Schuster v. Comm'r

T.C. Memo. 2017-15

UNITED STATES TAX COURT

NEIL S. SCHUSTER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 28217-14L. Filed January 17, 2017.

David J. Polashuk and Scott A. Schwartzberg, for petitioner.

David A. Indek, for respondent.

MEMORANDUM OPINION

CHIECHI, Judge: This case is before us on respondent’s motion for

summary judgment (respondent’s motion). We shall grant respondent’s motion.

Background

The record establishes and/or the parties do not dispute the following.
 -2-

[*2] Petitioner resided in Florida at the time he filed the petition.

With respect to taxable year 2004, petitioner had Federal income tax (tax)

withheld of $3,271 and made an estimated tax payment of $15,000. On April 15,

2005, petitioner filed with the Internal Revenue Service (IRS) Form 4868,

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

Return (Form 4868), and included a $580,000 check with that form in order to pay

what he believed was a reasonable estimate of the amount of tax due for his

taxable year 2004 (April 15, 2005 payment). The IRS granted petitioner an

extension of time to August 15, 2005, within which to file his tax return for his

taxable year 2004 (2004 return).

On April 15, 2005, petitioner also remitted to the IRS an $80,000 payment

on behalf of his mother (mother’s $80,000 payment) with respect to her taxable

year 2004. The IRS erroneously credited petitioner’s mother’s $80,000 payment

(misapplied mother’s $80,000 credit) to the account that the IRS maintained for

petitioner with respect to his taxable year 2004 (2004 account).

On August 15, 2005, petitioner filed with the IRS a second Form 4868 for

his taxable year 2004. The IRS granted petitioner an extension of time to October

15, 2005, within which to file his 2004 return.
 -3-

[*3] The IRS received petitioner’s 2004 return on October 21, 2005. In that

return, petitioner showed total tax of $519,718, which was less than he had

anticipated when he filed Form 4868 on April 15, 2005, and remitted his April 15,

2005 payment to the IRS. On November 28, 2005, the IRS assessed the total tax

shown in petitioner’s 2004 return (assessed 2004 total tax). In his 2004 return,

petitioner elected to apply any overpayment for his taxable year 2004 to his 2005

estimated tax.

With respect to taxable year 2004, petitioner made payments totaling

$598,271 (correct 2004 payments) that consisted of (1) tax withheld, (2) an

estimated tax payment, and (3) his April 15, 2005 payment. As a result, when

petitioner filed his 2004 return he had already paid in full his assessed 2004 total

tax of $519,718 and had an overpayment of $78,553 for his taxable year 2004

(correct 2004 overpayment).

In addition to assessing the total tax shown in petitioner’s 2004 return, the

IRS processed that return and showed in petitioner’s 2004 account his correct

2004 payments of $598,271 and the misapplied mother’s $80,000 credit

(erroneous 2004 credit of $80,000). Because the IRS showed in petitioner’s 2004

account not only his correct 2004 payments of $598,271 but also the erroneous

2004 credit of $80,000, the amount of the overpayment that the IRS showed
 -4-

[*4] petitioner had in that account was erroneously increased by $80,000 from

$78,553 to $158,553. Consequently, the IRS showed in petitioner’s 2004 account

and in the account that the IRS maintained for petitioner with respect to his

taxable year 2005 (2005 account) that petitioner had elected to apply to his 2005

estimated tax the total amount of $158,553 that the IRS showed in each of those

two accounts. (We shall refer to the erroneous 2004 credit of $80,000 that the IRS

erroneously credited to petitioner’s 2005 account as the erroneous 2005 credit of

$80,000.)

With respect to taxable year 2005, petitioner had tax withheld of $3,145 and

made estimated tax payments totaling $500,000. On April 15, 2006, petitioner

filed with the IRS Form 4868 and included a $450,000 check with that form in

order to pay what he believed was a reasonable estimate of the amount of tax due

for his taxable year 2005 (April 15, 2006 payment). The IRS granted petitioner an

extension of time to October 15, 2006, within which to file his tax return for his

taxable year 2005 (2005 return).

The IRS received petitioner’s 2005 return on October 19, 2006. In that

return, petitioner showed total tax of $1,012,169. On November 20, 2006, the IRS

assessed the total tax shown in petitioner’s 2005 return (assessed 2005 total tax)
 -5-

[*5] and an addition to tax under section 6654(a)1 of $2,474 (assessed 2005

addition to tax). In his 2005 return, petitioner elected to apply any overpayment

for his taxable year 2005 to his 2006 estimated tax.

