In Uncategorized on 05/30/2018 at 18:47

We all know that IRS can’t start collecting a deficiency from the mailing of the SNOD until the 90-day (or 150-day) clock to petition the SNOD has run, or, if a timely petition was filed, until decision on the SNOD becomes final.

Well, what happens when there’s a SNOD based on SFRs, but the taxpayer files delinquent returns that shows different numbers, and some overpayments, pre–petition? And then petitions after IRS processes the delinquent returns?

STJ Peter Panuthos tells us in a designated hitter, Steven W. Webert and Catherine S. Webert, Docket No. 15981-17, filed 5/30/18.

Steve wants to enjoin collection of whatever he owes after IRS massaged his numbers, but Catherine doesn’t agree.

STJ Panuthos: “…as explained in Meyer v. Commissioner, 97 T.C. 555, 559 (1991), the Commissioner is authorized to immediately ‘assess and collect the amount of taxes that are computed and shown due on a taxpayer’s individual income tax return, as well as the amount of any additional computed and shown due on a subsequently filed amended income tax return.’ See also sec. 6201(a)(1); sec. 301.6211-1(a), Proced. & Admin. Regs. The IRS is also authorized to ‘immediately assess and collect’ the additions to tax under sections 6651(a)(1) 6651(a)(2), and 6654, if such additions are determined by the amount of tax shown on the taxpayer’s return if a return is filed. Meyer v. Commissioner, 97 T.C. at 559-560; see also sec. 6665(b). Such summary assessments are not subject to normal deficiency procedures and are beyond the scope of this Court’s jurisdiction, and no action or proceeding may be commenced to enjoin the IRS’ actions. Sec. 7421(a); Meyer v. Commissioner, 97 T.C. at 560. Additionally, section 6213(a) specifies that the Court ‘shall have no jurisdiction to enjoin any action or proceeding or order any refund under this subsection unless a timely petition for a redetermination of the deficiency has been filed and then only in respect of the deficiency that is the subject of such petition.” [Emphasis added.].” Order, at p. 6.

“Here, petitioners submitted original delinquent returns prior to the filing of the petition and did not indicate that they disputed the amounts or that the returns related to the notice of deficiency determination. As indicated, the Court gave petitioners an additional opportunity to make reference to the delinquent returns and Mr. Webert did not respond. Mrs. Webert did not join the motion and agrees that respondent may assess the amounts reported on the delinquent returns.” Order, at p. 7.

So IRS can go grab whatever Steve and Catherine said they owe, right?

Not so fast.

“The Court notes that section 6402(a) allows respondent to credit a taxpayer’s overpayment against that taxpayer’s outstanding liabilities from prior years. See also sec. 301.6402-3(a)(5), (6), Proced. & Admin. Regs. The Commissioner’s crediting of a refund for one year against tax liability of another year does not prevent the Commissioner from later determining a deficiency for the year from which the refund arose. Savage v. Commissioner, 112 T.C. 46, 4849 (1999). If the taxpayer then files a timely petition with this Court, we ‘have jurisdiction to redetermine the correct amount of the deficiency’. Sec. 6214(a). If we find ‘that there is no deficiency and * * * that the taxpayer has made an overpayment of income tax’ for the year before us, we ‘have jurisdiction to determine the amount of such overpayment’ and order that amount ‘be credited or refunded to the taxpayer.’ Sec. 6512(b)(1). Thus, we have jurisdiction to determine whether the income tax liabilities for the years in issue are correct and whether petitioners are entitled to overpayments for any of the years in issue.” Order, at pp. 7-8.

Steve’s motion to restrain is denied. If IRS takes too much, presumably Steve gets a refund.

Clear? Thought not.

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