                                       HERSHAL WEBER, PETITIONER v. COMMISSIONER                                      OF INTERNAL
                                                       REVENUE, RESPONDENT
                                                        Docket No. 27369–10L.                          Filed May 7, 2012.

                                                   In 2007 P filed a Federal income tax return for 2006
                                                reporting an overpayment and electing to have it applied to
                                                his 2007 estimated income tax. However, in 2007 R deter-
                                                mined that P was liable for an I.R.C. sec. 6672 penalty (attrib-
                                                utable to unpaid trust fund taxes of C) and applied P’s 2006
                                                income tax overpayment to that penalty liability instead. In
                                                2008 the balance of C’s trust fund tax liability was satisfied
                                                by third-party payments. When P thereafter filed his 2007
                                                Federal income tax return in 2008, he claimed a credit
                                                thereon for the overpaid 2006 income tax, thereby reporting
                                                a 2007 income tax overpayment, and elected to have that
                                                asserted 2007 overpayment applied to his 2008 estimated
                                                income tax. The IRS notified P that it adjusted his 2007
                                                credits downward to eliminate the claimed 2006 income tax
                                                overpayment, thereby eliminating any overpayment for 2007,
                                                and yielding a balance due. When P filed his 2008 Federal
                                                income tax return in 2009, he nonetheless claimed a credit
                                                thereon for overpaid 2007 income tax (which consisted solely
                                                of the previously disallowed credit elect overpayment from
                                                2006). The IRS notified P that it adjusted his 2008 credits
                                                downward to eliminate the claimed 2007 income tax overpay-
                                                ment, yielding a balance due greater than he had reported.
                                                When P did not pay the balance due for 2008, R issued to P
                                                a notice of proposed levy, and P requested a hearing under
                                                I.R.C. sec. 6330(b). At the hearing P contended that his I.R.C.
                                                sec. 6672 penalty was overpaid and that his 2008 liability
                                                would be satisfied if that overpayment were applied to his
                                                2008 liability. R determined to proceed with the levy to collect
                                                P’s 2008 Federal income tax liability. Held: P is not entitled
                                                to apply a credit elect overpayment from 2007 toward his
                                                2008 income tax liability, because after application of his 2006
                                                income tax overpayment to his I.R.C. sec. 6672 penalty
                                                liability, he had no 2006 overpayment available for crediting

                                      348




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                                                to 2007 and therefore no 2007 overpayment available for cred-
                                                iting to 2008. Held, further, in a hearing under I.R.C. sec.
                                                6330 concerning collection of P’s unpaid 2008 income tax
                                                liability, we do not have jurisdiction to adjudicate P’s claim of
                                                an I.R.C. sec. 6672 penalty overpayment.

                                           Donald Jay Pols, for petitioner.
                                           Deborah Aloof, for respondent.

                                                                                  OPINION

                                         GUSTAFSON, Judge: This is a ‘‘collection due process’’ (CDP)
                                      appeal pursuant to section 6330(d), 1 in which petitioner
                                      Hershal Weber asks us to review a determination by the
                                      Office of Appeals (Appeals) of the Internal Revenue Service
                                      (IRS) to proceed with a levy in order to collect his income tax
                                      for the year 2008. The issue is whether the tax that the IRS
                                      proposes to collect has already been paid by Mr. Weber’s
                                      alleged overpayment of a section 6672 penalty liability.
                                      Respondent, the Commissioner of Internal Revenue, moved
                                      for summary judgment, and Mr. Weber filed an opposition
                                      supported by exhibits. We will grant the Commissioner’s
                                      motion.

                                                                                Background
                                        For purposes of the Commissioner’s motion, we assume
                                      correct the facts asserted by Mr. Weber and supported by his
                                      exhibits, as well as facts demonstrated by the Commissioner
                                      that Mr. Weber did not dispute.
                                      2006 income tax
                                        In 2006 Mr. Weber earned income from which Federal
                                      income tax was withheld. In October 2007 Mr. Weber filed
                                      his 2006 Federal income tax return. On that return he
                                      reported an overpayment of $46,717 (consisting entirely of
                                      amounts withheld in 2006) and elected (pursuant to 26
                                      C.F.R. section 301.6402–3(a)(5), Proced. & Admin. Regs.) to
                                      have that overpayment applied to his estimated income tax
                                      for the succeeding year, i.e., 2007. We assume that he had
                                      in fact overpaid his 2006 liability in this amount. (Tax year
                                        1 Unless otherwise indicated, all section references are to the Internal Revenue Code of 1986

                                      as in effect at all relevant times (codified in 26 U.S.C.), and all Rule references are to the Tax
                                      Court Rules of Practice and Procedure.




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                                      2006 is not at issue here, but the 2006 overpayment is rel-
                                      evant to the 2008 tax that is at issue.)
                                      Trust fund penalty liability
                                         Mr. Weber evidently had some connection to S&G Services,
                                      Inc. (S&G). The IRS determined that in three quarters of cal-
                                      endar year 2005, S&G had failed to pay over ‘‘trust fund’’
                                      taxes withheld from its employees’ wages pursuant to sec-
                                      tions 3102 and 3402. By July 2007 the IRS determined that
                                      Mr. Weber had been a ‘‘responsible person’’ of S&G in 2005;
                                      and on July 17, 2007, the IRS therefore assessed penalties
                                      against Mr. Weber under section 6672(a) in amounts totaling
                                      $1,002,339. 2 The record indicates that the IRS determined
                                      that one or more other individuals were also responsible per-
                                      sons of S&G and assessed section 6672 penalties against
                                      them, as against Mr. Weber.
                                         Mr. Weber’s liability for that section 6672 penalty is not at
                                      issue here, but it is relevant to Mr. Weber’s contentions, as
                                      we explain below. Mr. Weber states that he ‘‘neither disputes
                                      nor admits the merits of this trust Fund Recovery Penalty in
                                      this proceeding’’, but in his administrative claim for refund
                                      (discussed below) he contends that the assessment was erro-
                                      neous.
                                      Satisfaction of the trust fund penalty liability
                                         In 2007 and 2008, various payments were made against
                                      the unpaid trust fund tax liabilities of S&G or against the
                                      corresponding penalty liabilities under section 6672. Most
                                      important to this suit is a credit against Mr. Weber’s section
                                      6672 penalty liability made from his 2006 income tax over-
                                      payment: By letter dated November 12, 2007—i.e., before the
                                      end of tax year 2007 and long before Mr. Weber filed his
                                      2007 return—the IRS advised Mr. Weber that his reported
                                      2006 overpayment of $46,717 had been applied not to his
                                      2007 estimated income tax but instead to his section 6672
                                      penalty liability. Although Mr. Weber’s 2006 tax return was
                                      filed in October 2007 and processed in November 2007, the
                                      IRS applied these credits with an effective date of July 17,

                                        2 The tally of these assessments that was attached to Mr. Weber’s request for a CDP hearing

                                      overstated the penalty for the quarter ended 12/31/2005 by $10,000 and therefore overstated the
                                      total by the same amount.




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                                      2007—the date on which the section 6672 penalty had been
                                      assessed.
                                         Almost a year later, in June 2008, the IRS received, from
                                      responsible persons other than Mr. Weber, a payment of
                                      $233,000 toward S&G’s liabilities. In August 2008 the IRS
                                      executed an agreement with Mr. Weber (on Form 12257,
                                      ‘‘Summary Notice of Determination, Waiver of Right to
                                      Judicial Review of a Collection Due Process Determination,
                                      and Waiver of Suspension of Levy Action’’), in which Mr.
                                      Weber acknowledged that he had received collection notices
                                      concerning the section 6672 penalty liabilities but in which
                                      he waived his right to a CDP hearing before Appeals con-
                                      cerning those liabilities. The agreement stated as follows the
                                      IRS Office of Appeals’ determination with regard to Mr.
                                      Weber:
                                      The trust fund portion of the liabilities have [sic] been satisfied at the cor-
                                      porate level by the redesignation of a $233,000 payment made on 6/19/
                                      2008.
                                      The satisfaction of the trust fund portion of the tax at the corporate level
                                      will offset to your [section 6672 penalty] account resulting in no balance
                                      due remaining.
                                      Levy action [as to the section 6672 penalty] is no longer needed and will
                                      not take place.