With respect to taxable year 2005, petitioner made payments totaling

$1,031,698 (correct 2005 payments) that consisted of (1) tax withheld,

(2) estimated tax payments, (3) the April 15, 2006 payment, and (4) petitioner’s

correct 2004 overpayment of $78,553, which he had elected to apply to his 2005

estimated tax. As a result, when petitioner filed his 2005 return he had already

paid in full his assessed 2005 total tax of $1,012,169 and assessed 2005 addition

to tax of $2,474 and had an overpayment of $17,055 for his taxable year 2005

(correct 2005 overpayment).

In addition to assessing the total tax shown in petitioner’s 2005 return and

an addition to tax under section 6654(a), the IRS processed that return and showed

in petitioner’s 2005 account his correct 2005 payments of $1,031,698 and the

erroneous 2005 credit of $80,000. Because the IRS showed in petitioner’s 2005

account not only his correct 2005 payments of $1,031,698 but also the erroneous

2005 credit of $80,000, the amount of the overpayment that the IRS showed

1
All section references are to the Internal Revenue Code in effect at all
relevant times. All Rule references are to the Tax Court Rules of Practice and
Procedure.
 -6-

[*6] petitioner had in that account was erroneously increased by $80,000 from

$17,055 to $97,055. Consequently, the IRS showed in petitioner’s 2005 account

and in the account that the IRS maintained for petitioner with respect to his

taxable year 2006 (2006 account) that petitioner had elected to apply to his 2006

estimated tax the total amount of $97,055 that the IRS showed in each of those

two accounts. (We shall refer to the erroneous 2005 credit of $80,000 that the IRS

erroneously credited to petitioner’s 2006 account as the erroneous 2006 credit of

$80,000.)

With respect to taxable year 2006, petitioner had tax withheld of $3,135 and

made an estimated tax payment of $250,000. On April 15, 2007, petitioner filed

with the IRS Form 4868 for his taxable year 2006 and did not include a payment

with that form. The IRS granted petitioner an extension of time to October 15,

2007, within which to file his tax return for his taxable year 2006 (2006 return).

The IRS received petitioner’s 2006 return on October 16, 2007. In the 2006

return, petitioner showed total tax of $317,265. On November 5, 2007, the IRS

assessed the total tax shown in petitioner’s 2006 return (assessed 2006 total tax).

In his 2006 return, petitioner elected to apply any overpayment for his taxable year

2006 to his 2007 estimated tax.
 -7-

[*7] With respect to taxable year 2006, petitioner made payments totaling

$270,190 that consisted of (1) tax withheld, (2) an estimated tax payment, and

(3) petitioner’s correct 2005 overpayment of $17,055, which he had elected to

apply to his 2006 estimated tax. In addition, the IRS had credited to petitioner’s

2006 account an amount totaling $30 ($30 credit) to which the IRS had concluded

petitioner was entitled. As a result, petitioner’s 2006 account showed that he had

made total payments, including that $30 credit,2 of $270,220 (correct 2006

payments). Because petitioner’s assessed 2006 total tax was $317,265, there

remained unpaid $47,045 of that assessed 2006 total tax when petitioner filed his

2006 return (assessed 2006 total tax due of $47,045).

In addition to assessing the total tax shown in petitioner’s 2006 return, the

IRS processed that return and showed in petitioner’s 2006 account his correct

2006 payments of $270,220 and the erroneous 2006 credit of $80,000. Because

the IRS showed in petitioner’s 2006 account not only his correct 2006 payments of

$270,220 but also the erroneous 2006 credit of $80,000, the IRS erroneously

credited $47,045 of that erroneous 2006 credit of $80,000 against petitioner’s

assessed 2006 total tax due of $47,045. As a result, the amount of the

2
Of the $30 credit, $4.39 consisted of interest. We shall include the entire
$30 credit amount as part of petitioner’s total payments for his taxable year 2006.
 -8-

[*8] overpayment that the IRS showed in petitioner’s 2006 account was

erroneously increased by $32,955 (i.e., the unused portion of the erroneous 2006

credit of $80,000) from zero to $32,955. Consequently, the IRS showed in

petitioner’s 2006 account and in the account that the IRS maintained for petitioner

with respect to his taxable year 2007 (2007 account) that petitioner had elected to

apply to his 2007 estimated tax $32,955 of the erroneous 2006 credit of $80,000,

which the IRS showed in each of those two accounts. (We shall refer to the

unused portion (i.e., $32,955) of the erroneous 2006 credit of $80,000 that the IRS

erroneously credited to petitioner’s 2007 account as the erroneous 2007 credit of

$32,955.)

