Opinion
4211-20S
12-01-2021
Richard V.E. Marriott Petitioner v. Commissioner of Internal Revenue Respondent
ORDER AND DECISION
Daniel A. Guy, Jr. Special Trial Judge
This deficiency case is before the Court on respondent's motion for entry of decision, filed August 16, 2021, pursuant to Rule 50. (Unless otherwise indicated, section references are to the Internal Revenue Code of 1986, as amended and in effect for the taxable year 2017, and Rule references are to the Tax Court Rules of Practice and Procedure.) On October 4, 2021, petitioner filed a response opposing respondent's motion. As discussed in detail below, we will grant respondent's motion.
Background
Petitioner failed to file a timely Federal income tax return for the taxable year 2017, which led respondent to prepare a substitute for return in accordance with section 6020(b). Respondent subsequently issued a notice of deficiency to petitioner determining an income tax deficiency of $17,278, a failure-to-file addition to tax under section 6651(a)(1) of $1,199, and a failure-to-pay addition to tax under section 6651(a)(2) of $640. Petitioner filed a timely petition for redetermination with the Court disputing the notice of deficiency.
In March 2021 petitioner submitted to respondent a handwritten tax return for 2017. Petitioner provided information that his taxable income was less than the amount respondent had determined in the notice of deficiency and he claimed that he was entitled to a credit of $2,037 purportedly attributable to an overpayment of tax arising in connection with an amended return that he had filed for the taxable year 2016. After reviewing petitioner's information, respondent agreed to reduce his income tax deficiency for 2017 from $17,278 to $12,442, and to make corresponding computational reductions to the aforementioned additions to tax. Respondent concluded, however, that petitioner was not entitled to the $2,037 credit because respondent had no record that he filed an amended tax return for 2016, nor did he have an available credit for that year.
Petitioner filed a response in opposition to respondent's motion for entry of decision and submitted a copy of a Form 1040X, Amended U.S. Individual Income Tax Return, for 2016, signed and dated October 24, 2020, along with a receipt from the U.S. Postal Service showing that he mailed an item to the Internal Revenue Service on that same date. On the amended return for 2016, petitioner reduced the taxable income reported on his original return by $3,530 to account for claimed moving expenses, and increased his itemized deductions or standard deduction by $4,628, resulting in a claimed overpayment for that year of $2,037.
Respondent provided the Court with transcripts of petitioner's accounts for 2016 and 2017. The transcript for 2016 provides no support for petitioner's claim that he filed an amended return for 2016 or that he has an available credit for that year. The transcript of account for 2017 shows in relevant part that petitioner has been credited with payments totaling $12,442, including a final payment of $494 made on March 25, 2020.
Discussion
Petitioner does not dispute that he is liable for a tax deficiency of $12,442 for the taxable year 2017. In opposing respondent's motion for entry of decision, however, petitioner maintains that respondent must give him credit against the tax due for 2017 to account for an overpayment of $2,037 that he claims he is entitled to for the taxable year 2016 and that recognition of that credit will eliminate his liability for the additions to tax imposed under sections 6651(a)(1) and 6651(a)(2) for the taxable year 2017.
Section 6402 and the regulations thereunder give respondent discretion to credit income tax overpayments against the estimated income tax for the succeeding taxable year. Respondent's discretion in this regard is specifically limited to allowing credits of overpayments for which a claim has been filed within the applicable period of limitations. See sec. 6402(a) and (b); secs. 301.6402-2(a)(1) and 301.6402-3(a)(5), Proced. & Admin. Regs. Section 6511(a) governs the period of limitations for claiming credits and refunds. The Commissioner is not required to accept and/or process an amended return. See Badaracco v. Commissioner, 464 U.S. 386, 393 (1984) (holding that "an amended return is a creature of administrative origin and grace"); Goldring v. Commissioner, 20 T.C. 79, 81 (1953) (holding that the acceptance or rejection of an amended return is solely within the discretion of the Commissioner).
Although petitioner maintains that he mailed an amended tax return for 2016 to the IRS in October 2020, there is no evidence that the return was actually received by the IRS. Until a claim has been filed, respondent cannot exercise his discretion under section 6402(a). Moreover, as we stated in Weber v. Commissioner, 138 T.C. 348, 372 (2012), "a mere claim of an overpayment is not an 'available credit' but is instead a claim for a credit." In other words, even assuming for the sake of argument that petitioner submitted an amended return, respondent is not required to accept it, and, in any event, respondent may reject the claimed overpayment for, inter alia, lack of substantiation of the expenses underlying the increased deductions. On this record, petitioner has failed to show that he is entitled to an available credit that may be applied to offset his tax liability for 2017.
The Commissioner bears the burden of production with respect to the liability of any individual for any penalty or addition to tax. Sec. 7491(c). That burden is to show that imposition of the penalty or addition to tax is appropriate. Higbee v. Commissioner, 116 T.C. 438, 446 (2001). If the Commissioner carries that burden, the taxpayer must come forward with evidence sufficient to persuade us that imposition of the penalty or addition to tax is incorrect (e.g., because of the existence of reasonable cause and the absence of willful neglect). Id. at 446- 447. Respondent's burden is met here because petitioner's 2017 return was not timely filed and the deficiency was not fully paid until March 2020. Petitioner offered no meaningful defense to the imposition of the additions to tax.
In sum, we find that petitioner is liable for the deficiency and the additions to tax as set forth in respondent's motion for entry of decision, and further that there is no overpayment for 2017. In short, petitioner's payments, as reflected in respondent's transcript of petitioner's account for 2017, do not exceed the tax imposed. See sec. 6512(b)(1); Bachner v. Commissioner, 109 T.C. 125, 128-129 (1997) (defining an "overpayment").
Upon due consideration and for cause, it is
ORDERED that respondent's motion for entry of decision, filed August 16, 2021, is granted. It is further
ORDERED AND DECIDED: That there is a deficiency in income tax due from petitioner for the taxable year 2017 in the amount of $12,442.00;
That there is an addition to tax due from petitioner for the taxable year 2017, under the provisions of section 6651(a)(1), in the amount of $210.00; and
That there is an addition to tax due from petitioner for the taxable year 2017, under the provisions of section 6651(a)(2), in the amount of $59.28.