                                      The IRS has adjusted the account for Mr. Weber’s section
                                      6672 penalty not only by payments that he made but also by
                                      payments from the other responsible persons. IRS transcripts
                                      for Mr. Weber’s penalty liability for the three quarters at
                                      issue show small balances due, but for purposes of the
                                      Commissioner’s motion we assume that if the ‘‘redesignation’’
                                      to which the IRS agreed is properly accomplished, then the
                                      IRS has collected (through his section 6672 penalty payments,
                                      the penalty payments by other responsible persons of S&G,
                                      and S&G’s own payments of the trust fund liabilities) a total
                                      amount greater than S&G’s trust fund liabilities.
                                        On August 14, 2009, Mr. Weber filed claims for refund
                                      with the IRS by submitting Forms 843, ‘‘Claim for Refund
                                      and Request for Abatement’’. On February 16, 2010, the IRS
                                      disallowed those refund claims. On February 14, 2012, Mr.
                                      Weber filed a refund suit in Federal District Court chal-
                                      lenging that disallowance. Weber v. United States, No. 1:12–




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                                      CV–732 (E.D.N.Y.). Our record does not show any disposition
                                      of that refund suit.
                                      2007 income tax
                                         Our record does not show precisely when in 2008 Mr.
                                      Weber filed his 2007 Federal income tax return, but we
                                      assume (in his favor) that he filed it after August 2008—i.e.,
                                      after Appeals had determined he had ‘‘no balance due
                                      remaining’’ on his section 6672 liability. On that 2007 return,
                                      Mr. Weber reported a tax liability of $75,089 that we assume
                                      to be correct. In addition to claiming withholding credits of
                                      $68,310 and excess Social Security remittances of $1,231, on
                                      line 65 (‘‘2007 estimated tax payments and amount applied
                                      from 2006 return’’) he reported credits totaling $46,717—i.e.,
                                      the amount of his claimed 2006 overpayment—and he there-
                                      fore reported an overall overpayment for 2007 in the amount
                                      of $41,169. On line 75 he elected to have that claimed over-
                                      payment applied to his estimated income tax for the suc-
                                      ceeding year (i.e., 2008).
                                         As we have noted, however, before that time the IRS’s
                                      November 2007 letter had advised him that his reported
                                      2006 overpayment had not been applied to his 2007 esti-
                                      mated income tax but rather to his section 6672 penalty
                                      liability.
                                         The IRS therefore evidently spotted as excessive the credit
                                      claimed on line 65, and it sent Mr. Weber a letter dated
                                      November 24, 2008, advising him that it had reduced the
                                      amount of his 2007 estimated tax payments and that he
                                      therefore still owed $5,962 3 of the tax he had reported due
                                      for 2007. Our record does not show whether or when Mr.
                                      Weber paid that liability, and 2007 is not at issue in our
                                      case.
                                      2008 income tax
                                         For the year at issue—i.e., 2008—Mr. Weber filed his Fed-
                                      eral income tax return in September 2009. He reported a tax
                                      liability that we assume to be correct. He also reported, on
                                      line 63 of that 2008 return, a credit amount of $61,169 that
                                        3 This amount was determined by taking Mr. Weber’s tax liability of $75,089 less withholding

                                      credits of $68,310 and excess Social Security remittances of $1,231, which resulted in an under-
                                      payment of $5,548. To that underpayment, the Commissioner applied penalties of $221.92 and
                                      interest of $192.11, for an unpaid balance of $5,962.03.




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                                      included a supposed overpayment of $41,169 from his 2007
                                      return. Of course, 22 months before he filed his 2008 return
                                      he had received the IRS’s November 2007 letter indicating
                                      that his 2006 overpayment had not been applied to 2007 but
                                      had instead been applied to his penalty liability, leaving him
                                      with no overpayment for 2007 that could be applied to 2008.
                                        Consistent with its prior action as to 2007, the IRS sent Mr.
                                      Weber a letter dated October 19, 2009, advising him that it
                                      had adjusted his 2008 estimated tax payments (i.e., to reduce
                                      them by the claimed 2007 overpayment of $41,169) and that
                                      he had a balance due on his 2008 income tax account of
                                      $41,084 (on which penalties and interest were also due).
                                      Collection action for 2008 income tax
                                         When Mr. Weber did not pay the 2008 balance due, the IRS
                                      sent him a ‘‘Final Notice—Notice of Intent to Levy and
                                      Notice of Your Right to a Hearing’’. On April 2, 2010, the IRS
                                      received from Mr. Weber a Form 12153, ‘‘Request for a
                                      Collection Due Process or Equivalent Hearing,’’ by which he
                                      requested a CDP hearing pursuant to section 6330. He
                                      attached to that form a ‘‘Calculation of trust Fund Penalty
                                      Overpayment’’, asserting that the ‘‘Total Overpayment for
                                      trust Funds’’ was $71,394.04. 4 The IRS granted him that
                                      hearing before its Office of Appeals.
                                         At the hearing Mr. Weber’s representative argued that,
                                      because S&G’s trust fund liability had been fully satisfied (by
                                      payments other than Mr. Weber’s), the IRS should correct its
                                      prior actions as to Mr. Weber’s income tax liabilities for 2006
                                      and 2007, so that his 2006 income tax overpayment would be
                                      credited to his 2007 income tax liability as originally
                                      requested, and the resulting 2007 overpayment would then
                                      be credited against—and would satisfy—his 2008 income tax
                                      liability. He argued that if those actions were taken, his 2008
                                      income tax liability would be satisfied and no levy would be
                                      appropriate.

                                        4 Mr. Weber derived this ‘‘overpayment’’ by taking the total amount of payments made by him-

                                      self, by other ‘‘responsible persons’’, and by S&G—$1,083,733.28—against the total amount of
                                      the trust fund penalties assessed against him—$1,002,339.24, but mistakenly stated by him as
                                      $1,012,339.24. Mr. Weber concluded that the difference, i.e., $71,394.04, was an overpayment.
                                      Mr. Weber then reasoned that since the trust fund taxes had been overpaid by $71,394.04, his
                                      entire payment—$46,717—was unnecessary for satisfying these liabilities.




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                                        On November 10, 2010, Appeals issued a notice of deter-
                                      mination upholding the proposed levy. An attachment to the
                                      notice of determination stated:
                                      The Office of Appeals does not have jurisdiction on the other tax periods
                                      that you believe caused the liability on tax period 2008.

                                      On December 10, 2010, Mr. Weber filed a timely petition
                                      with this Court challenging that determination. At the time
                                      he filed his petition, Mr. Weber resided in New York.

                                                                                 Discussion
                                      I. General legal principles
                                           A. ‘‘Collection due process’’
                                         At issue here is the IRS’s proposal to collect Mr. Weber’s
                                      2008 income tax liability by means of a levy. Section 6330
                                      provides that, before the IRS may make a levy on any prop-
                                      erty pursuant to section 6331, the taxpayer is entitled to
                                      notice of the Commissioner’s intent to levy and of the tax-
                                      payer’s right to a hearing before the IRS Office of Appeals.
                                      Sec. 6330(a) and (b). That hearing addresses ‘‘the taxable
                                      period to which the unpaid tax specified [in the notice of pro-
                                      posed levy] * * * relates’’. Sec. 6330(b)(2). At the agency-
                                      level CDP hearing, the taxpayer may raise ‘‘any relevant issue
                                      relating to the unpaid tax or the proposed levy’’, sec.
                                      6330(c)(2)(A) (emphasis added)—language important here, for
                                      reasons we explain below. The taxpayer may make chal-
                                      lenges to ‘‘the appropriateness of collection actions’’ and may
                                      make ‘‘offers of collection alternatives, which may include the
                                      posting of a bond, the substitution of other assets, an install-
                                      ment agreement, or an offer-in-compromise.’’ Sec.
                                      6330(c)(2)(A). The appeals officer must consider those issues,
                                      verify the requirements of applicable law and administrative
                                      procedure have been met, and consider ‘‘whether any pro-
                                      posed collection action balances the need for the efficient
                                      collection of taxes with the legitimate concern of the person
                                      [involved] that any collection action be no more intrusive
                                      than necessary.’’ Sec. 6330(c)(3).
                                         Mr. Weber does not complain of any failure by the IRS to
                                      comply with these provisions, except that he contends it
                                      erred by failing to apply against his 2008 income tax liability