With respect to taxable year 2007, petitioner had tax withheld of $3,129.

On April 15, 2008, petitioner filed with the IRS Form 4868 for his taxable year

2007 and did not include a payment along with that form. The IRS granted

petitioner an extension of time to October 15, 2008, within which to file his tax

return for his taxable year 2007 (2007 return).

The IRS received petitioner’s 2007 return on October 14, 2008. In the 2007

return, petitioner showed total tax of zero. On November 3, 2008, the IRS

assessed the total tax shown in petitioner’s 2007 return (assessed 2007 total tax).
 -9-

[*9] In his 2007 return, petitioner elected to apply any overpayment for his taxable

year 2007 to his 2008 estimated tax.

With respect to taxable year 2007, petitioner made a payment of $3,129

(correct 2007 payment) that consisted of tax withheld. Because petitioner’s

assessed 2007 total tax was zero, petitioner had an overpayment of $3,129 for his

taxable year 2007 (correct 2007 overpayment).

In addition to assessing the total tax shown in petitioner’s 2007 return, the

IRS processed that return and showed in petitioner’s 2007 account his correct

2007 payment of $3,129 and the erroneous 2007 credit of $32,955. Because the

IRS showed in petitioner’s 2007 account not only his correct 2007 payment of

$3,129 but also the erroneous 2007 credit of $32,955, the amount of the

overpayment that the IRS showed petitioner had in that account was erroneously

increased by $32,955 from $3,129 to $36,084. Consequently, the IRS showed in

petitioner’s 2007 account and in the account that the IRS maintained for petitioner

with respect to his taxable year 2008 (2008 account) that petitioner had elected to

apply to his 2008 estimated tax the total amount of $36,084 that the IRS showed in

each of those two accounts. (We shall refer to the erroneous 2007 credit of

$32,955 that the IRS erroneously credited to petitioner’s 2008 account as the

erroneous 2008 credit of $32,955.)
 - 10 -

[*10] With respect to taxable year 2008, petitioner had tax withheld of $3,120.

On April 15, 2009, petitioner filed with the IRS Form 4868 for his taxable year

2008 and did not include a payment along with that form. The IRS granted

petitioner an extension of time to October 15, 2009, within which to file his tax

return for his taxable year 2008 (2008 return).

The IRS received petitioner’s 2008 return on October 15, 2009. In the 2008

return, petitioner showed total tax of zero. On November 9, 2009, the IRS

assessed the total tax shown in petitioner’s 2008 return (assessed 2008 total tax).

With respect to taxable year 2008, petitioner made payments totaling $6,249

(correct 2008 payments) that consisted of (1) tax withheld and (2) petitioner’s

correct 2007 overpayment of $3,129, which he had elected to apply to his 2008

estimated tax. Because petitioner’s assessed 2008 total tax was zero, petitioner

had an overpayment of $6,249 for his taxable year 2008.

In addition to assessing the total tax shown in petitioner’s 2008 return, the

IRS processed that return and showed in petitioner’s 2008 account his correct

2008 payments of $6,249 and the erroneous 2008 credit of $32,955. Because the

IRS showed in petitioner’s 2008 account not only his correct 2008 payments of

$6,249 but also the erroneous 2008 credit of $32,955, the amount of the
 - 11 -

[*11] overpayment that the IRS showed petitioner had in that account was

erroneously increased by $32,955 from $6,249 to $39,204.

In his 2008 return, petitioner claimed a refund of $39,204. The IRS sent to

petitioner a refund check for $39,204 with respect to his taxable year 2008,

$32,955 of which consisted of the erroneous 2008 credit of $32,955 and was an

erroneous refund.

On April 8, 2011, an IRS representative sent a letter to petitioner. That

letter stated in pertinent part:

We regret that we incorrectly applied a payment of $80,000.00 to
your 2004 tax year and the payment was credit[ed] to your 2005
[taxable year] as estimated tax. The payment was credit[ed] to your
2006 estimated tax. This made your [2006] account appear to be
overpaid. We have corrected the error. Your 2006 tax account is in a
balance due status.

