T.C. Memo. 2003-143
UNITED STATES TAX COURT
JOHN J. AND MARY FRANCES MALONEY, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 8175-02L. Filed May 20, 2003.
John J. and Mary Frances Maloney, pro sese.
Jack T. Anagnostis, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
RUWE, Judge: This case arises from a petition filed
pursuant to section 6330(d)(1)(A).1 The issue for decision is
whether respondent’s determinations to proceed with the
1
All section references are to the Internal Revenue Code as
amended.
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collection by levies of petitioners’ unpaid tax for 1984 and Mr.
Maloney’s unpaid tax for 1995 should be sustained.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. Petitioners resided in
Perkiomenville, Pennsylvania, at the time of filing the petition.
On January 22, 1996, respondent issued a notice of
deficiency to petitioners in which he determined a deficiency and
additions to tax for their 1984 taxable year. Petitioners filed
a petition with the Tax Court disputing respondent’s
determinations. In those proceedings, the parties stipulated the
amount of credits for Federal income tax withholdings, including
FICA taxes. The parties reached a basis of settlement in that
case, stipulating the deficiency for 1984. The Tax Court entered
its decision on September 15, 1998, incorporating respondent’s
computation for decision. The computation for decision
incorporated the stipulated deficiency for 1984 and stated that
there were additional withholding credits of $5,306 for 1984. On
February 2, 1999, respondent assessed the deficiency and credited
petitioners for the additional withholding credits for 1984.
Mr. Maloney filed an individual Federal income tax return
for 1995 listing his filing status as married filing separate.
He reported a net profit of $4,828 and $446 in self-employment
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tax with respect to his consulting engineer business. The self-
employment tax reported on the return was erroneously computed,
and respondent increased Mr. Maloney’s self-employment tax
liability to $682. Respondent assessed the increased amount.
Petitioners did not pay the entire amount of their assessed
tax liabilities for 1984 and 1995. Respondent mailed to
petitioners a notice of intent to levy, dated August 6, 2001,
advising them of their right to request a hearing with respect to
their unpaid tax for 1984. He also mailed to Mr. Maloney a
notice of intent to levy, dated August 6, 2001, advising him of
his right to request a hearing with respect to his unpaid tax for
1995. Petitioners timely filed a request for a hearing with
respect to the notice of intent to levy for 1984. Mr. Maloney
timely filed a request for a hearing with respect to the notice
of intent to levy for 1995. A document attached to each of those
requests states:
Please be advised that there are no taxes owed for the
tax year 1984. There were overpayments of FICA TAXES
for the years 1984, 1985, 1986, 1987, 1988, 1989. The
reason for the overpayments is John J. Maloney &
Associates is a sole proprietor and as such cannot be
an employee, the same holds true for * * * Mary F.
Maloney.
The overpayments are based on the following: The
amount of FICA Tax on John J. Maloney as a sole
proprietor is less than as an Employer-Employee. The
amount of FICA tax on Mary F. Maloney is zero since all
the income would be taxed through John J. Maloney.
The following are the amounts of overpayment
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1984 $ 3,203.00
1985 $ 5,169.00
1986 $ 5,597.00
1987 $ 2,270.00
1988 $ 2,270.00
1989 $ 2,270.00
Total FICA Overpayments $20,779.00
Please apply the overpayments to the outstanding 1995
taxes owed less any interest or penalties since the
monies were paid before the tax was due. Please
forward a check in the amount of any overpayments to
John J. Maloney at the above address.
On April 4, 2002, respondent issued a notice of
determination to petitioners with respect to their unpaid tax for
1984, in which he determined:
The taxpayer wrote that there were overpayments of FICA
taxes for the years 1984, 1985, 1986, 1987, 1988 and
1989. These overpayments total $20,779. The reason
for the overpayments is that John J. Maloney &
Associates is a sole proprietor and as such cannot be
an employee. The same holds true for Mary F. Maloney.
The amount of FICA tax on John J. Maloney as a sole
proprietor is less than as an employer-employee. The
amount of FICA tax on May [sic] F. Maloney is zero
since al [sic] the income would be taxed through John J
Maloney.
