T.C. Summary Opinion 2003-173
UNITED STATES TAX COURT
STEVEN JAY WOLK, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 11536-02S. Filed December 30, 2003.
Steven Jay Wolk, pro se.
Lorianne D. Masano, for respondent.
POWELL, Special Trial Judge: This case was heard pursuant
to the provisions of section 74631 of the Internal Revenue Code
in effect at the time the petition was filed. The decision to be
entered is not reviewable by any other court, and this opinion
should not be cited as authority.
1
Unless otherwise indicated, subsequent section references
are to the Internal Revenue Code, as amended.
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Respondent issued a Notice Of Determination Concerning
Collection Action(s) Under Section 6320 to petitioner for unpaid
Federal income taxes and related liabilities in the following
amounts:
Year Liability1
1991 $6,070.14
1992 2,360.67
1994 .28
1995 .54
1996 1,557.39
1
Amounts computed through May 31, 2002. The amounts for
the 1991, 1992, and 1996 taxable years comprise unpaid Federal
income taxes, additions to tax for failure to timely file Federal
income tax returns and failure to pay Federal income taxes under
sec. 6651(a)(1) and (2), and interest.
The unpaid liabilities for the 1994 and 1995 taxable years
reflect unpaid interest calculated for 2 days. Respondent levied
upon petitioner’s bank account on Sept. 15, 1998, for payment of
petitioner’s 1994 and 1995 tax liabilities and interest
calculated through that date. Respondent received payment on
Sept. 18, 1998. Petitioner did not raise any issue with respect
to the unpaid interest amounts for 1994 and 1995 in the petition
filed with this Court, and, thus, these years are not before the
Court.
After concessions,2 the issues are (1) whether the period of
limitations on assessment bars respondent from collecting the
1991 and 1992 tax liabilities, (2) whether respondent correctly
issued refund checks to petitioner instead of applying an
overpayment to petitioner’s 1990 estimated tax payments, and (3)
2
Petitioner concedes the amount of Federal income taxes
due and the additions to tax for failure to timely file Federal
income tax returns under sec. 6651(a)(1) for the 1991, 1992, and
1996 taxable years.
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whether petitioner is liable for the additions to tax under
section 6651(a)(2) for failure to timely pay the 1991, 1992, and
1996 tax liabilities. Petitioner resided in Maitland, Florida,
at the time the petition was filed.
Background
1991, 1992, and 1996 Federal Income Tax Returns
Petitioner filed his 1991 return on January 6, 1999.
Respondent assessed petitioner’s reported tax due of $2,216 on
March 15, 1999. The 1991 return bears a date stamp of “February
10, 1993" next to the signature line on the return.
Petitioner filed his 1992 return on September 28, 1998.
Respondent assessed petitioner’s reported tax liability of $817
on November 30, 1998. The 1992 return is not a part of the
record.
As to the 1996 taxable year, petitioner filed Form 4868,
Application for Automatic Extension of Time to File U.S.
Individual Income Tax Return, on April 15, 1997, and remitted a
payment of $1,000 to respondent. Petitioner filed his 1996
return on April 23, 2000, and respondent assessed the reported
tax due of $1,575 on November 6, 2000. Petitioner made no
additional payments for the 1991, 1992, and 1996 taxable years
because he contended that an overpayment from 1987 applied to the
tax liabilities for those years.
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1987 Overpayment
We begin by noting that the facts as presented surrounding
the 1987, 1989, 1990, 1991, and 1992 taxable years are unclear,
and at times, contradictory. By letter dated July 30, 1992,
petitioner sent respondent a duplicate copy of his 1989 return,
which respondent filed that date, and a copy of Form 1045,
Application for Tentative Refund, claiming a net operating loss
(NOL) for that year to be carried back to the 1987 taxable year.
This generated an overpayment of tax in 1987 of $3,341.
Petitioner asserts that these documents were previously filed in
November 1990, and that he never received the refund. Thus, he
filed Form 1040X, Amended U.S. Individual Income Tax Return,
requesting respondent to apply the unpaid refund to his 1990
estimated tax payments.
By the same letter, petitioner also filed his 1990 return
claiming an NOL and requested that respondent carryback that NOL
to 1987. This generated an additional overpayment in 1987 of
$3,300.3 Petitioner also requested that respondent apply this
overpayment as an estimated tax payment for 1990 and for “later
years.” As a result, the 1987 overpayment totaled $6,641, which
petitioner, on his 1990 return, applied as estimated tax
payments.