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                                      his claimed credit elect overpayment from 2007 (derived
                                      from his claimed credit elect overpayment from 2006), or in
                                      the alternative, to credit to his 2008 liability his (alleged)
                                      section 6672 penalty overpayment, which he asks us to deter-
                                      mine. Both parties ask us to review for abuse of discretion,
                                      see Murphy v. Commissioner, 125 T.C. 301, 320 (2005), aff ’d,
                                      469 F.3d 27 (1st Cir. 2006), the determination by Appeals to
                                      proceed with collection. As we show below, Mr. Weber’s
                                      contention involves the assertion that Appeals made errors of
                                      law; and if a determination is indeed based upon an error of
                                      law, then by definition it constitutes an abuse of discretion.
                                      See Swanson v. Commissioner, 121 T.C. 111, 119 (2003).
                                           B. Summary judgment
                                         Under Rule 121 (the Tax Court’s analog to Rule 56 of the
                                      Federal Rules of Civil Procedure), the Court may grant sum-
                                      mary judgment where there is no genuine issue of any mate-
                                      rial fact and a decision may be rendered as a matter of law.
                                      The moving party (here, the Commissioner) bears the burden
                                      of showing that no genuine issue of material fact exists, and
                                      the Court will view any factual material and inferences in
                                      the light most favorable to the nonmoving party. Dahlstrom
                                      v. Commissioner, 85 T.C. 812, 821 (1985); cf. Anderson v. Lib-
                                      erty Lobby, Inc., 477 U.S. 242, 255 (1986) (same standard
                                      under Fed. R. Civ. P. 56). ‘‘The opposing party is to be
                                      afforded the benefit of all reasonable doubt, and any
                                      inference to be drawn from the underlying facts contained in
                                      the record must be viewed in a light most favorable to the
                                      party opposing the motion for summary judgment.’’ Espinoza
                                      v. Commissioner, 78 T.C. 412, 416 (1982).
                                         In this case we assume the facts as shown by Mr. Weber,
                                      the non-moving party, or as shown by the Commissioner and
                                      not disputed by Mr. Weber.
                                           C. Credit elect overpayments
                                        Mr. Weber contends that the IRS erred by failing to apply
                                      his claimed 2006 income tax overpayment against his 2007
                                      income tax liability, and by failing to apply his claimed 2007
                                      income tax overpayment against his 2008 income tax liability
                                      at issue here. When a taxpayer has made an overpayment of
                                      tax, the IRS has discretion to credit that overpayment to




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                                      another liability—a discretion given to it by section 6402(a), 5
                                      which provides:
                                      In the case of any overpayment, the Secretary * * * may credit the
                                      amount of such overpayment * * * against any liability in respect of an
                                      internal revenue tax on the part of the person who made the overpayment
                                      and shall * * * refund any balance to such person. [Emphasis added.]

                                      That is, the IRS ‘‘shall’’ refund any overpayment not other-
                                      wise credited, but the IRS ‘‘may credit’’ an overpayment to
                                      another liability.
                                        In the case of a prior year’s overpayment reported on the
                                      succeeding year’s tax return (such as is at issue here), Con-
                                      gress underscored the IRS’s discretion to allow credits or over-
                                      payments by providing in section 6402(b):
                                      The Secretary is authorized to prescribe regulations providing for the cred-
                                      iting against the estimated income tax for any taxable year of the amount
                                      determined by the taxpayer or the Secretary to be an overpayment of the
                                      income tax for a preceding taxable year.

                                      Pursuant to that authority, the Secretary promulgated 26
                                      C.F.R. section 301.6402–3(a)(5), Proced. & Admin. Regs.,
                                      which provides:
                                      If the taxpayer indicates on its return (or amended return) that all or part
                                      of the overpayment shown by its return (or amended return) is to be
                                      applied to its estimated income tax for its succeeding taxable year, such
                                      indication shall constitute an election to so apply such overpayment * * *.
                                         5 See Kaffenberger v. United States, 314 F.3d 944, 958 n.4 (8th Cir. 2003); IRS v. Luongo (In

                                      re Luongo), 259 F.3d 323, 335 (5th Cir. 2001); Kalb v. United States, 505 F.2d 506, 509 (2d Cir.
                                      1974); Estate of Bender v. Commissioner, 86 T.C. 770, 778–779 (1986) (discussing Kalb), aff ’d
                                      in part, rev’d in part, 827 F.2d 884 (3d Cir. 1987); Georgeff v. United States, 67 Fed. Cl. 598,
                                      608 (2005) (‘‘From the plain language of the statute, the IRS has no obligation to credit any
                                      individual’s tax overpayment to specific preexisting outstanding tax liabilities upon the tax-
                                      payer’s request. The statute, 26 U.S.C. § 6402, gives the IRS the discretionary authority to cred-
                                      it tax overpayments to any tax liability. See Northern States Power Co. v. United States, 73 F.3d
                                      764, 766–67 (8th Cir.), cert. denied, 519 U.S. 862, 136 L. Ed. 2d 110, 117 S. Ct. 168 (1996); In
                                      re Ryan, 64 F.3d 1516, 1523–24 (11th Cir. 1995) (holding that 26 U.S.C. § 6402 gives the IRS
                                      the discretionary authority to credit tax overpayments to any tax liability); Pettibone Corp. v.
                                      United States, 34 F.3d 536, 538 (7th Cir. 1994); Acker v. United States, 519 F. Supp. 178, 182
                                      (N.D. Ohio 1981) (finding that the government may apply tax overpayments to subsequent
                                      years’ liabilities, but is not required to do so). The statute and case law are clear that the discre-
                                      tionary authority of the IRS supersedes any desires or wishes on the part of a taxpayer to have
                                      their overpayment credited to specific, preexisting, tax liabilities.’’). For purposes of the Commis-
                                      sioner’s motion for summary judgment, we assume that, in a collection due process case, we can
                                      review for an abuse of discretion the IRS’s decision under section 6402 to credit an overpayment
                                      to a nondetermination year rather than to the year at issue. Cf. N. States Power Co. v. United
                                      States, 73 F.3d 764, 768 (8th Cir. 1996) (‘‘In a proper case, the failure to credit overpayments
                                      might be reviewable on an abuse-of-discretion basis’’); Winn-Dixie Stores, Inc. v. Commissioner,
                                      110 T.C. 291, 294–296 (1998); see also Orian v. Commissioner, T.C. Memo. 2010–234, slip op.
                                      at 13–17 (and cases cited thereat).




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                                      ‘‘The subject of such an election is known as a ‘credit elect
                                      overpayment’ or simply a ‘credit elect.’ ’’ FleetBoston Fin. v.
                                      United States, 483 F.3d 1345, 1347 (Fed. Cir. 2007). How-
                                      ever, section 301.6402–3(a)(6) makes it clear that the tax-
                                      payer’s election to apply an overpayment to the succeeding
                                      year is not binding on the IRS:
                                      Notwithstanding paragraph (a)(5) of this section, the Internal Revenue
                                      Service, within the applicable period of limitations, may credit any overpay-
                                      ment of individual, fiduciary, or corporation income tax, including interest
                                      thereon, against * * * any outstanding liability for any tax (or for any
                                      interest, additional amount, additions to the tax, or assessable penalty)
                                      owed by the taxpayer making the overpayment * * *. [Emphasis added.]

