Attorney-at-Law

SOL ON SOL – REDUX

In Uncategorized on 09/11/2018 at 17:00

When redetermining underlying liability in a CDP (e.g., SNOD not sent to last known address, so no prior opportunity to contest), Tax Court has always tried to dodge determining a refund. The lookbacks in Section 6511 are the limiting factors. Today, despite the efforts of the University of the District of Columbia David A. Clarke School of Law Tax Clinic, there’s no refund for Brian H. McLane, 2018 T. C. Memo. 149, filed 9/11/18.

Brian reported his tax and asked for an IA, under which he paid money. While paying, IRS hit him with a SNOD, disallowing most of his deductions. Brian never got the SNOD, but he got the NITL. After Appeals affirms IRS on the CDP, Brian petitions. He gets a remand,  and after trial establishes all his deductions, so for the year at issue, he owes zero.

Brian wants back what he paid on the IA. Tax Court says “no jurisdiction to order a refund, as the Sections 6511 clocks have run.”

Our old friend Greene-Thapedi says “if no lien or levy, nothing more for Tax Court to do.” As Brian owes nothing, game over. Brian never raised an overpayment in his petition or on brief.

But the DC Clinicians are in as amicus “in the area of taxpayer rights and procedural efficiency.” 2018 T. C. Memo. 149, at p. 6.

Section 6214 (a) lets Tax Court redetermine a deficiency if timely petitioned (and Brian did). “But section 6512(b)(3) limits our jurisdiction to order a credit or refund to only that portion of a tax paid after the mailing of a notice of deficiency or in regard to which a timely claim for refund was pending (or could have been filed) on the date of mailing of the notice of deficiency.” 2018 T. C Memo. 149, at p. 8.

Brian was past the cutoff. He raised the refund post-trial, and that was years after the SOL.

The DC Clinicians argue Judge Vasquez’s dissent in Greene-Thapedi. But Judge Halpern isn‘t buying. Brian wants to claim that the SNOD language in Section 6512(b)(3) grants Tax Court authority to order a refund for a non-mailed or non-received SNOD. “We see no reason why the issuance of a notice of deficiency that petitioner never received should allow him to pursue a claim for refund that would otherwise have become time barred long before he manifested any awareness of it.” 2018 T. C. Memo. 149, at p. 17.

It’s true that the CDP process is there to make sure IRS collects the right amount of tax. But it doesn’t protect taxpayers who don’t file timely for refunds, or raise the refund issue from the getgo.

And the cases on which the DC Clinicians rely are abatement of interest cases.

“Because a claim for interest abatement made in connection with a CDP hearing gives us jurisdiction under section 6404(h) that is independent of our jurisdiction under section 6330, it follows that, in our review of a notice of determination denying abatement, we can consider any claim by the taxpayer that the abatement requested would result in an overpayment that should be refunded to the taxpayer or credited to his account.

“The refund petitioner seeks, however, is not grounded in a claim for abatement of interest.  And, more generally, on the facts before us, we cannot view the petition filed in this case as one filed not only under section 6330(d)(1) but also under another provision that would give us overpayment jurisdiction.  In particular, we cannot accept the petition as one for redetermination of the deficiency in petitioner’s 2008 Federal income tax that would provide us with ancillary overpayment jurisdiction under section 6512(b)(1).  Petitioner’s supplemental brief posits that respondent mailed him a notice of deficiency for his 2008 taxable year on August 7, 2012.  On that premise, a petition for redetermination of that deficiency would have been timely under section 6213(a) only if filed by November 5, 2012–a date that preceded by almost nine months the issuance of the notice of determination in response to which petitioner filed his petition.  (Moreover, neither in that petition nor, as far as the record discloses, in his CDP hearing did petitioner claim that he had overpaid his 2008 Federal income tax liability.).” 2018 T. C. Memo. 149, at pp. 32-33.

Innocent spousery cases differ. “Even if amicus’ premise were correct, the resulting disparate treatment of innocent spouse claims depending on their jurisdictional posture would be required by the applicable statutory provisions.  Section 6330(c)(2)(A)(i) allows for the raising of “appropriate spousal defenses” when “relevant * * * to the unpaid tax or the proposed levy”.  In contrast to section 6015(g), section 6330(c) provides no express basis for a taxpayer to claim (or for Appeals to consider) a taxpayer’s claim for a refund arising from a grant of relief from joint and several liability.  Such a claim could be considered only if the taxpayer’s request for a CDP hearing and petition to this Court for review of a notice of determination denying the requested relief could be viewed as grounded in section 6015 as well as section 6330.” 2018 T. C. Memo. 149, at p. 34.

And if Brian has a due process beef, it’s his own fault.

“Whenever the statute of limitations bars a taxpayer from pursuing a claim for refund, however, it will result in the Commissioner’s retention of an overpayment of tax.  That result cannot be viewed as violating the taxpayer’s due process rights because his loss of any refund to which he might have been entitled would arise from his own failure to claim the refund timely.  Moreover, most of the payments that petitioner now seeks to have refunded to him were voluntary payments of the tax he reported on his 2008 Federal income tax return.  We fail to see how our decision not to assume jurisdiction to consider a refund claim of which petitioner manifested no awareness before the expiration of the applicable period of limitations would result in an unconstitutional violation of his due process rights.” 149 T. C. Memo. 149, at pp. 36-37.

Takeaway- If not frivolous, ask for a refund every chance you get.

 

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