In Uncategorized on 12/30/2016 at 14:54

The official march of the United States Merchant Marine Academy mirrors the career of John Michael Gillespie, Docket No. 729-09L, filed 12/30/16, as IRS signs off for CY 2016 with a designated hitter from The Great Dissenter, f/k/a The Implacable, Indomitable, Indefatigable, Ineluctable, Incomparable, Incontrovertible and Imperturbable Foe of the Partitive Genitive, Old China Hand and Master Silt-Stirrer, Judge Mark V. Holmes.

John Michael is a commercial fisherman. When IRS hit him with a NFTL, John Michael was on the briny deep, so he couldn’t show for the CDP. When he reached dry land he petitioned, and Tax Court remanded his case to Appeals.

John Michael wanted an old overpayment applied to his self-reported but unpaid balance for the year at issue. But the return for the year of the claimed overpayment was filed six (count ‘em, six) years late.

John Michael tries an OIC, but his house and boat have enough equity to pay the tab in full. And the SOL has run, of course, on the year for which he claims the overpayment.

The IRS did send John Michael a letter while John Michael still had a couple months (Happy New Year, Judge Holmes) to file and get the refund before the SOL ran out. The letter said it looked like he had an overpayment, but they couldn’t find his return, and please send it within two weeks. The letter didn’t mention the SOL, but John Michael didn’t file the return until years later.

Section 6511(b)(1) has wrought some tough results, but that’s the law.

Anyway, says Judge Holmes, “Gillespie seems to focus his attention on the fairness aspect by repeatedly noting he overpaid his 1998 taxes. We can’t deny an element of unfairness here -both parties agree the United States Treasury received a little over $7000 more than it was supposed to from Gillespie and he never got it back. But we don’t find such a level of unfairness to find the IRS acted clearly erroneously. See Wai v. Commissioner, 92 T.C.M. (CCH) 181, 2006 WL 2482901, at *6 (upholding the IRS’s refusal of the taxpayer’s offer in compromise, despite acknowledging that the application of the AMT rules to this particular taxpayer may have produced an inequitable result); Murphy v. Commissioner, 469 F.3d 27, 32 (1st Cir. 2006) (noting that the court won’t disturb the IRS’s decision unless the rejection ‘represents a clear abuse of discretion in the sense of clear taxpayer abuse and unfairness by the IRS’). Nevertheless, we needn’t decide if this fact would “’undermine public confidence that the tax laws are being administered in a fair and equitable manner.’ We don’t because even if the IRS could’ve accepted an offer for less than full amount, Gillespie’s offer was for far less than his liability less the lost credit. In other words, Gillespie’s lost refund can’t fully justify the difference between his offer and his true liability, especially when he doesn’t disagree with the IRS’s position that he has sufficient equity to pay it in full.” Order, at p. 5.

IRS wins it.


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