As of the time the IRS corrected petitioner’s 2006 account by removing the

erroneous 2006 credit of $80,000 from that account, petitioner’s 2006 account

showed that, of the assessed 2006 total tax of $317,265, there was a balance of

$47,045 that remained unpaid.

On April 25, 2011, the IRS assessed additions to tax under sections

6651(a)(2) and 6654(a) with respect to petitioner’s taxable year 2006 as well as

interest as provided by law. On October 10, 2011, the IRS assessed an additional
 - 12 -

[*12] addition to tax under section 6651(a)(2). On November 25, 2013, the IRS

assessed additional interest as provided by law. In addition, at various times after

2010, the IRS credited against petitioner’s assessed 2006 total tax certain

overpayments totaling $15,694 that petitioner had made for certain of his taxable

years after his taxable year 2008.

On February 18, 2014, the IRS issued to petitioner a final notice of intent to

levy and notice of your right to a hearing (notice of intent to levy) with respect to

petitioner’s taxable year 2006.

On March 10, 2014, the IRS received petitioner’s Form 12153, Request for

a Collection Due Process or Equivalent Hearing (Form 12153). In Form 12153,

petitioner requested a hearing with the IRS’ Appeals Office (Appeals Office) with

respect to the notice of intent to levy.

On July 30, 2014, a settlement officer with the Appeals Office (settlement

officer) who was assigned to petitioner’s Form 12153 held a telephonic hearing

with petitioner’s representative (July 30, 2014 hearing). During that hearing,

petitioner’s representative did not dispute that petitioner had not paid with his own

funds the entire amount of his assessed 2006 total tax of $317,265. Nor did

petitioner’s representative dispute that the erroneous 2006 credit of $80,000 that
 - 13 -

[*13] was reflected in petitioner’s 2006 account was the result of a mistake that

the IRS had made.

Instead, petitioner’s representative argued during the July 30, 2014 hearing

that, because the IRS erroneously credited the erroneous 2006 credit of $80,000

(to the extent of $47,045) against petitioner’s assessed 2006 total tax, petitioner

received from the IRS an erroneous refund of $80,000 for his taxable year 2006

(to the extent of $47,045) (claimed 2006 erroneous refund).3 Petitioner’s

representative maintained (1) that, because petitioner received from the IRS what

that representative claimed was an erroneous refund for his taxable year 2006,

subsection (d) of section 7405, titled “Action for Recovery of Erroneous

Refunds”, governs the period within which the IRS is entitled to collect that

claimed 2006 erroneous refund from petitioner and (2) that that period of

limitations, which petitioner’s representative claimed is two years, has expired.

(We shall sometimes refer to the arguments that petitioner’s representative

advanced at the July 30, 2014 hearing as petitioner’s position.)

The settlement officer informed petitioner’s representative during the July

30, 2014 hearing that he would ask an IRS examiner (examiner) to review

3
We note that we do not find petitioner’s arguments at the Appeals Office
and here to be altogether clear or consistent.
 - 14 -

[*14] petitioner’s 2006 account in order to ascertain whether an erroneous refund

had been issued to petitioner for his taxable year 2006. Immediately after the July

30, 2014 hearing had ended, the settlement officer requested an examiner to

review petitioner’s 2006 account in order to ascertain whether an erroneous refund

had been issued to petitioner for his taxable year 2006. After the examiner

reviewed that account, she advised the settlement officer that the IRS had not

issued any refund to petitioner for his taxable year 2006.

On August 22, 2014, the settlement officer telephoned petitioner’s

representative (August 22, 2014 telephone call) and informed him that the

examiner had reviewed petitioner’s 2006 account and had found that that account

did not show that the IRS had issued any refund to petitioner for his taxable year

2006. Petitioner’s representative advised the settlement officer during that

telephone call that he disagreed with the examiner’s finding and restated

petitioner’s position. At the conclusion of the August 22, 2014 telephone call with

petitioner’s representative, the settlement officer informed that representative that

he would contact a representative of the IRS’ Office of Chief Counsel (Chief

Counsel’s representative) in order to obtain that representative’s views with

respect to petitioner’s position.
 - 15 -

[*15] Immediately after the August 22, 2014 telephone call had ended, the

settlement officer consulted with a Chief Counsel’s representative. That

representative gave the settlement officer her views about petitioner’s position.

