T.C. Memo. 1997-234
UNITED STATES TAX COURT
SUSAN L. LESINSKI, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 22086-95. Filed May 21, 1997.
Susan L. Lesinski, pro se.
Tyron J. Montague and Peter K. Reilly, for respondent.
MEMORANDUM OPINION
TANNENWALD, Judge: This matter is before the Court on
respondent's motion for leave to file an amendment to answer in
which she seeks to recover an asserted erroneous refund.
Petitioner and her husband obtained extensions of time to
file their joint Federal income tax return for the taxable year
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1991 until October 15, 1992. Petitioner and her husband made
payments regarding their 1991 tax liability as follows:
Type Amount Date
Estimated tax payment $2,000 June 18, 1991
Estimated tax payment 7,000 Sept. 18, 1991
Estimated tax payment 17,000 Jan. 18, 1992
Credit from 1990 return 15,874 April 15, 1992
Income tax withheld 2,381 April 15, 1992
Payment with extension 13,500 April 15, 1992
request
Total $57,755
On July 26, 1995, respondent mailed petitioner a notice of
deficiency for the taxable year 1991 (the notice) determining a
deficiency of $80,596 in tax plus additions to tax of $20,149
under section 6651(a) and $4,635 under section 6654.1 As of that
date, petitioner had not filed a Federal income tax return, or a
claim for a refund, for that year. Respondent did not issue a
notice of deficiency to petitioner's husband.
On October 15, 1995, petitioner and her husband mailed a
joint Federal income tax return for 1991 (the return) to the
Internal Revenue Service (IRS). The return reflected a tax
liability of $47,840, payments totaling $57,755, and an
overpayment of $9,915. On the return, petitioner and her husband
requested that $9,715 of the overpayment be applied to their 1992
1
Unless otherwise indicated, all statutory references are
to the Internal Revenue Code in effect for the year in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
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estimated tax, and the remaining $200 to the estimated tax
penalty. On October 19, 1995, the IRS received the return.
On October 27, 1995, petitioner, at that time a resident of
New York, filed her petition in this case, attaching a copy of
the return. Respondent filed her answer on December 1, 1995. On
April 5, 1996, we issued our notice setting the case for trial at
the trial session beginning September 9, 1996.
In or about April 1996, the IRS, allegedly without the
knowledge of respondent's counsel in this case, issued a refund
to petitioner and her husband for the taxable year 1991 (the
refund) in the amount of $10,043.59 ($9,915.00 plus interest).
At some point, respondent accepted the return as filed, and on
June 26, 1996, sent petitioner a decision document reflecting no
deficiency.2 On August 28, 1996, respondent filed her motion for
leave to file an amendment to answer in order to recover the
refund, alleging that it was erroneous because neither petitioner
nor her husband was eligible for a refund due to the expiration
of the period of limitations contained in sections 6512(b)(3) and
6511(b)(2). In her motion, respondent states that the deficiency
she now seeks "is solely attributable to the erroneous refund"
and that she is no longer seeking any additions to tax.
Petitioner opposes respondent's motion on the grounds that
the matter of the deficiency as stated in the notice was resolved
2
The record contains a copy of the decision document
showing that petitioner signed it on Aug. 7, 1996.
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by respondent’s acceptance of petitioner’s return and that we
lack jurisdiction over the refund because there is no deficiency.
Petitioner also objects due to the motion's lateness and
prejudicial effect. Respondent argues that her claim in respect
of the refund constitutes a determination of deficiency and that,
therefore, this Court has jurisdiction to grant its recovery. We
first address the jurisdictional issue.
Section 6514(a)(1) provides that "A refund of any portion of
an internal revenue tax shall be considered erroneous and a
credit of any such portion shall be considered void * * * If made
after the expiration of the period of limitation for filing claim
therefor, unless within such period claim was filed". Refunds
may be erroneous for other reasons. Secs. 6514, 7405.
Respondent has more than one remedy to recover erroneous refunds;
these include bringing a civil suit under section 7405 or
following the deficiency procedures under sections 6211 through
6215. Beer v. Commissioner, 733 F.2d 435, 436 (6th Cir. 1984),
affg. T.C. Memo. 1982-735; Pesch v. Commissioner, 78 T.C. 100,
117-118 (1982).