At the hearing, the taxpayer stated that this issue was
settled by the Tax Court and he owed no tax for 1984.
He also stated that it appeared that the statute for
assessment was gone when the liability was assessed.
He also questioned whether the assessed interest was
correct.
Review of closed Appeals cases indicated that the Tax
Court Case settled by the Tax Court for the tax year
ending December 31, 1984 was for the same amount as the
assessment. The statute for assessment date was
verified. The assessment was timely. The assessed
interest was correct.
The taxpayer stated that there was excess FICA tax
calculated and paid for years not under Appeals
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jurisdiction. He wanted the overpayments transferred
to this year. The taxpayers were sent Publication
3598, The Audit Reconsideration Process, to help them
pursue these adjustments.
Respondent determined that no collection alternatives were
offered and that the levy should proceed for 1984. Also, on
April 4, 2002, respondent issued a notice of determination to Mr.
Maloney with respect to his unpaid tax for 1995. Respondent
determined that Mr. Maloney’s FICA claims were for years other
than 1995, that Mr. Maloney could pursue those claims through the
audit reconsideration process, that no collection alternatives
had been offered, and that the levy should proceed.
Petitioners did not file, within the applicable statutory
period, a claim for refund or credit for FICA taxes that they
claim to have overpaid between 1984 and 1989. Petitioners did
submit to respondent several letters requesting respondent to
recalculate their FICA withholdings for years other than 1984 and
1995 and to apply what petitioners alleged to be excess FICA
withholdings to their outstanding balances for 1984 and 1995.2
2
In a letter to respondent dated Jan. 4, 2000, Mr. Maloney
stated his belief that he did not owe any tax, listed approximate
amounts of FICA taxes that he claimed he had overpaid, and asked
respondent to apply the claimed overpayments to any outstanding
liabilities. This letter did not identify any particular tax
year. In a letter dated Dec. 18, 2000, Mr. Maloney advised
respondent of his position that he did not owe any tax for 1984.
This letter is the same letter which is attached to the Forms
12153, Request for a Collection Due Process Hearing, for 1984 and
1995. In a letter dated Feb. 25, 2002, addressed to respondent,
Mr. Maloney asked respondent to calculate excess FICA
(continued...)
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OPINION
This case involves determinations under section 6330 to
proceed with proposed levies to collect petitioners’ unpaid tax
for 1984 and Mr. Maloney’s unpaid tax for 1995. A taxpayer is
entitled to notice before levy and notice of the right to a fair
hearing before an impartial officer of the Internal Revenue
Service (IRS) Office of Appeals. Secs. 6330(a) and (b) and
6331(d). If the taxpayer requests a hearing, he may raise in
that hearing any relevant issue relating to the unpaid tax or the
proposed levy, including appropriate spousal defenses, challenges
to the appropriateness of the collection action, and offers of
collection alternatives. Sec. 6330(c)(2).
Petitioners’ only argument is that they overpaid their FICA
taxes in 1984 through 1990, and those overpayments should be
applied to their outstanding tax liabilities for 1984 and 1995.
Respondent argues that petitioners cannot seek redetermination of
their 1984 tax liability, that they did not timely request credit
for any overpaid FICA taxes for 1984 through 1990, and that he
2
(...continued)
withholdings for 1985 through 1990 and to apply the excess to his
outstanding liability for 1984. Also, in a letter dated Feb. 25,
2002, addressed to respondent, Mr. Maloney asked respondent to
calculate excess FICA withholdings for 1985 through 1990, and to
apply the excess to his outstanding liability for 1995. On Mar.
16, 2002, petitioners requested audit reconsideration for 1984,
and Mr. Maloney requested audit reconsideration for 1995,
regarding their claimed excess FICA payments.
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did not abuse his discretion in denying petitioners’ request to
apply FICA credits against their unpaid tax liabilities.
The parties stipulated a certified transcript of account for
petitioners’ 1984 taxable year. The certified transcript of
account shows that on February 2, 1999, respondent assessed the
stipulated deficiency and gave petitioners a withholding credit
of $5,306. Petitioners claim that the overpayment of FICA tax in
1984 was actually $6,740.40. However, in the prior Tax Court
proceeding, petitioners and respondent stipulated the amount of
credits for increased Federal income tax withholdings, including
FICA taxes. Petitioners did not present any evidence that their
excess withholdings for 1984 exceeded those amounts.