The Chief Counsel’s representative advised the settlement officer (1) that the

erroneous 2006 credit of $80,000 was what she called a credit transfer, not a

refund, which the IRS had erroneously reflected in petitioner’s 2006 account, and

(2) that the IRS had removed the erroneous 2006 credit of $80,000 from that

account around April 2011, thereby correcting that account. Consequently,

according to the Chief Counsel’s representative, subsection (a) of section 6502,

titled “Collection After Assessment”, governs the period within which the IRS is

entitled to collect from petitioner any portion of his assessed 2006 total tax that

remains unpaid as well as any unpaid additions to tax and interest as provided by

law for his taxable year 2006. That representative further informed the settlement

officer that the applicable period of limitations under section 6502(a), which that

representative claimed is 10 years, has not expired.

On August 25, 2014, the settlement officer telephoned petitioner’s

representative and informed him of the Chief Counsel representative’s views with

respect to petitioner’s position.
 - 16 -

[*16] On October 24, 2014, the Appeals Office issued to petitioner a notice of

determination concerning collection action(s) under section 6320 and/or 6330

(notice of determination) in which that office sustained the notice of intent to levy.

An attachment to the notice of determination stated in pertinent part:

SUMMARY AND RECOMMENDATION

You have requested a Collection Due Process hearing under IRC §
6330 as to the appropriateness of a tax levy * * *

A review of all the information available indicates that (1) all legal
and procedural requirements have been followed, (2) issues raised by
you have been considered, and (3) the balancing of the need for
efficient collection with your concerns that the collection action be no
more intrusive than necessary has been considered.

We believe that issuing a levy is an appropriate collection action
under the circumstances.

BRIEF BACKGROUND

You filed your Form 104[0] tax return for 2006 and self-reported a
tax liability on the return. IRS records show that the tax assessment
was properly made. Notice and demand was sent to you as required
by IRC § 6303 and you failed to pay the liability in full.

There was a balance due at the time that the Collection Due Process
Notice was issued as required by IRC § 6331(a). Letter 1058, Final
Notice of Intent to Levy, was issued to you February 18, 2014. You
made a timely request for a hearing on the Form 12153 that was
received March 10, 2014.
 - 17 -

[*17] DISCUSSION AND ANALYSIS

Verification of Legal and Administrative Procedural
Requirements

The Settlement Officer (SO) has had no prior involvement with this
taxpayer in either Compliance or Appeals with respect to this
liability.

The collection statute has been suspended by the appropriate
computer code for the tax period at issue.

We have determined with the best information available that the
requirements of various applicable laws and administrative
procedures have been met.

IRC § 6331 states that if any person liable to pay any tax neglects or
refuses to pay the same within 10 days after notice and demand, it
shall be lawful for the Secretary to collect such tax (and such further
sum as shall be sufficient to cover the expenses of the levy) by levy
upon all property and rights to property (except such property as is
exempt under section 6334) belonging to such person or on which
there is a lien provided in this chapter for payment of such tax. The
notice and demand was issued to you.

IRC § 6330 states that no levy may be made unless the IRS notifies a
taxpayer of the opportunity for a hearing with Appeals. The hearing
request must be made within 30 days of the levy notice. The notice,
Letter 1058, was issued to you and you made a timely request for a
hearing.

Relevant Issues by the Taxpayer

In his appeal your authorized representative David Rosen didn’t raise
a specific issue.
 - 18 -

[*18] During the hearing that was held July 30, 2014 Mr. Rosen said that
the reason you owe for 2006 is because you received an $80,000.00
erroneous refund. He said that the IRS can’t collect the amount owed
because the two[-year] statute of limitation for collecting an
erroneous refund has expired. The SO told Mr. Rosen that there was
no refund issued from 2006 but he would research your records and
call him back.

The SO called Mr. Rosen on August 22, 2014 and informed him that
he had an Appeals Tax Examiner review the transcripts for the years
2004, 2005 and 2006 for an erroneous refund and none was found.
Mr. Rosen insisted that the $80,000.00 credit that was transferred was
a refund. The SO told Mr. Rosen that he would secure the opinion of
our Area Counsel if the credit transfer is considered a refund. And
call him back.