3
Petitioner claims the overpayment is $3,256. The reason
for the $44 discrepancy is unclear from the record, and we will
apply respondent’s calculations.
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Upon receipt of these documents, respondent applied $1,829
and $817 of the 1987 overpayment to petitioner’s 1989 and 1990
tax liabilities, respectively. The rest, $3,995, remained as an
overpayment from 1987. As a result, respondent issued two refund
checks to petitioner: (1) $780.544 on November 30, 1992, and (2)
$3,3005 on December 7, 1992. Instead of negotiating these refund
checks, petitioner placed them in a file cabinet. When the time
in which the checks could be negotiated expired, respondent
issued a third check to petitioner on April 18, 1994, in the
amount of $4,080.54. Again petitioner failed to timely negotiate
the third refund check. Respondent issued a fourth refund check
on February 5, 1996, in the amount of $5,497.36,6 which
petitioner negotiated.
On June 29, 2001, respondent issued to petitioner a Notice
of Federal Tax Lien Filing and Your Right to a Hearing Under IRC
6320. Petitioner timely filed a Request for a Collection Due
Process Hearing. On June 5, 2002, respondent issued a Notice of
Determination Concerning Collection Action(s) Under Section 6320
to petitioner determining, inter alia, that all legal and
4
Balance remaining from the $3,341 overpayment resulting
from the 1989 NOL, minus the 1989 and 1990 tax liabilities, plus
interest.
5
The overpayment resulting from the 1990 NOL.
6
The $3,995 overpayment plus interest.
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procedural requirements were met and that the collection action
should proceed.
Discussion
Period of Limitations
Petitioner argues that the period of limitations on
assessment expired for the 1991 and 1992 taxable years. We
review respondent’s determinations de novo, as the period of
limitations constitutes a challenge to the underlying tax
liabilities. See MacElvain v. Commissioner, T.C. Memo. 2000-320.
The period of limitations is an affirmative defense which must be
pled and established by the taxpayer. Knollwood Meml. Gardens v.
Commissioner, 46 T.C. 764, 792 (1966); Gatto v. Commissioner, 20
T.C. 830, 832 (1953).7 As pertinent here, an assessment of taxes
must be made “within 3 years after the return was filed (whether
or not such return was filed on or after the date prescribed)”.
Sec. 6501(a).
Respondent assessed petitioner’s 1991 and 1992 taxes on
March 15, 1999, and November 30, 1998, respectively. In order to
prevail, petitioner must establish that he filed his 1991 and
1992 returns before March 15, 1996, and November 30, 1995,
respectively.
7
Sec. 7491(a), concerning the burden of proof, is
inapplicable because petitioner has not satisfied its
requirements.
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Respondent’s “Certificate of Official Record” indicates,
inter alia, that petitioner filed his 1991 return on January 6,
1999. While petitioner provided a copy of his 1991 return
containing a date stamp of February 10, 1993, next to the
signature line, he failed to provide any evidence of mailing or
delivery.8 A date stamp on a return, without any evidence of
mailing or other delivery, does not satisfy petitioner’s burden.
As to the 1992 return, which is not part of the record,
respondent’s “Certificate of Official Record” indicates, inter
alia, that petitioner filed his 1992 return on September 28,
1998. Petitioner testified that he delivered his 1992 and 1993
returns to respondent’s Maitland, Florida, Service Center on
November 9, 1995. Petitioner’s testimony, without credible
supporting documentary evidence, is not enough to satisfy his
burden of proof.9 See Hradesky v. Commissioner, 65 T.C. 87, 89-
90 (1976), affd. 540 F.2d 821 (5th Cir. 1976). Accordingly, we
find that the period of limitations does not bar collection of
petitioner’s 1991 and 1992 tax liabilities.
8
If a taxpayer sends a return “by registered mail or
certified mail, proof that the * * * [return] was properly
registered or that a postmark certified mail sender’s receipt was
properly issued * * * shall constitute prima facie evidence that
the * * * [return] was delivered”. Sec. 301.7502-1(d), Proced. &
Admin. Regs.
9
According to respondent’s “Certificate of Official
Record”, petitioner’s 1993 return was filed on Nov. 16, 1995.
