Krape v. Comm'r

T.C. Memo. 2007-125

UNITED STATES TAX COURT

PERRY C. KRAPE, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 9778-05. Filed May 17, 2007.

Stanley P. Kaplan, for petitioner.

John T. Lortie, for respondent.

MEMORANDUM OPINION

VASQUEZ, Judge: Respondent moves the Court to enter a

decision in accordance with the parties’ stipulation of settled

issues (stipulation) filed on November 20, 2006. Petitioner

objects to the motion, contending that respondent’s computation

of his tax liability erroneously bars the refund or credit of

part of an overpayment of petitioner’s 2000 taxes. We must
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decide whether to grant respondent’s motion. For the reasons

stated below, we shall grant respondent’s motion.

Background

At the time he filed his petition, petitioner resided in Ft.

Lauderdale, Florida.

On April 15, 2001, petitioner filed Form 4868, Application

for Automatic Extension of Time To File U.S. Individual Income

Tax Return (application for extension). With his application for

extension, petitioner estimated that his income tax liability for

2000 was $225,000 and submitted a payment of that amount. On

October 24, 2002, petitioner delinquently filed a Form 1040, U.S.

Individual Income Tax Return (the delinquent return), for the

2000 tax year, showing a tax due of $248,805. On lines 59 and 65

of the delinquent return, petitioner erroneously entered $250,000

of 2000 estimated tax payments. On lines 66 and 67a of the

delinquent return, petitioner entered an overpayment in the

amount of $1,195 and requested a refund of that amount.

On January 30, 2003, pursuant to a request from respondent,

petitioner paid the difference between his actual estimated tax

payments for tax year 2000 of $225,000 and the tax liability he

reported on his return of $248,805 (amounting to $23,805), plus

interest.

On March 22, 2005, respondent mailed petitioner a notice of

deficiency, determining unpaid taxes, additions to tax, and
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penalties for tax years 1999, 2000, and 2001. On May 26, 2005,

petitioner petitioned this Court for a redetermination of the

above-mentioned determination.

On November 20, 2006, the parties filed a stipulation of

settled issues (the stipulation) with the Court. The stipulation

resolved substantially all of the issues in the notice of

deficiency. Particularly, the parties now agree that petitioner

has an overpayment of tax for tax year 2000 in the amount of

$129,656. The parties also agree that petitioner is allowed a

refund of $23,805 of that overpayment, representing the

additional payment petitioner made on January 30, 2003. The

parties agree that the only issue that remains for our

determination is whether petitioner is barred from recovering the

remaining portion of the above-mentioned overpayment (amounting

to $105,851) pursuant to section 6512.1

Discussion

Petitioner objects to respondent’s motion for entry of

decision in accordance with the stipulation. Petitioner argues

that the delinquent return forms the basis of a claim for refund,

and that petitioner is therefore entitled to a refund or credit

of the above-mentioned overpayment of $129,656 pursuant to

section 6512(b)(3)(C). Respondent contends that the delinquent

1
Unless otherwise indicated, all section references are to
the Internal Revenue Code, and all Rule references are to the Tax
Court Rules of Practice and Procedure.
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return does not constitute a claim for refund, and that the Court

is therefore precluded from determining a credit or refund of the

overpayment pursuant to section 6512(b)(3)(B).

If a notice of deficiency is issued to a taxpayer for a

particular taxable period and the taxpayer files a timely

petition in this Court claiming an overpayment for that taxable

period, that overpayment may be refunded or credited only as

provided in section 6512(b). Sec. 6512(b); Jackson v.

Commissioner, T.C. Memo. 2002-44; sec. 301.6512-1(a), Proced. &

Admin. Regs. With respect to a taxpayer’s claim to an

overpayment in a proceeding before this Court, the requirements

of section 6512(b) are jurisdictional. Commissioner v. Lundy,

516 U.S. 235 (1996); Harlan v. Commissioner, 116 T.C. 31, 32 n.2

(2001). Petitioner bears the burden of proving that his claimed

overpayments are refundable under section 6512(b). Rule

142(a)(1).

Section 6512(b)(3) limits the Court’s ability to order a

credit or refund of an overpayment. Under section 6512(b)(3)(B),

if a notice of deficiency is mailed within 3 years from the time

the return was filed, the Court may order a credit or refund of

an overpayment if the overpayment was made within the 3-year

period immediately preceding the date of the mailing of the

notice of deficiency, plus the period of any extension of time

for filing the return. If the notice of deficiency was not
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mailed within 3 years after the filing of the return, the amount

of the credit or refund may not exceed the amount of tax paid

during the 2 years immediately preceding the date the notice of

deficiency was mailed. See sec. 6511(b)(2)(A) and (B).