                                      Thus, a taxpayer may request a credit elect overpayment,
                                      but the IRS has discretion whether to allow it or instead to
                                      credit the overpayment to another liability owed by the tax-
                                      payer or to refund it.
                                           D. ‘‘Responsible person’’ penalty
                                         The liability to which the IRS applied Mr. Weber’s 2006
                                      income tax overpayment was the penalty imposed by section
                                      6672, sometimes known as the ‘‘responsible person penalty’’
                                      or the ‘‘trust fund recovery penalty’’ (TFRP). An employer is
                                      required by sections 3102 and 3402 to withhold from an
                                      employee’s wages and then pay over to the IRS both income
                                      tax, under section 3402, and the employee’s share of Social
                                      Security and Medicare tax (i.e., Federal Insurance Contribu-
                                      tions Act (FICA) tax), under section 3102. Under section
                                      7501(a), ‘‘the amount of tax so collected or withheld shall be
                                      held to be a special fund in trust for the United States’’; con-
                                      sequently, these withheld taxes are referred to as ‘‘trust fund
                                      taxes’’. One of the means Congress has enacted to ensure
                                      that these trust fund taxes are paid over to the Government
                                      is section 6672, under which ‘‘the officers or employees of the
                                      employer responsible for effectuating the collection and pay-
                                      ment of trust-fund taxes who willfully fail to do so are made
                                      personally liable to a ‘penalty’ equal to the amount of the
                                      delinquent taxes.’’ Slodov v. United States, 436 U.S. 238,
                                      244–245 (1978). Section 6672(a) provides:
                                      Any person required to collect, truthfully account for, and pay over any tax
                                      imposed by this title who willfully fails to collect such tax, or truthfully
                                      account for and pay over such tax, or willfully attempts in any manner to




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                                      evade or defeat any such tax or the payment thereof, shall, in addition to
                                      other penalties provided by law, be liable to a penalty equal to the total
                                      amount of the tax evaded, or not collected, or not accounted for and paid
                                      over. * * *

                                        The trust fund penalty of section 6672 is a means of col-
                                      lecting from the responsible persons (here, Mr. Weber and
                                      others) the unpaid trust fund liability of the employer (here,
                                      S&G). The IRS collects the trust fund liability no more than
                                      once. 6 Consequently, the IRS cross-references payments
                                      against the trust fund liability itself and payments against
                                      the section 6672 penalty liabilities of responsible persons, 7
                                      and those payments ultimately reduce the amount of the
                                      penalty liability of each responsible person. 8 However, where
                                      there are multiple responsible persons who have paid pen-
                                      alties under section 6672 arising from the same unpaid trust
                                      fund taxes, the IRS faces the risk that, if it stops collecting
                                      after receiving amounts that equal the trust fund shortage,
                                      one assessed person may later prove himself not responsible
                                      and therefore entitled to a refund. For that reason, ‘‘the TFRP
                                      is considered ‘collected’ only after the passage of two years
                                      from the date of payment with no claim for refund filed by
                                      or for the payor in those two years, so there may be cases
                                      where the Service retains more than 100% payment from two
                                      or more taxpayers until the TFRP is conclusively collected’’.
                                      Internal Revenue Manual pt. 8.25.2.3 (Oct. 17, 2007)
                                         6 See Avildsen v. United States (In re Avildsen Tools & Mach., Inc.), 794 F.2d 1248, 1254 n.10

                                      (7th Cir. 1986) (‘‘if the corporate trust fund tax obligations are subsequently paid by the corpora-
                                      tion this payment may also relieve the corporate officials of their separate liability for delin-
                                      quent trust fund taxes under section 6672’’); USLIFE Title Ins. Co. of Dallas v. Harbison, 784
                                      F.2d 1238, 1241 (5th Cir. 1986) (‘‘as a matter of policy, it [the Government] does not retain pay-
                                      ments exceeding the underlying withholding tax delinquency’’); Spivak v. United States, 370
                                      F.2d 612, 615 (2d Cir. 1967) (‘‘Had the government’s claim in the bankruptcy been defeated by
                                      an adjudication that the payments should have been credited to Lincoln [the employer], the gov-
                                      ernment concedes that it would be bound to release appellants [the responsible officers], for it
                                      is its practice not to attempt enforcement of § 6672 liability if the corporate obligation is met,
                                      and an adjudication that the payments should have been credited to Lincoln would have entitled
                                      Lincoln to credits as great as its entire tax obligation.’’); Internal Revenue Manual (IRM) pt.
                                      1.2.14.1.3 (Policy Statement 5–14), para. 2 (June 9, 2003) (‘‘The withheld income and employ-
                                      ment taxes or collected excise taxes will be collected only once, whether from the business, or
                                      from one or more of its responsible persons’’), pt. 8.25.2.3(5) (Oct. 19, 2007) (‘‘Even though the
                                      Service may make assessments against more than one responsible person for a specific quarterly
                                      liability, it only collects the total amount once’’) (bold in original).
                                         7 See IRM pt. 5.19.14.15 (Apr. 29, 2008).
                                         8 In addition, for the circumstance in which more than one person has been held liable for

                                      the section 6672 penalty and one of those persons believes he is entitled to contribution from
                                      one or more of the other persons, Congress has provided that a taxpayer may bring a separate
                                      suit claiming a right of contribution, pursuant to section 6672(d).




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                                      (348)                           WEBER v. COMMISSIONER                                         359


                                      (‘‘Related TFRP Cases’’), para. 5. 9 For that reason, the mere
                                      presence of a credit balance in the penalty account of a
                                      responsible person does not assure that he is entitled to a
                                      refund. In addition, the settling of the penalty account of a
                                      responsible person may be complicated by questions about
                                      liability for interest and additions to tax under section
                                      6651(a)(3) (both by the employer on its liability for the trust
                                      fund tax in the first instance and by the responsible person
                                      on his liability for the penalty).
                                         The liability at issue in this collection review case is Mr.
                                      Weber’s unpaid 2008 income tax liability, not a section 6672
                                      penalty. However, such a penalty was assessed against Mr.
                                      Weber; and his overpayment of 2006 income tax was credited
                                      toward that liability and not toward his 2007 income tax
                                      liability as he had requested. The IRS’s refusal to alter that
                                      crediting after S&G’s trust fund tax liability was satisfied by
                                      another taxpayer’s payment is important to Mr. Weber’s
                                      contentions here.
                                      II. Whether the tax at issue is ‘‘unpaid’’
                                         Mr. Weber complains that Appeals refused to consider a
                                      ‘‘collection alternative’’, but by that he really means that it
                                      failed to consider his contention that the liability at issue
                                      should be treated as having been satisfied and therefore as
                                      not ‘‘unpaid’’. His position was and is that, in view of the
                                      resolution of S&G’s withholding tax liability, his 2006 income
                                      tax overpayment—originally credited against a section 6672
                                      penalty to compensate for S&G’s unpaid liability—should
                                      now be credited instead to his 2007 income tax liability (as
                                      he elected on his 2006 return) and that, if it is, the result
                                      will be a 2007 income tax overpayment that, when applied
                                      to his 2008 income tax liability (as he elected on his 2007
                                      return), will satisfy that liability and render moot any fur-
                                      ther collection for 2008. Alternatively, Mr. Weber contends
                                      that, because of the satisfaction of S&G’s trust fund liability
                                      from other sources, he has overpaid his section 6672 penalty,
                                         9 See also IRM pt. 8.25.2.6(4) (Oct. 19, 2007) (‘‘In related trust fund recovery penalty cases

                                      where all responsible parties are not in agreement with an Appeals settlement based on hazards
                                      of litigation, a Form 2751, Proposed Assessment of Trust Fund Recovery Penalty, should be se-
                                      cured from the agreeing responsible person(s). Inform the agreeing responsible person(s) by clos-
                                      ing letter that the case can be reopened if the Department of Justice decides to join all poten-
                                      tially responsible persons in a refund suit before the assessment limitation period expires’’).