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Application of the 1987 Overpayment
The crux of petitioner’s argument is that if respondent had
applied the 1987 overpayment, generated from the 1989 and 1990
NOL’s, “as an estimated tax payment toward any tax liability due
on my 1990 return and later years” as he requested in the July
30, 1992, letter, the tax liabilities for 1991, 1992, and 1996
would have been paid. We review respondent’s determination de
novo, as the validity of the underlying tax liability, “i.e., the
amount unpaid after application of credits to which petitioner is
entitled,” is properly at issue. See Landry v. Commissioner, 116
T.C. 60, 62 (2001).
Section 6401(b)(1) provides: “If the amount allowable as
credits * * * exceeds the tax imposed * * * the amount of such
excess shall be considered an overpayment.” The Commissioner may
first credit any overpayment against “any outstanding liability
for any tax * * * owed by the taxpayer making the overpayment”.
Sec. 301.6402-3(a)(6)(i), Proced. & Admin. Regs. Any remaining
overpayment may be applied to the estimated tax but only “for the
taxable year immediately succeeding the taxable year for which
such return (or amended return) is filed.” Sec. 301.6402-
3(a)(5), Proced. & Admin. Regs. (emphasis added); see also sec.
6402(b). The Commissioner shall refund any balance of the
overpayment to the taxpayer. Sec. 6402(a).
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For the 1989 taxable year, respondent correctly applied the
1987 overpayment of $3,341, generated from the NOL in 1989, to
petitioner’s 1989 tax liability of $1,829. The balance of the
1987 overpayment could not be applied to petitioner’s 1990
estimated tax payments because petitioner filed his 1989 return
on July 30, 1992,10 long past the 1990 taxable year during which
the estimated tax payments would be due. See sec. 6654(c)(2).
As to the 1990 taxable year, petitioner, in completing his
1990 return, applied the entire 1987 overpayment of $6,64111 as
estimated tax payments in 1990. As previously discussed,
respondent could not apply the portion of the 1987 overpayment
generated from the 1989 NOL to petitioner’s 1990 estimated tax
payments. As to the portion of the 1987 overpayment arising from
the 1990 NOL, respondent correctly applied that portion of the
1987 overpayment to petitioner’s 1990 tax liability of $817. It
is nonsensical, as petitioner requested, to apply the remaining
balance of the 1987 overpayment (generated from the 1990 NOL) to
petitioner’s 1990 estimated tax payments. Any overpayment
10
Petitioner argues that he filed his 1989 return on Nov.
26, 1990. This issue was not addressed at trial, and we will not
decide it. In any event, if we were to accept petitioner’s
filing date, petitioner still filed his 1989 return too late, as
the deadline for the third installment of his 1990 estimated tax
payment had passed. See sec. 6654(c)(2).
11
Petitioner claimed $6,611 as estimated tax payments in
1990. The reason for the $30 discrepancy is unclear from the
record, and we will apply respondent’s calculations.
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generated in 1990 could only be applied to petitioner’s 1991
estimated tax payments, which is the tax year immediately
succeeding the taxable year in which the 1990 return was filed.
See Stephenson v. Commissioner, T.C. Memo. 1995-33; Stephenson v.
Commissioner, T.C. Memo. 1995-32. When respondent could not
apply the remaining 1987 overpayment to petitioner’s 1990
estimated tax liability, respondent correctly issued petitioner
the refund checks. Accordingly, we sustain respondent on this
issue.
Additions to Tax for Failure To Timely Pay
We review respondent’s determination de novo and sustain
respondent on this determination.12 If a Federal income tax is
not timely paid, “there shall be added to the amount shown as tax
on such return 0.5 percent of the amount of such tax” for each
month or fraction thereof, but “not exceeding 25 percent” “unless
it is shown that such failure is due to reasonable cause and not
due to willful neglect”. Sec. 6651(a)(2). Petitioner argues
that the additions to tax should not be imposed because, if
respondent had applied the overpayments to petitioner’s 1990
estimated tax payments as he requested, the Federal income taxes
due would have been paid. But the fact remains that petitioner
did not timely file his returns, and he has conceded his
12
Respondent has satisfied his burden of production under
sec. 7491(c).
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liability for the additions to tax under section 6651(a)(1).
Moreover, as discussed, respondent previously had properly
applied the overpayment to petitioner’s 1989 and 1990 tax
liabilities and refunded the remainder to him.
In closing, we note that petitioner is an attorney and has a
history of not timely filing tax returns and of apparently
ignoring any communications from respondent, including not
opening envelopes with refund checks. This is the crux of the
dispute before the Court. Under these circumstances,
petitioner’s claim that he is an abused taxpayer has a decidedly
hollow ring.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
for respondent.