If section 6512(b)(3)(B) applies, as respondent contends it

does, the Court lacks jurisdiction to determine a refund or

credit of the overpayment at issue in this case. The notice of

deficiency was mailed on March 22, 2005, and within 3 years after

petitioner filed the delinquent return. Under respondent’s

theory, the “look-back” period (consisting of 3 years, plus the

period of the extension of time for filing that petitioner

received for his 2000 tax return) extends back to November 22,

2001. Petitioner’s overpayment was made on April 15, 2001, and

therefore, according to respondent, falls outside the “look-back”

period. Absent application of another provision, respondent

argues that the Court lacks jurisdiction to determine a refund or

credit of the overpayment in issue in this case.

However, section 6512(b)(3)(C) allows the Court to determine

a credit or refund of an overpayment in some situations in which

a taxpayer has actually filed a claim for a refund before the

notice of deficiency was issued. In such a case, the end of the

“look-back” period is determined not by the date the notice of

deficiency was mailed, but by the date on which the claim for

refund was filed.
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As it relates to the case before us, section 6512(b)(3)(C)

provides that the Court may order refund or credit of the

overpayment if the claim had not been disallowed before the

notice of deficiency was mailed, or if the claim had been

disallowed before the notice of deficiency was mailed and a

timely suit for refund could have been commenced as of the date

the notice of deficiency was mailed. Sec. 6512(b)(3)(C)(i) and

(ii). Petitioner contends that he made an administrative claim

for refund that was either not disallowed, or if it was

disallowed, he could have commenced a timely suit for refund as

of the date the notice of deficiency was mailed.

If, as petitioner asserts, the delinquent return constitutes

a claim for refund, the Court would have jurisdiction to order a

refund or credit of the overpayment at issue. As noted supra,

petitioner filed the delinquent return on October 24, 2002.

Regardless of whether the 3-year or the 2-year “look-back” period

would apply, petitioner’s overpayment on April 15, 2001, falls

within the “look-back” period under petitioner’s theory, and the

Court would have jurisdiction to order refund or credit of the

overpayment.

Under certain circumstances, a properly executed income tax

return may constitute a claim for refund or credit. Section

301.6402-3(a)(5), Proced. & Admin. Regs., provides:
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A properly executed individual * * * income tax return
* * * shall constitute a claim for refund or credit if
it contains a statement setting forth the amount
determined as an overpayment and advising whether such
amount shall be refunded to the taxpayer or shall be
applied as a credit against the taxpayer’s estimated
income tax for the taxable year immediately succeeding
the taxable year for which such return * * * is filed.
* * *

The delinquent return does not meet the above criteria for a

formal refund claim with respect to the overpayment at issue.

The delinquent return makes no mention of the amount the parties

now agree constitutes an overpayment and does not contain any

statements regarding the basis for such overpayment.

Petitioner also argues that the delinquent return forms the

basis for an informal refund claim. As petitioner correctly

notes in his objection to respondent’s motion:

It is well established that a writing which does not
qualify as a formal refund claim nevertheless may toll
the period of limitations applicable to refunds if (1)
the writing is delivered to the Service before the
expiration of the applicable period of limitations, (2)
the writing in conjunction with its surrounding
circumstances adequately notifies the Service that the
taxpayer is claiming a refund and the basis therefor,
and (3) either the Service waives the defect by
considering the refund claim on its merits or the
taxpayer subsequently perfects the informal refund
claim by filing a formal refund claim before the
Service rejects the informal refund claim.

Jackson v. Commissioner, supra (and the cases cited therein).

The determination of whether an informal refund claim has been

made depends on the particular circumstances of the case, and the

relevant question is whether the Commissioner knew or should have
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known that a refund claim was being made. Turco v. Commissioner,

T.C. Memo. 1997-564. A writing may constitute an informal refund

claim if it gives notice fairly advising the Commissioner of the

nature of the taxpayer’s claim. United States v. Kales, 314 U.S.

186, 194 (1941).

The delinquent return does not form the basis of an informal

claim for refund. The delinquent return shows tax due of

$248,805. Although the delinquent return erroneously sought a

refund of $1,195--an amount less than the refund of $23,805 to

which respondent has stipulated--the return does not give any

notice of the overpayment amount petitioner now seeks or of any

basis for such a claim.

Moreover, the circumstances surrounding petitioner’s filing

of the delinquent return indicate that the delinquent return does

not constitute a claim for refund. As noted supra, petitioner

actually made an additional payment toward the amount of tax

shown on the delinquent return approximately 3 months after

petitioner filed the delinquent return. Petitioner has not

shown--or even alleged--that he maintained any protest to the

payment of additional tax. It need hardly be noted that

petitioner’s voluntary payment of more tax shortly after filing

the delinquent return tends to indicate that he was not

simultaneously pursuing a claim that he had already paid too much

tax.
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The delinquent return did not give any notice of

petitioner’s alleged claim for refund or the basis thereof, and

the circumstances surrounding the filing of that return do not

alter that conclusion. The delinquent return therefore does not

form the basis of a claim for refund, and section 6512(b)(3)(B)

applies. Accordingly, the Court lacks jurisdiction to determine

a refund or credit of the overpayment at issue. We reject

petitioner’s sole objection to respondent’s motion, and we shall

grant respondent’s motion.

To reflect the foregoing,

An appropriate order and

decision will be entered.