The SO called Mr. Rosen on August 25, 2014 and informed him that
in our Area Counsel’s opinion a credit transfer is not a refund. The
SO also told Mr. Rosen that the letter issued to you from the IRS
Taxpayer Advocate Service date August 13, 2014 explained to you
that the refund you received from 2008 in the amount of $39,[204].00
was an erroneous refund, but you did not received [sic] a refund from
2006 and that the 2006 tax liability is valid. Mr. Rosen kept insisting
that there was an erroneous refund [from] 2006. The SO informed
Mr. Rosen that the only options that can be considered are a
collection alternative or issuing a notice of determination which
would allow you to petition the Tax Court. Mr. Rosen told the SO
that you can’t afford to pay the liability and the SO told him that you
would have to provide a completed financial statement and
documentation to support the financial statement. Mr. Rosen told the
SO that he would discuss this with you and asked the SO to send the
financial statement. Mr. Rosen asked if he could have until
September 15, 2014 to respond and the SO agreed.

On August 26, 2014 the SO mailed the financial statement and a
cover letter to you. In his letter the SO told you that he had discussed
 - 19 -

[*19] the enclosed financial statement with Mr. Rosen, and the SO listed
the documentation that you would have to provide with the financial
statement. The SO asked that you have the financial statement and all
of the documentation in his office by September 25, 2014. The SO
has not received a response from you or Mr. Rosen as of this date.
Without the requested financial information we can’t consider placing
your tax liability into currently not collectable status.

Balancing Efficient Collection and Intrusiveness

The Office of Appeals believes that issuing a levy balances the need
for efficient collection of taxes with your concerns as to the
intrusiveness of the action. Our determination is that the levy is
proper.

As of December 7, 2015, petitioner’s 2006 account showed that $31,351 of

petitioner’s assessed 2006 total tax as well as additions to tax under sections

6651(a)(2) and 6654(a) and interest as provided by law accrued to December 7,

2015, remained unpaid. (We shall sometimes refer to any unpaid assessed

amounts with respect to petitioner’s taxable year 2006 as well as interest as

provided by law accrued after December 7, 2015, as petitioner’s unpaid assessed

2006 liability.)

Discussion

We may grant summary judgment where there is no genuine dispute of

material fact and a decision may be rendered as a matter of law. Rule 121(b);

Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff’d, 17 F.3d 965
 - 20 -

[*20] (7th Cir. 1994). We conclude that there is no genuine dispute as to any

material fact regarding the issue raised in respondent’s motion.

It is petitioner’s position4 that (1) because the IRS erroneously credited the

erroneous 2006 credit of $80,000 (to the extent of $47,045) against petitioner’s

assessed 2006 total tax, he received from the IRS an erroneous refund for his

taxable year 2006 of $80,000 (to the extent of $47,045) (i.e., the claimed 2006

erroneous refund); (2) because petitioner received from the IRS what petitioner

claims was an erroneous refund for his taxable year 2006, section 7405(d)5

4
It is our understanding that petitioner’s position here is the same as
petitioner’s position at the Appeals Office. See supra note 3.
5
Sec. 7405(d) on which petitioner relies provides:

SEC. 7405. ACTION FOR RECOVERY OF ERRONEOUS
REFUNDS.

(d) Periods of Limitation.--

For periods of limitations on actions under this section,
see section 6532(b).

Sec. 6532(b) to which sec. 7405(d) refers provides:

SEC. 6532. PERIODS OF LIMITATION ON SUITS.

(b) Suits by United States for Recovery of Erroneous Refunds.--
Recovery of an erroneous refund by suit under section 7405 shall be
allowed only if such suit is begun within 2 years after the making of
(continued...)
 - 21 -

[*21] governs the period within which the IRS is entitled to collect that claimed

2006 erroneous refund from petitioner; and (3) that period of limitations, which

petitioner claims is two years, has expired.

It is respondent’s position that (1) the erroneous 2006 credit of $80,000 was

a credit transfer, not a refund, which the IRS had erroneously reflected as of April

15, 2006, in petitioner’s 2006 account and which the IRS thereafter, around April

2011, had removed from that account, thereby correcting petitioner’s 2006

account; (2) the IRS’ correction of petitioner’s 2006 account by removing the

erroneous 2006 credit of $80,000 from that account resulted in that account’s

showing that the entire amount of petitioner’s assessed 2006 total tax as well as

certain additions to tax and interest as provided by law for his taxable year 2006

had not been paid; (3) section 6502(a)6 governs the period within which the IRS is

5
(...continued)
such refund, except that such suit may be brought at any time within 5
years from the making of the refund if it appears that any part of the
refund was induced by fraud or misrepresentation of a material fact.
6
Sec. 6502(a) on which respondent relies provides:

SEC. 6502. COLLECTION AFTER ASSESSMENT.