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                                      and that overpayment, if applied, would be sufficient to sat-
                                      isfy his unpaid 2008 income tax liability.
                                           A. The claimed credit elect overpayment
                                        As we have held, we have jurisdiction to consider Mr.
                                      Weber’s claim of a credit elect that would satisfy the liability
                                      at issue here, but we hold that his claim of a credit elect
                                      cannot be sustained.
                                           1. The credit elect overpayment claimed on the 2008 return
                                              depends on the credit elect overpayment claimed on the
                                              2007 return.
                                         On his tax return for the year at issue, 2008, Mr. Weber
                                      claimed a credit that included $41,169 of an asserted over-
                                      payment of 2007 income tax. If such a credit elect overpay-
                                      ment is applied to his 2008 liability as he requested, then the
                                      2008 liability is satisfied and no levy should occur. We note
                                      that a credit elect overpayment is not a claimed overpayment
                                      of an unrelated liability that the taxpayer asks us to adju-
                                      dicate and then to offset against the different liability that
                                      is the subject of the IRS’s collection efforts. Rather, the credit
                                      elect overpayment is a credit that a taxpayer is explicitly
                                      permitted by regulation to report on the income tax return
                                      for the year at issue. In such an instance—where a credit
                                      elect overpayment is claimed on the return for the year at
                                      issue—we have held that ‘‘the validity of the underlying tax
                                      liability, i.e., the amount unpaid after application of credits
                                      to which * * * [the taxpayer] is entitled, is properly at issue’’
                                      in a CDP case. See Landry v. Commissioner, 116 T.C. 60, 62
                                      (2001). We therefore have jurisdiction to consider Mr.
                                      Weber’s contention that he is entitled to apply a credit elect
                                      overpayment from 2007 to the 2008 liability at issue here.
                                         However, that 2007 overpayment depended in turn on the
                                      validity of a credit elect overpayment claimed on the 2007
                                      return. Mr. Weber’s tax return for 2006 had reported an
                                      overpayment and had requested it be applied as a credit
                                      against his 2007 estimated income tax. If the credit elect
                                      overpayment from 2006 claimed on the 2007 return is not
                                      allowed, then there is no overpayment from 2007 to pass on
                                      to 2008, and the 2008 liability remains unsatisfied. There-
                                      fore, to address Mr. Weber’s contention, we must decide the




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                                      merits of the credit elect overpayment from 2006 as reported
                                      on the 2007 return. 10
                                           2. Mr. Weber was not entitled to a credit elect overpayment
                                              on his 2007 return.
                                        Mr. Weber claims (and the Commissioner does not dispute)
                                      that he overpaid his 2006 income tax by $46,717. It is clear
                                      that on his 2006 return, he elected that this overpayment be
                                      applied to his 2007 estimated income tax. However, at the
                                      time Mr. Weber filed that return in 2007, a section 6672 pen-
                                      alty had been assessed against him and at that time had not
                                      been paid. (The payments that he now contends satisfied
                                      that liability were not made until months later.)
                                        Thus, when the IRS received Mr. Weber’s 2006 income tax
                                      return in 2007, it was confronted with the question whether
                                      to treat the 2006 overpayment as an estimated payment
                                      toward Mr. Weber’s future 2007 income tax liability (which
                                      would ultimately be due in April 2008) or instead to credit
                                      the overpayment against his already due and owing liability
                                      for a section 6672 penalty. As we have shown (in part I.C.
                                      above), section 6402(a) gives the IRS broad discretion in the
                                      crediting of overpayments, and a taxpayer’s election under 26
                                      C.F.R. section 301.6402–3(a)(5) to apply an overpayment to
                                      estimated tax for the succeeding year is not binding on the
                                      IRS. See sec. 301.6402–3(a)(6). We see no basis for criticizing
                                      the IRS’s exercise of its discretion to apply the overpayment
                                      to the due-and-owing section 6672 penalty rather than the
                                      future and only potential 2007 income tax liability. Con-
                                      sequently, we must say that the 2006 overpayment was prop-
                                      erly applied to the penalty liability.
                                        The IRS did not disallow Mr. Weber the overpayment he
                                      claimed for 2006. Rather, it allowed the claim but applied
                                      that overpayment to his outstanding liability for a section
                                      6672 penalty. After the IRS thus allowed Mr. Weber the
                                      credit against the penalty liability, the 2006 overpayment
                                      was no longer (in the words of Freije v. Commissioner, 125
                                         10 As we stated in Freije v. Commissioner, 125 T.C. 14, 27 (2005), ‘‘our jurisdiction under sec-

                                      tion 6330(d)(1)(A) encompasses consideration of facts and issues in nondetermination years
                                      where the facts and issues are relevant in evaluating a claim that an unpaid tax has been paid.’’
                                      If there are scenarios in which a cascading series of multiple credit elect overpayments might
                                      implicate years or issues so remote from the year at issue that they should not fall within a
                                      CDP case, this case does not present such a scenario, and we do not here test the outer limits
                                      of our CDP jurisdiction.




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                                      T.C. 14, 26 (2005)) an ‘‘available credit’’. It had been used up.
                                      The Government’s defense to any subsequent claim for
                                      refund of a 2006 income tax overpayment would be accord
                                      and satisfaction; the claim has already been allowed. Under
                                      section 7422(d), ‘‘The credit of an overpayment of any tax
                                      [here, 2006 income tax] in satisfaction of any tax liability
                                      [here, the section 6672 penalty] shall, for the purpose of any
                                      suit for refund of such tax liability so satisfied, be deemed to
                                      be a payment in respect of such tax liability [i.e., of section
                                      6672 penalty] at the time such credit is allowed.’’ (Emphasis
                                      added.) 11
                                         As a result, if the IRS holds Mr. Weber’s money wrongly,
                                      it holds it not as an overpaid 2006 income tax but as an over-
                                      paid section 6672 penalty. But there is no regulation that
                                      permits a taxpayer to elect to have an overpayment of a sec-
                                      tion 6672 penalty applied to his income tax liability, and
                                      there is no line on the Federal income tax return form that
                                      permits the reporting of an overpaid section 6672 penalty as
                                      a credit to income tax. A credit elect overpayment can be an
                                      issue in a CDP case (as in Landry), but Mr. Weber has no
                                      valid claim of a credit elect overpayment. After the 2006
                                      income tax overpayment was credited against the section
                                      6672 penalty, the 2006 income tax overpayment was no
                                      longer available for application to 2007 income tax. In the
                                      absence of that credit elect overpayment, Mr. Weber had no
                                      2007 income tax overpayment that could be credited to his
                                      liability for 2008 income tax. The 2008 income tax liability
                                      could thus not be satisfied by cascading credit elect overpay-
                                      ments from 2006 and 2007.
                                           B. Overpayment of section 6672 penalty
                                         The argument remaining to Mr. Weber is that his section
                                      6672 penalty liability has been overpaid and that the over-
                                      payment is ‘‘available’’ to be credited to his 2008 income tax
                                      liability. He cites our Opinion in Freije v. Commissioner, 125
                                      T.C. at 26, in which we stated that—
                                        11 See Greene-Thapedi v. United States, 549 F.3d 530, 532 (7th Cir. 2008) (‘‘Under section

                                      7422(d), when the IRS applies an overpayment as a credit to a liability for a separate tax year,
                                      the taxpayer must file a refund claim for the year in which the IRS applied the credit. See
                                      Kaffenberger v. United States, 314 F.3d 944, 959 (8th Cir. 2003); Republic Petroleum Corp. v.
                                      United States, 613 F.2d 518, 525 n.19 (5th Cir. 1980)’’); see also Recchie v. United States, 1 Cl.
                                      Ct. 726, 727 (1983) (1981 income tax overpayment applied in 1982 to a 1975 tax deficiency held
                                      to be ‘‘1975 tax * * * deemed paid in 1982 for the purpose of the statute of limitations’’).




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                                      a ‘‘relevant issue relating to the unpaid tax or the proposed levy’’ [quoting
                                      section 6330(c)(2)(A)] surely includes a claim, such as the one here, that
                                      the ‘‘unpaid tax’’ has in fact been satisfied by a remittance that the
                                      Commissioner improperly applied elsewhere. * * * Meaningful review of a
                                      claim that a tax sought to be collected by levy has been paid, by means of
                                      a remittance or an available credit, will typically require consideration of
                                      facts and issues in nondetermination years, as those years may constitute
                                      the years to which a remittance was applied or from which a credit origi-
                                      nated. [Emphasis added; fn. ref. omitted.]