Petitioners also claimed FICA overpayments for 1985 through
1989 in their requests for a section 6330 hearing and claimed a
FICA overpayment for 1990 in their posttrial memorandum. None of
those years were before the IRS Office of Appeals. Further,
petitioners did not file, within the applicable statutory period,
a claim for refund or credit for FICA taxes that they claim to
have overpaid between 1984 and 1989.3 Petitioners contend,
3
Under sec. 6413(b), if certain other conditions are met, an
overpayment of employment taxes, including an overpayment of FICA
taxes, “shall be refunded in such manner and at such times
(subject to the statute of limitations properly applicable
thereto) as the Secretary may by regulations prescribe.” Sec.
6511(a) provides in part:
SEC. 6511(a). Period of Limitation on Filing
(continued...)
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however, that the FICA withholdings for 1984 through 1990 were
“erroneous deposits” of FICA tax for 1984 through 1990 and that
those deposits represent overpayments that can be used to correct
a deficiency or be refunded at any time. Petitioners suggest
that the statute of limitations applicable to claims for a credit
or a refund of tax applies only to payments of tax and not
deposits.4 Even if we were to assume that petitioners are
correct and deposits are not subject to a statute of limitations,
they presented no evidence that they made deposits or that any
FICA taxes were assessed after the applicable period of
limitations had expired.
3
(...continued)
Claim.--Claim for credit or refund of an overpayment of
any tax imposed by this title in respect of which tax
the taxpayer is required to file a return shall be
filed by the taxpayer within 3 years from the time the
return was filed or 2 years from the time the tax was
paid, whichever of such periods expires the later, or
if no return was filed by the taxpayer, within 2 years
from the time the tax was paid. * * *
4
Petitioners cite Cohen v. United States, 995 F.2d 205 (Fed.
Cir. 1993), Ewing v. United States, 914 F.2d 499 (4th Cir. 1990),
and Harden v. United States, 74 F.3d 1237 (5th Cir. 1995)
(unpublished), for their position that a voluntary remittance to
the IRS before an assessment of tax is made is a deposit and not
a payment of tax, and that no statute of limitations applies to
deposits. However, the critical fact in each of those cases was
that the remitted amounts had not been assessed before the period
of limitations for assessment expired, and the Courts of Appeals
in Cohen and Harden treated the remittances as refundable
deposits. Cf. secs. 6401(a) and 6402(a). In the instant case,
there is no evidence or suggestion that the FICA withholdings
were assessed untimely. We cannot agree that those withholdings
are deposits on the basis of the cases that petitioners cite.
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Moreover, even if we were to consider petitioners’ claims of
overpayments for the years 1985 through 1990, we have no basis
upon which to conclude that there were actual overpayments of
FICA taxes for those years.5 The only evidence that petitioners
presented in support of their claimed overpayments was numerous
letters that petitioners sent to respondent asking him to
recalculate their FICA taxes. Those letters do not establish
petitioners’ claimed overpayments.
Petitioners do not raise any collection alternatives or
other relevant issues relating to their unpaid taxes or the
proposed levies. In the petition, Mrs. Maloney requested relief
from joint and several liability. However, she no longer wishes
to pursue her request for relief.6 We hold that the Appeals
officer’s determinations to proceed with collection by levies
were not an abuse of discretion.
Decision will be
entered for respondent.
5
We note that petitioners’ 1986 taxable year was at issue in
the prior Tax Court proceeding discussed above. The parties
stipulated a decrease in FICA tax withheld for Mr. Maloney, an
increase in Federal income tax withheld for Mrs. Maloney’s
employee portion of the FICA tax withheld, and an increase to
Federal income tax withheld for Mr. Maloney for 1986. The Tax
Court decision document incorporating respondent’s computation
states: “That there is no deficiency in income tax due from, nor
overpayment due to, the petitioners for the taxable year 1986”.
6
A copy of a written withdrawal of Mrs. Maloney’s request
dated Dec. 11, 2002, was stipulated.