(a) Length of Period.--Where the assessment of any tax
imposed by this title has been made within the period of limitation
properly applicable thereto, such tax may be collected by levy or by a
(continued...)
 - 22 -

[*22] entitled to collect from petitioner his assessed 2006 total tax that remains

unpaid as well as any unpaid additions to tax and interest as provided by law for

his taxable year 2006; and (4) the period of limitations under section 6502(a),

which respondent claims is 10 years, has not expired.

In support of respondent’s position, respondent advances the following

contentions. As of the date on which the IRS corrected the erroneous 2006 credit

of $80,000 reflected in petitioner’s 2006 account, that account showed, and

petitioner had, assessed 2006 total tax due of $47,045, which he has never paid

with his own funds. Thereafter, the IRS credited against petitioner’s assessed

2006 total tax certain overpayments totaling $15,694 that petitioner had made for

certain of his taxable years after his taxable year 2008. As of December 7, 2015,

petitioner’s 2006 account showed that $31,351 of petitioner’s assessed 2006 total

tax as well as additions to tax under sections 6651(a)(2) and 6654(a) and interest

as provided by law remained unpaid (i.e., petitioner’s unpaid assessed 2006

liability).

6
(...continued)
proceeding in court, but only if the levy is made or the proceeding
begun--

(1) within 10 years after the assessment of the tax * * *
 - 23 -

[*23] On the record before us, we find that the IRS’ crediting to petitioner’s 2006

account the erroneous 2006 credit of $80,000 (to the extent of $47,045) did not

satisfy petitioner’s assessed 2006 total tax due of $47,045. Petitioner’s assessed

2006 total tax may be paid or satisfied only with a payment “tendered by * * *

[him], and not by an IRS error.” Clark v. United States, 63 F.3d 83, 89 (1st Cir.

1995) (relying on United States v. Wilkes, 946 F.2d 1143, 1152 (5th Cir. 1991));

see C&R Inv., Inc. v. United States, 444 F.2d 765, 768, 770 (10th Cir. 1971).

Petitioner has never paid his assessed 2006 total tax due of $47,045 with his own

funds. It was only because of an IRS error that petitioner’s 2006 account showed

that the IRS had applied the erroneous 2006 credit of $80,000 (to the extent of

$47,045) against the assessed 2006 total tax due of $47,045. The IRS thereafter

corrected that error and petitioner’s 2006 account by removing the erroneous 2006

credit of $80,000 from that account. After that correction, petitioner’s 2006

account showed that, of the assessed 2006 total tax of $317,265, there was a

balance of $47,045 that remained unpaid.

On the record before us, we find that the IRS’ erroneously crediting to

petitioner’s 2006 account the erroneous 2006 credit of $80,000 (to the extent of

$47,045) was not an erroneous refund to petitioner for purposes of section 7405.

See Clark, 63 F.3d at 89; C&R Inv., Inc., 444 F.2d at 768, 770. On that record, we
 - 24 -

[*24] further find that the period of limitations within which respondent may

collect petitioner’s unpaid assessed 2006 liability is prescribed by section 6502(a).

On the record before us, we also find that that period of limitations has not

expired.7 On that record, we sustain the determinations in the notice of determina-

tion.

We have considered all of the contentions and arguments of the parties that

are not discussed herein, and we find them to be without merit, irrelevant, and/or

moot.

To reflect the foregoing,

An order granting respondent’s

motion and decision for respondent will be

entered.

7
The 10-year period of limitations within which respondent may collect
petitioner’s assessed 2006 total tax began to run on November 5, 2007, the date on
which the IRS assessed the total tax shown in petitioner’s 2006 return. See sec.
6502(a). On March 10, 2014, the IRS received petitioner’s Form 12153 which he
submitted to the IRS in response to the notice of intent to levy that he had received
with respect to his taxable year 2006 and in which he requested a hearing with the
Appeals Office. The 10-year period of limitations prescribed by sec. 6502(a) was,
and remains, suspended as of the date on which the IRS received petitioner’s Form
12153. See sec. 6330(e)(1); sec. 301.6330-1(g)(2), Q&A-G1, Proced. & Admin.
Regs.