                                      Mr. Weber contends that S&G’s trust fund liability has been
                                      satisfied by other payments, leaving ‘‘available’’ the amount
                                      paid by credit from his 2006 income tax that was originally
                                      credited against his corresponding penalty assessment. And
                                      he contends in his refund claim that he did not owe the pen-
                                      alty at all. He asks us to hold that the resulting overpayment
                                      of section 6672 penalty is an ‘‘available credit’’ that could sat-
                                      isfy the 2008 income tax liability at issue here and should
                                      preclude the IRS from proceeding otherwise to collect that
                                      liability. But there are flaws in this contention.
                                           1. Threshold requirements
                                        Before a CDP petitioner could contend that overpayments
                                      (other than credit elect overpayments) ought to be applied to
                                      satisfy the liability at issue, he would have to show that he
                                      had satisfied the threshold requirements for claiming a
                                      refund. See Brady v. Commissioner, 136 T.C. 422, 427–431
                                      (2011) (citing sections 6402, 6514). These threshold require-
                                      ments include (1) the prior full payment of the liability; 12 (2)
                                      the filing of a proper administrative claim, see sec. 7422(a); 13
                                         12 See Flora v. United States, 362 U.S. 145 (1960). Only requirements (2) through (5) as num-

                                      bered here are actually implicated in section 6514, the statute that we looked to in Brady v.
                                      Commissioner, 136 T.C. 422 (2011). The Flora full-payment rule is founded on 28 U.S.C. sec.
                                      1346(a)(1), which according to the Supreme Court’s subtle reading requires full payment as a
                                      prerequisite to court review. Section 6330, by contrast, necessarily allows court review where
                                      there is ‘‘unpaid tax’’. If overpayment jurisdiction were read into section 6330, then a Flora-like
                                      full payment rule limiting that jurisdiction would be difficult to base on the statute. However,
                                      the full-payment rule would in any event be satisfied in this case. The Supreme Court observed
                                      that ‘‘excise tax deficiencies may be divisible into a tax on each transaction or event, and there-
                                      fore present an entirely different problem with respect to the full-payment rule’’, id. at 171 n.37;
                                      and the courts have thereafter held that the section 6672 penalty is divisible, so that a taxpayer
                                      may litigate the penalty after having paid an amount corresponding to the tax withheld from
                                      a single employee, see, e.g., Davis v. United States, 961 F.2d 867, 870 n.2 (9th Cir. 1992); Bland
                                      v. Commissioner, T.C. Memo. 2012–84, slip op. at 22 n.13. There is no question that Mr. Weber’s
                                      payment of penalty exceeded the trust fund amount attributable to one employee.
                                         13 The requirement of section 7422(a) that a claim be filed can give rise to complicated dis-

                                      putes about the adequacy and validity of an ‘‘informal claim’’, see United States v. Kales, 314
                                                                                                     Continued




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                                      (3) the timely filing of that claim, see sec. 6511; (4) the dis-
                                      allowance of the claim (or the passage of six months), see sec.
                                      6532(a)(1); and (5) the timely filing of the refund suit, see id.
                                      The IRS disputes Mr. Weber’s fulfillment of only one of these
                                      requirements—i.e., the timeliness of his August 2009 refund
                                      claim. However, we find that, for purposes of the Commis-
                                      sioner’s motion, the claim was timely.
                                         Under section 6511(a), the period of limitations applicable
                                      in the case of claims for refund of the section 6672 penalty
                                      is two years from the date of payment. 14 In this case, the
                                      allegedly overpaid penalty must have been paid no earlier
                                      than two years before Mr. Weber filed his refund claim in
                                      August 2009. When an overpayment of one liability arises
                                      from the application of an overpayment from another
                                      liability, the timing rules of section 6513 for the effective
                                      date of payments do not apply; rather, section 7422(d)
                                      applies. Favret v. United States, 92 A.F.T.R.2d (RIA) 2003–
                                      7249, 2004–1 U.S. Tax Cas. (CCH) para. 50,142 (E.D. La.
                                      2003). Section 7422(d) provides:
                                      The credit of an overpayment of any tax in satisfaction of any tax liability
                                      shall, for the purpose of any suit for refund of such tax liability so satis-
                                      fied, be deemed to be a payment in respect of such tax liability at the time
                                      such credit is allowed. [Emphasis added.]

                                      Thus, the question before us is: At what time was Mr.
                                      Weber’s overpayment of his 2006 income tax liability
                                      ‘‘allowed’’ as a credit against his section 6672 penalty? The
                                      IRS’s position is that the credit was allowed on its effective
                                      date in July 2007 (requiring a refund claim no later than
                                      U.S. 186 (1941), and about whether the complaint that the taxpayer files in court is at substan-
                                      tial variance with his administrative refund claim, see Hertz Corp. v. United States, 364 U.S.
                                      122, 125–126 (1960)—disputes that may not often arise in the Tax Court’s deficiency suits, but
                                      that could indeed arise in CDP cases if we had the expanded jurisdiction that Mr. Weber pro-
                                      poses.
                                         14 See Kuznitsky v. United States, 17 F.3d 1029, 1032–1033 (7th Cir. 1994) (and cases cited

                                      thereat); Pham v. United States, 42 Fed. Cl. 886, 889 (1999). Although Mr. Weber’s 2006 income
                                      tax overpayment was credited against the penalty liability (and was thus paid) in 2007, his
                                      overpayment of the section 6672 penalty arguably did not arise until the third party made the
                                      $233,000 payment in June 2008. If that third-party payment were the event that commenced
                                      the running of the two-year period of section 6511(a) for Mr. Weber, then a claim filed as late
                                      as June 2010 would have been timely. However, section 6511(a) looks to the time the tax was
                                      ‘‘paid’’ (not overpaid). Likewise, the corresponding look-back provision of section 6511(b)(2)(B) al-
                                      lows a refund of ‘‘the portion of the tax paid during the 2 years immediately preceding the filing
                                      of the claim.’’ Given the way section 6511 operates, it is thus incumbent on the payor of section
                                      6672 penalty to file timely protective claims for refund of his payments of penalty even if they
                                      are not (yet) ‘‘overpayments’’.




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                                      July 2009), while Mr. Weber asserts that the credit could not
                                      have been allowed until he filed his 2006 income tax return
                                      reporting such overpayment in October 2007 (requiring a
                                      refund claim no later than October 2009)—or more likely
                                      when the IRS processed the return in November 2007. Given
                                      that Mr. Weber filed his claim for refund on August 14, 2009,
                                      the determination of when the credit was ‘‘allowed’’ is deter-
                                      minative as to whether his refund claim was timely.
                                         Section 6407 provides that a refund or credit is deemed
                                      allowed on the date ‘‘the Secretary first authorizes the sched-
                                      uling of an overassessment,’’ and 26 C.F.R. section 301.6407–
                                      1, Proced. & Admin. Regs., elaborates that the relevant date
                                      is the date an enumerated IRS official certifies the allowance
                                      of the overassessment. In the instant case, it would seem all
                                      but impossible (and the Commissioner has not shown) that
                                      the IRS actually certified Mr. Weber’s 2006 overpayment
                                      before his filing of his 2006 return in October 2007. The IRS
                                      did have in hand Mr. Weber’s 2006 withheld tax in July
                                      2007; but at that time he had not yet filed his 2006 return,
                                      so the IRS could not yet know his 2006 income tax liability
                                      and could not yet know how much of that 2006 withholding
                                      would be available to credit to another liability.
                                         The IRS’s only proof of a supposed July 2007 crediting is its
                                      transcripts that show an effective date of the crediting—i.e.,
                                      the same date that it recorded the penalty assessments. The
                                      allowance of this earlier effective date (which would affect, in
                                      Mr. Weber’s favor, the running of interest on his penalty
                                      assessment) is not at all inconsistent with, and does not dis-
                                      prove, a later actual date of allowing and posting the
                                      credit. 15 Therefore, making the inferences favorable to Mr.
                                      Weber, the IRS did not ‘‘allow’’ the credit from his 2006 over-
                                      payment against his section 6672 penalty until sometime
                                      after it received his 2006 return in October 2007. Therefore,
                                      Mr. Weber’s claim for refund submitted less than two years
                                      later in August 2009 was timely.
                                         In previous cases in which CDP petitioners have asked us
                                      to determine an unrelated overpayment that would satisfy
                                        15 The IRS account transcript for Mr. Weber’s penalty for the quarter ended September 30,

                                      2005, gives for the penalty assessment an entry that includes both a ‘‘Date’’ of ‘‘07–17–2007’’
                                      (evidently an effective date) and a ‘‘Cycle’’ of ‘‘20073108’’ (evidently a ‘‘posting’’ date, see
                                      Dingman v. Commissioner, T.C. Memo. 2011–116, slip op. at 17 n.15, in which the fifth and
                                      sixth digits are the ‘‘posting cycle’’ within the year, see IRM pts. 5.2.4–19 (Oct. 1, 2009),
                                      3.17.79.2.1(9) (Jan. 1, 2012)). The transcript gives no posting date for the credit entry.




