

7502(c).    Accordingly, we find that petitioner's 1993 Federal

income tax return was not filed before October 2, 1998, and

therefore the claim for refund for overpayment of taxes for 1993

was made on October 2, 1998.

     B.    1994 Taxable Year

     At trial, petitioner presented an express mail receipt dated

May 15, 1995.5   The receipt showed total postage and fees paid in

the amount of $11.85.   The postage and fees were listed as

follows:   $10.75 postage and $1.10 return receipt fee.

     Petitioner contends that the express mail receipt dated May

15, 1995, establishes that petitioner mailed her 1994 return to

the IRS on that date.

     Again, we weigh the credibility of petitioner's testimony,

and we consider petitioner's lack of actual knowledge of the



     5
          Petitioner also submitted a postmarked copy of the
address label with the same date.
                              - 10 -

mailing in question, and the uncontested filing history of

petitioner.   We also consider the fact that respondent

established that the IRS carried out a diligent search of its

records.

     Based on the record, we find that petitioner has failed to

establish that the 1994 return was mailed to the IRS Service

Center in Cincinnati, Ohio, on May 15, 1995.   Accordingly,

petitioner's 1994 Federal income tax return was not filed before

October 2, 1998, and therefore the claim for refund for

overpayment of tax for 1994 was made on October 2, 1998.

     We now turn to a discussion of the law as it pertains to the

timely claim for refunds for overpayment of Federal income taxes.

     Section 6512(b)(3) prescribes limitations on the amounts of

credits or refunds as follows:

     (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--

                (A) after the mailing of the notice of deficiency

                (B) within the period which would be applicable
           under section 6511(b)(2), (c), 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, or

                (C) within the period which would be applicable
           under section 6511(b)(2), (c), or (d), in respect of
           any claim for refund filed within the applicable period
           specified in section 6511 and before the date of the
           mailing of the notice of deficiency--
                              - 11 -

                     (i) which had not been disallowed before that
                     date,
                     (ii) which had been disallowed before that
                     date and in respect of which a timely suit
                     for refund could have been commenced as of
                     that date, or
                     (iii) in respect of which a suit for refund
                     had been commenced before that date and
                     within the period specified in section 6532.

These provisions prevent the allowance of any credit or refund

paid during a period beyond the periods prescribed by section

6512(b)(3).   See Sutherland v. Commissioner, T.C. Memo. 1987-301.

     Section 6511(a) provides generally that a claim for credit

or refund of an overpayment of any tax as to which the taxpayer

is required to file a return shall be filed within 3 years from

the time the return was filed or 2 years from the time the tax

was paid, whichever period expires later, or if no return was

filed by the taxpayer, within 2 years from the time the tax was

paid.   Section 6511(b) provides:

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

           (1) Filing of claim within prescribed period.--No
           credit or refund shall be allowed or made after the
           expiration of the period of limitation prescribed in
           subsection (a) for the filing of a claim for credit or
           refund, unless a claim for credit or refund is filed by
           the taxpayer within such period.

           (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
                              - 12 -

                extension of time for filing the return. If the
                tax was required to be paid by means of a stamp,
                the amount of the credit or refund shall not
                exceed the portion of the tax paid within the 3
                years immediately preceding the filing of the
                claim.

                (B) Limit where claim not filed within 3-year
                period.--If the claim was not filed within such
                3-year period, 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.

                (C) Limit if no claim filed.--If no claim was
                filed, the credit or refund shall not exceed the
                amount which would be allowable under subparagraph
                (A) or (B), as the case may be, if claim was filed
                on the date the credit or refund is allowed.

     In Commissioner v. Lundy, 516 U.S. 235 (1996), the Supreme

Court held that this Court lacks jurisdiction to award a refund

of taxes paid more than 2 years prior to the date on which the

Commissioner mailed the taxpayers a notice of deficiency, if, on

the date that the notice was mailed, a return had not yet been

filed.   Under such circumstances, the applicable look-back period

under sections 6511(b)(2)(B) and 6512(b)(3)(B) is 2 years.

     The Court held that section 6512(b)(3)(B) precludes the Tax

Court from awarding a refund unless it first determines that the

taxes were paid within the look-back period, which would be

applicable under section 6511(b)(2) if on the date of the mailing

of the notice of deficiency a claim for refund had been filed.

     Section 6511(b)(2)(A) applies a 3-year look-back period if a

refund claim is filed, as required by section 6511(a), "within 3
                              - 13 -

years from the time the return was filed", while section

6511(b)(2)(B) specifies a 2-year look-back period if the refund

claim is not filed within the 3-year period.   The 2-year

look-back period applied in Commissioner v. Lundy, supra, because

as of the date the notice of deficiency was mailed in that case,

the taxpayers had not filed a return, and, therefore, a claim

filed on that date would not have been filed within the 3-year

period described in section 6511(a).   The taxpayers' taxes were

withheld from wages so they were deemed paid on the date their

1987 tax return was due (April 15, 1988), which was more than 2

years prior to the date the notice of deficiency was mailed on

September 26, 1990.   Therefore, the claim for refund was denied.