The jurisdiction of this Court is limited and may be
exercised only pursuant to specific statutory authorization.
Belloff v. Commissioner, 996 F.2d 607, 611 (2d Cir. 1993), affg.
T.C. Memo. 1991-350; Pen Coal Corp. v. Commissioner, 107 T.C.
249, 254 (1996). That authorization encompasses the
determination of deficiencies pursuant to section 6214(a) and
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overpayments, subject to specific limitations, under section
6512(b). Obviously, the provisions of section 6512(b) are not
applicable because petitioner herein is not claiming any
overpayment. It is respondent who, having accepted the fact that
there was an overpayment and refunded it, now seeks to utilize
the deficiency procedure to recapture that refund. To achieve
her objective, respondent's claim must fall within the scope of
the deficiency procedure.
The term “deficiency” means the amount by which the tax
imposed exceeds the excess of --
(1) the sum of
(A) the amount shown as the tax by the
taxpayer upon his return, if a return was made by
the taxpayer and an amount was shown as the tax by
the taxpayer thereon, plus
(B) the amounts previously assessed (or
collected without assessment) as a deficiency,
over--
(2) the amount of rebates, as defined in
subsection (b)(2), made. [Sec. 6211(a).]
The tax imposed and the tax shown on the return are determined
without regard to payment on account of estimated tax or
withholding credits. Sec. 6211(b)(1). Section 6211(b)(2)
defines “rebate” to mean “so much of an abatement, credit,
refund, or other payment, as was made on the ground that the tax
imposed * * * was less than the excess of the amount specified in
subsection (a)(1) over the rebates previously made." Thus, not
all refunds are rebates. See O’Bryant v. United States, 49 F.3d
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340 (7th Cir. 1995); Groetzinger v. Commissioner, 69 T.C. 309,
312 (1977); sec. 301.6211-1(f), Proced. & Admin. Regs.
Application of the foregoing statutory provisions to an
erroneous refund requires a determination of the basis of the
refund, i.e., is it a rebate within the meaning of section
6211(b)(1)? The answer to this question depends upon what the
refund herein represents. If it is a refund related to the
recalculation of petitioner's tax liability, then it constitutes
a rebate. If it is unrelated to a recalculation of petitioner's
tax liability, then it is properly characterized as a nonrebate
refund. See O'Bryant v. United States, supra, wherein the
foregoing dichotomy is set forth; see also Clark v. United
States, 63 F.3d 83 (1st Cir. 1995); Groetzinger v. Commissioner,
supra at 315.
In the instant case, respondent has accepted the amount
shown as tax on the return as the correct amount of tax imposed.
She is not seeking to increase the amount of that tax. The
amount of the refund check was the amount by which the payments
exceeded the amount of tax shown on the return, plus interest.
The refund was not made on the ground that the tax imposed was
less than the amount of tax shown; therefore, it is not a rebate.
The amount of the deficiency as defined in section 6211 is,
therefore, zero. Thus, respondent cannot seek an increased
deficiency in order to recover the refund.
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Nor can respondent salvage her position because the amount
of the alleged erroneous refund is less than the amount of the
deficiency originally determined in the notice so that only a
different ground for the deficiency is involved. The hard fact
is that the claim for the erroneous refund simply does not fall
within the definition of a deficiency and is therefore not merely
a new ground for a properly claimed deficiency.
We conclude that the subject matter of respondent's
amendment to answer is not within our jurisdiction, and therefore
respondent's motion will be denied. We note, however, that
respondent may pursue recovery of the refund in U.S. District
Court under section 7405. Generally, the period of limitation
for bringing suit is within 2 years of making the erroneous
refund. Secs. 7405(d), 6532(b). Our determination that we lack
jurisdiction with respect to respondent's claim appears to
preclude the application of the principles of res judicata to the
decision of no deficiency in tax for 1991 which will be entered
herein. United States v. Wynshaw, 697 F.2d 85, 87 (2d Cir.
1983); Morse v. United States, 494 F.2d 876, 879 (9th Cir. 1974).
An appropriate order will
be entered denying respondent's
motion, and decision will be
entered for petitioner.