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                                      the liability that the IRS proposed to collect, the petitioners
                                      had failed to meet the threshold requirements for refund
                                      litigation, and we dismissed the cases on those grounds. See
                                      Brady v. Commissioner, 136 T.C. at 427 (‘‘Assuming that it
                                      would be appropriate in this case to consider the merits of
                                      petitioner’s claims of overpayments in prior years’’); Conn v.
                                      Commissioner, T.C. Memo. 2011–166, slip op. at 14–15 (‘‘if
                                      we assume our jurisdiction in cases governed by section 6330
                                      may permit us to consider overpayment claims arising from
                                      nondetermination years’’). However, since Mr. Weber has ful-
                                      filled those requirements, we must now address the premise
                                      ‘‘assum[ed]’’ in those cases and answer the question whether,
                                      in a CDP case, we have jurisdiction to determine an overpay-
                                      ment of an unrelated liability. We hold that we do not have
                                      that jurisdiction.
                                           2. Lack of refund jurisdiction in CDP proceedings
                                         Mr. Weber’s contention proposes that we turn from the
                                      subject of his 2008 income tax liability—the liability whose
                                      collection is at issue—and address the distinct question of his
                                      section 6672 penalty liability. We do have jurisdiction to
                                      review the collection of a section 6672 penalty liability, see,
                                      e.g., Mason v. Commissioner, 132 T.C. 301 (2009), when the
                                      IRS has issued a ‘‘determination’’ to proceed with collection of
                                      such a liability; but the IRS does not propose collection of any
                                      such liability for Mr. Weber. Rather, Mr. Weber asks us to
                                      find that he has overpaid that penalty liability, and then to
                                      order the IRS to apply the overpayment to his 2008 income
                                      tax (or, more precisely, asks us to hold that it would be an
                                      abuse of discretion for the IRS to do anything other than to
                                      apply it to his 2008 income tax liability), and to overrule
                                      Appeals’s determination to proceed with a levy. Mr. Weber’s
                                      argument would thus require us to adjudicate his right to a
                                      section 6672 penalty refund.
                                           a. Refund jurisdiction generally
                                         However, ‘‘Congress has indeed established a detailed
                                      refund scheme that subjects complaining taxpayers to var-
                                      ious requirements before they can bring suit.’’ United States
                                      v. Clintwood Elkhorn Min. Co., 553 U.S. 1, 11 (2008). In post-
                                      payment circumstances, ‘‘[a] taxpayer seeking a refund of




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                                      taxes erroneously or unlawfully assessed or collected may
                                      bring an action against the Government either in United
                                      States district court [see 28 U.S.C. sec. 1346(a)(1) (2006)] or
                                      in the United States Court of Federal Claims [see id. secs.
                                      1346(a)(1), 1491(a)(1)].’’ Clintwood Elkhorn, 553 U.S. at 4.
                                         Under the tax litigation regime Congress created, the Tax
                                      Court’s principal jurisdiction (pursuant to section 6213(a)) is
                                      over pre-payment ‘‘deficiency cases’’. In a deficiency case
                                      within this Court’s jurisdiction, the Tax Court has also been
                                      explicitly granted jurisdiction to determine ‘‘an overpayment
                                      of income tax for the same taxable year, of gift tax for the
                                      same calendar year or calendar quarter, [or] of estate tax in
                                      respect of the taxable estate of the same decedent’’. Sec.
                                      6512(b)(1) (emphasis added). That is, the Tax Court’s over-
                                      payment jurisdiction in deficiency cases is explicitly limited
                                      to determining an overpayment of the same liability already
                                      at issue. In a deficiency case involving income tax for 2008
                                      (for example), we could determine an overpayment of 2008
                                      income tax but could not determine an overpayment of a sec-
                                      tion 6672 penalty.
                                         Where the Tax Court does have jurisdiction to determine
                                      an overpayment in a deficiency case, the Court nonetheless
                                      may not order a refund of that overpayment until 120 days
                                      after its decision has become final. Sec. 6512(b)(2). And even
                                      where the Tax Court does have jurisdiction to determine an
                                      overpayment and to order a refund of that overpayment, sec-
                                      tion 6512(b)(4) provides, ‘‘The Tax Court shall have no juris-
                                      diction under this subsection to restrain or review any credit
                                      or reduction made by the Secretary under section 6402.’’ Con-
                                      sequently, in that 120-day period the IRS retains its discre-
                                      tion under section 6402 to credit or refund the overpayment;
                                      and if the IRS allows the determined overpayment by cred-
                                      iting it to another liability (rather than refunding it or
                                      applying it as the taxpayer might have preferred), the Tax
                                      Court has no jurisdiction to upset the IRS’s action.
                                         The foregoing description is intended to show how explicit
                                      Congress has been in establishing a remedy for litigating tax
                                      refund claims in forums other than the Tax Court and in
                                      establishing a circumscribed exception for litigating such
                                      claims in a Tax Court deficiency case.




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                                           b. CDP proceedings contrasted
                                         The instant case is obviously not a refund suit brought in
                                      District Court nor in the Court of Federal Claims; and it is
                                      not a deficiency case to which section 6512(b) might apply (to
                                      limit overpayment jurisdiction in deficiency cases); rather, it
                                      is a collection review case brought pursuant to section 6330.
                                      It is true, as we noted above, that in determining whether
                                      tax is ‘‘unpaid’’, we sometimes do have the responsibility, as
                                      in Freije, to determine the presence of ‘‘available credits’’. 16
                                      Freije involved contentions that the IRS had misapplied pay-
                                      ments that, if applied correctly, would have satisfied the
                                      determination-year liability that the IRS proposed to collect;
                                      and Mr. Weber’s analogous contention (that the IRS mis-
                                      applied his 2006 credit elect) has been dealt with above. Our
                                      reasoning in Freije might also warrant bringing into consid-
                                      eration in a CDP case other ‘‘available credits’’—such as a
                                      credit carryover prescribed by statute that would affect the
                                      tax liability for the determination year, 17 or an overpayment
                                      that had been determined in a refund or deficiency suit but
                                      that had not yet been refunded or credited, or an overpay-
                                      ment that had been determined by the IRS (e.g., in response
                                      to a claim for refund) but that had not yet been refunded or
                                      credited.
                                         Mr. Weber, however, asks us not to consider a credit that
                                      is already ‘‘available’’ (because it has already been deter-
                                      mined) but rather to make ‘‘available’’ a credit that is cur-
                                      rently not available because the IRS has disallowed it. He
                                      contends that there is a positive balance in his penalty
                                      account and that we could decide this case in his favor as an
                                        16 See, e.g., Wright v. Commissioner, 471 Fed. Appx. 21, 23 (2d Cir. 2012) (‘‘the Tax Court

                                      erred in declining to consider Wright’s final argument, which was that he did not receive a 1994
                                      refund for $960. On remand, the Tax Court should resolve this last issue and determine whether
                                      the 1994 refund—if such refund was due to Wright—was sent to him’’). In Wright, a CDP case
                                      involving collection of 1987 and 1989 income tax, the taxpayer pointed to an IRS transcript for
                                      his 1994 year that reflected a $960 credit and the allowance of a $960 refund, asserted that
                                      he had never received the refund, and contended that it should therefore be applied to satisfy
                                      his determination year liability. See taxpayer-appellant’s reply brief filed with the Court of Ap-
                                      peals for the Second Circuit on June 10, 2011, at 22 n.6 (citing Exhibit A to the Commissioner’s
                                      motion for summary judgment filed June 17, 2005, in Wright v. Commissioner, docket No. 6240–
                                      01L). That is, Wright involved an alleged existing credit and not a taxpayer’s request that the
                                      Tax Court adjudicate a refund claim.
                                        17 For example, section 39 allows the carryback and carryforward of business credits listed in

                                      section 38(b); and in 2008 such carrybacks and carryforwards were claimed on lines 6 and 7
                                      of Form 3800, ‘‘General Business Credit’’, and thus could contribute to the total credit claimed
                                      on line 53 of Form 1040, ‘‘U.S. Individual Income Tax Return’’.