     In the instant case, petitioner was required to file Federal

income tax returns for 1993, 1994, 1995, on or before August 15,

1994, April 15, 1995, and April 15, 1996, respectively.     Taxes in

the respective amounts of $6,378, $8,043, and $378 were withheld

from petitioner's wages for the 1993, 1994, and 1995 tax years.

These taxes are deemed to have been paid by petitioner on April

15, 1994, April 15, 1995, and April 15, 1996 for the 1993, 1994,

and 1995 tax years, respectively.   See sec. 6513(a).   Petitioner

requested a notice of deficiency, and one was duly mailed on

February 19, 1998.

     We have found, earlier in this opinion, that Mr. Williams

submitted joint income tax returns for 1993, 1994, and 1995 to
                              - 14 -

respondent on October 2, 1998.   The returns for the years in

issue stated that petitioner overpaid her 1993, 1994, and 1995

income taxes by $1,214, $4,440, and $2,978, respectively, and

that the overpayments were to be applied as estimated tax

payments to the succeeding tax year.

     It is respondent's position that the returns for 1993 and

1994 constitute petitioner's sole claims for refund for those

years within the meaning of section 6511.   Respondent contends

that no other claim for refund, formal or informal, was ever

filed by petitioner for the tax years 1993 and 1994.   We agree

with respondent, based on our previous findings.

     Because the notice of deficiency was mailed prior to the

date petitioner filed her claims for credits or refunds, section

6512(b)(3)(B) requires that we consider the claim filed as of

February 19, 1998, the date the notice of deficiency was mailed.

In that we have concluded that petitioner did not file a 1993 or

1994 return before the mailing of the notice of deficiency, we

must apply the 2-year look-back rule of section 6511(b)(2)(B).

Because petitioner's 1993 and 1994 taxes are deemed paid on April

15, 1994, and April 15, 1995, respectively, we conclude that

petitioner's claim for credit of any overpayment of her 1993 and

1994 tax is time barred.   As a result, her overpayments of 1993

and 1994 taxes cannot be applied to her 1995 taxes.    Therefore,

though petitioner's claim for a credit or refund for the 1995 tax
                               - 15 -

year is not time barred by the 2-year look-back period, there is

no overpayment for that year to be credited or refunded.

Petitioner is instead liable for a deficiency for 1995.

3.   Addition to Tax for Failure To Timely File

      Section 6651(a)(1) imposes an addition to tax for failure to

file a timely tax return.    The addition to tax is equal to 5

percent of the amount of the tax required to be shown on the

return if the failure to file is not for more than 1 month.       See

sec. 6651(a)(1).    An additional 5 percent is imposed for each

month or fraction thereof in which the failure to file continues,

to a maximum of 25 percent of the tax.     See id.   The addition to

tax is imposed on the net amount due.     See sec. 6651(b).

      The addition is applicable unless a taxpayer establishes

that the failure to file was due to reasonable cause and not

willful neglect.    See sec. 6651(a).   If a taxpayer exercised

ordinary business care and prudence and was nonetheless unable to

file the return within the date prescribed by law, then

reasonable cause exists.    See sec. 301.6651-1(c)(1), Proced. &

Admin. Regs.   "Willful neglect" means a "conscious, intentional

failure or reckless indifference."      United States v. Boyle, 469

U.S. 241, 245 (1985).

      Petitioner contends that her 1995 return was mailed to the

Cincinnati IRS Service Center by certified mail sometime in mid-

August of 1996.    The copy of petitioner's return submitted to
                                - 16 -

this Court bears petitioner's signature dated August 14, 1996,

and Mr. Williams’ signature dated August 12, 1996.     Therefore, by

petitioner's own admission, the earliest petitioner could have

mailed her 1995 return would have been mid-August 1996, at least

4 months late.     Additionally, petitioner did not have personal

knowledge of the mailing of her 1995 return and could not produce

a certified mailing receipt for her 1995 return.

      On the basis of the record, we find that petitioner has not

established that her failure to timely file her Federal income

tax return for the 1995 tax year was due to reasonable cause and

find that petitioner's 1995 return was filed more than 4 months

late.     Therefore, we hold that petitioner is liable for the

maximum 25 percent of the addition to tax under section

6651(a)(1) for 1995.     Respondent is sustained on this issue.

4.   Additions to Tax for Failure To Pay Estimated Income Taxes

        Section 6654(a) imposes an addition to tax where prepayments

of tax, either through withholding or estimated quarterly tax

payments during the year, do not equal the percentage of total

liability required under the statute.     However, the addition to

tax is not imposed if the taxpayer can show that one of several

statutory exceptions applies.     See sec. 6654(e).   Petitioner has

not contended that she qualifies for any of the exceptions.
                              - 17 -

     Accordingly, we hold that petitioner is liable for the

addition to tax pursuant to section 6654(a) for the 1995 tax

year.   Respondent is sustained on this issue.

     To reflect the foregoing,



                                         Decision will be entered

                                    under Rule 155.