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                                      almost arithmetical matter—but that is not the case:
                                      Whether the penalty has really been overcollected is a poten-
                                      tially complex question that may depend not only on the bal-
                                      ance in his account (which in fact is still negative) but also
                                      on the pendency of refund claims by other responsible per-
                                      sons and on liabilities for interest and additions to tax. See
                                      supra pp. 358–359. Mr. Weber thus asks us not to allocate
                                      an uncontroversial credit but rather to adjudicate a disputed
                                      refund claim that is unrelated to the liability the IRS pro-
                                      poses to collect, and this stretches Freije past the breaking
                                      point.
                                         Unlike section 6512(b) (which gives us overpayment juris-
                                      diction in a deficiency case), section 6330—the statute confer-
                                      ring our CDP jurisdiction—has no provisions conferring and
                                      delimiting any overpayment jurisdiction. Mr. Weber’s posi-
                                      tion would require us to conclude that, in enacting the CDP
                                      regime in section 6330, Congress intended to implicitly grant
                                      us jurisdiction to adjudicate refund claims for unrelated
                                      liabilities. This would contradict our prior holding that ‘‘Con-
                                      gress did not intend section 6330 to provide for the allowance
                                      of tax refunds and credits’’. Greene-Thapedi v. Commissioner,
                                      126 T.C. 1, 12 (2006).
                                         Mr. Weber’s position would also require us to conclude
                                      that, in conferring this supposed CDP overpayment jurisdic-
                                      tion, Congress determined not to circumscribe that
                                      jurisdiction (as it circumscribed overpayment jurisdiction in
                                      deficiency cases). That is, this supposed grant of CDP over-
                                      payment jurisdiction would apparently include no restriction
                                      as in section 6512(b)(4) but rather would include the power,
                                      in effect, not only to determine an overpayment but also—
                                      critical to the relief Mr. Weber seeks—to direct how it shall
                                      be credited. This supposed grant of CDP overpayment juris-
                                      diction would have no apparent full-payment rule, see supra
                                      note 12, but would in that respect evidently be broader than
                                      the refund jurisdiction of the District Courts. Most tax litiga-
                                      tion is restricted to a specific taxable period at issue, and in
                                      a CDP hearing Appeals ‘‘review[s] only a particular collection
                                      episode—a given notice of lien or notice of proposed levy.’’
                                      Tucker v. Commissioner, 135 T.C. 114, 164 (2010), aff ’d, 676
                                      F.3d 1129 (D.C. Cir. 2012). By contrast, a CDP hearing with
                                      the expanded reach that Mr. Weber proposes would then not
                                      be confined to consideration of ‘‘the taxable period to which




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                                      the unpaid tax specified [in the notice of proposed levy] * * *
                                      relates’’, sec. 6330(b)(2); rather, a CDP hearing could become
                                      an almost plenary review of the taxpayer’s situation vis-a-vis
                                      the IRS for all liabilities and for all periods; and a delinquent
                                      taxpayer would have the power to halt IRS collection of any
                                      given tax simply by filing a refund claim for any other tax,
                                      however unrelated it might be to the tax that the IRS pro-
                                      posed to collect. There is nothing in the text or legislative
                                      history of section 6330 to suggest that, in establishing the
                                      CDP regime, Congress intended to so constrain the collection
                                      of revenue.
                                         In addition, there would be several other practical prob-
                                      lems and conceptual anomalies generated by the adjudication
                                      of such a claim in this CDP proceeding. First, Mr. Weber
                                      waived in writing his right to a CDP hearing before IRS
                                      Appeals concerning his penalty liability. That would have
                                      been the natural occasion to dispute his liability for this pen-
                                      alty; and if this were a CDP hearing concerning the penalty,
                                      that ‘‘prior opportunity’’ would deprive both Appeals and this
                                      Court of jurisdiction to entertain his challenge to underlying
                                      liability. See sec. 6330(c)(2)(B). However, in this collection
                                      review case concerning his 2008 income tax, his challenge to
                                      liability for the section 6672 penalty is raised as an issue con-
                                      cerning whether the 2008 income tax should be deemed
                                      ‘‘unpaid’’, so the congressional intent to offer only one oppor-
                                      tunity would be side-stepped, if Mr. Weber’s view prevailed.
                                         Second, if collection of Mr. Weber’s 2008 income tax must
                                      await litigation of his claim of overpaid penalty, then that
                                      wait may be substantial. ‘‘Responsible person’’ cases, like
                                      other cases involving substantive tax disputes, can be factu-
                                      ally and legally complex and can take years to resolve. To
                                      properly adjudicate Mr. Weber’s claim would require a deter-
                                      mination of whether he was, in fact, a ‘‘responsible person’’
                                      who willfully failed to pay over S&G’s trust fund taxes, so
                                      that the section 6672 penalty was properly assessed; and if
                                      so, whether the trust fund taxes of S&G (along with any
                                      interest and penalties that may have accrued against the
                                      entity and all ‘‘responsible persons’’) have by now been over-
                                      paid when taking into consideration payments by him, by
                                      other ‘‘responsible persons’’, and/or by S&G. Then, if such an
                                      overpayment does exist, a determination must be made
                                      whether there are other possible claimants to that overpay-




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                                      ment and to what extent those other claimants have claims
                                      currently pending or have time left to file such a claim.
                                      Thereafter, a determination of each respective claimant’s
                                      share in such overpayment would also be necessary. Only
                                      then would Mr. Weber’s share of any such overpayment be
                                      known and possibly ‘‘available’’ to apply to his 2008 income
                                      tax liability.
                                         Third, if a taxpayer may assert an overpayment of an
                                      unrelated liability in a CDP proceeding, Mr. Weber does not
                                      say whether the IRS may raise in turn (as it could in a refund
                                      suit) an issue not stated in the refund claim as an ‘‘offset’’
                                      to reduce the amount of the overpayment, see Lewis v.
                                      Reynolds, 284 U.S. 281 (1932), or a counterclaim for an unre-
                                      lated liability, see 28 U.S.C. secs. 1346(c), 1503, 2508. Section
                                      6330 is silent on the point—surprisingly silent, if Congress
                                      meant to confer jurisdiction to entertain overpayment claims.
                                         Fourth, where the deadline for filing a refund suit, see sec.
                                      6532(a), was looming, and where the taxpayer has been cau-
                                      tious and (like Mr. Weber) has filed not only a CDP case in
                                      this Court but also an actual refund suit in one of the courts
                                      with refund jurisdiction, the courts are presented with the
                                      vexing question of which court should proceed to adjudicate
                                      the claim, and which should defer. (Section 7422(e), which
                                      applies only when a deficiency case is pending in the Tax
                                      Court, and not a CDP case, would not answer the question.)
                                      It is true that Mr. Weber has disclaimed any intention to dis-
                                      pute in this Court his underlying liability for the penalty
                                      (and has said he argues here only an allegedly excessive
                                      collection of the penalty); but this tactical decision on his
                                      part does not solve the problems the courts would face in
                                      other cases if his view were adopted but his tactic was not
                                      imitated. Moreover, his approach involves inevitable difficul-
                                      ties: He proposes to litigate his excessive collection argument
                                      here and his non-liability argument in District Court; but
                                      these are two aspects of a single cause of action that he
                                      thereby purports to split. When one court reached an out-
                                      come, whether favorable or unfavorable, its judgment might
                                      be res judicata for his entire claim and might cut off the
                                      aspect still supposedly pending in the other court.
                                         An overpayment of a section 6672 penalty (or any other
                                      liability) that has been determined by the IRS or a court but
                                      has not been either refunded or applied to another liability




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                                      may be an ‘‘available credit’’ that, under Freije, could be
                                      taken into account in a CDP hearing to determine whether
                                      the tax at issue remains ‘‘unpaid’’ and whether the IRS can
                                      proceed with collection. But a mere claim of an overpayment
                                      is not an ‘‘available credit’’ but is instead a claim for a credit;
                                      and such a claim need not be resolved before the IRS can pro-
                                      ceed with collection of the liability at issue. Mr. Weber’s sec-
                                      tion 6672 penalty liability is distinct from and unrelated to
                                      his 2008 income tax liability. His remedy regarding his sec-
                                      tion 6672 penalty refund claim is to be found in the District
                                      Court refund suit he has already commenced.

                                                                                Conclusion
                                        The IRS’s Office of Appeals did not abuse its discretion in
                                      determining to proceed with a levy to collect Mr. Weber’s
                                      unpaid 2008 income tax, notwithstanding his contention that
                                      his liability for a section 6672 penalty was overpaid.
                                                                     An appropriate order and decision will be
                                                                   entered.

                                                                               f




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