Opinion
1934-20
04-22-2022
JOHN R. MORAN & CAROLYN P. MORAN, Petitioners, v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER AND DECISION
TAMARA W. ASHFORD JUDGE.
This case is before the Court on respondent's motion for partial summary judgment, filed February 7, 2022, on the question of whether petitioners' overpayment of $26, 464.19 for the 2014 taxable year is barred by statute from being refunded or credited to them. On March 2, 2022, petitioners filed a response in opposition to respondent's motion, and on March 22, 2022, respondent filed a reply to petitioners' response. The parties agree, however, that the aforementioned question is the only item remaining at issue in this case. As explained below, we will grant respondent's motion.
Background
On October 14, 2015, petitioners timely filed their joint Form 1040, U.S. Individual Income Tax Return, for 2014 (2014 return). In July 2018, during the examination of the 2014 return, petitioners and the Internal Revenue Service (IRS) executed Form 872, Consent to Extend the Time to Assess Tax, agreeing that any amount of Federal income tax due from petitioners for 2014 may be assessed at any time on or before March 31, 2020. Petitioners executed the form on July 6, 2018; the IRS executed the form on July 17, 2018. On November 26, 2019, the IRS issued a notice of deficiency to petitioners, disallowing certain deductions that petitioners had claimed on the 2014 return and, as a result, determining a deficiency in petitioners' Federal income tax of $308, 449.00 and an accuracy-related penalty pursuant to section 6662(a) of $61, 689.80 for 2014. On January 29, 2020, petitioners, while residing in Massachusetts, timely filed a petition with this Court for redetermination of the deficiency and the penalty.
Petitioners received a six-month extension of time to file their 2014 return until October 15, 2015.
Unless otherwise indicated, all statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, all regulation references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure.
After this case had been stricken for trial from the March 22, 2021, (remote) Boston, Massachusetts, Trial Session of the Court, either respondent or the parties filed a series of status reports, apprising the Court of the status of this case. Respondent's first status report was filed on April 16, 2021, apprising the Court that the parties had reached a basis for settlement which resolved all issues reflected in the November 26, 2019, notice of deficiency. Respondent then filed another status report on May 19, 2021, apprising the Court that an abatement of an earlier assessment against petitioners for 2014 would need to be made and that the process of making such an abatement had been undertaken, but it might take more than 30 days to be completed. On August 20, 2021, the parties filed a joint status report, apprising the Court that the abatement had been completed and that the parties agreed that petitioners have an overpayment of $26, 464.19 for 2014. The parties further reported that they did not agree, however, as to whether this overpayment is barred by statute from being refunded or credited to petitioners and that the parties were conferring with one another and respondent's National Office to determine the proper disposition of this overpayment. Finally, on October 25, 2021, respondent filed a status report, apprising the Court that the parties would soon file a signed stipulation of settled issues, attaching a statement of account reflecting (1) the agreed-upon overpayment for 2014 and (2) petitioners' payments with respect to that year. Respondent further reported that following the filing of the stipulation of settled issues, the parties would file cross-motions for summary judgment, requesting that the Court adjudicate the question of whether the agreed-upon overpayment is barred by statute from being refunded or credited to petitioners.
The parties filed the stipulation of settled issues, attaching the statement of account as Exhibit 1-J, on October 27, 2021. In the stipulation of settled issues itself, the parties recited that they agreed to the following: (1) the statement of account accurately reflects petitioners' income tax liability and payments for 2014; (2) petitioners have an overpayment of $26, 464.19 for 2014; (3) petitioners did not make a written claim for refund before November 26, 2019, the issuance date of the notice of deficiency to petitioners for 2014; and (4) the only item remaining at issue is whether the $26, 464.19 overpayment is barred by statute from being refunded or credited to petitioners. The statement of account reflects the agreed-upon overpayment amount for 2014 and payments made by petitioners with respect to that year on April 15, 2015, January 19, 2016, March 28, 2016, and June 6, 2016.
Discussion
The purpose of summary judgment is to expedite litigation and avoid unnecessary and expensive trials. Florida Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). We may grant (even partial) summary judgment where the moving party shows through "the pleadings * * * and any other acceptable materials, together with the affidavits or declarations, if any," that there is no genuine dispute of material fact and that a decision may be rendered as a matter of law. Rule 121(b); see also Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff'd, 17 F.3d 965 (7th Cir. 1994). The burden is on the moving party to demonstrate that there is no genuine dispute of material fact; consequently, factual inferences will be viewed in a light most favorable to the party opposing summary judgment. Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985); Jacklin v. Commissioner, 79 T.C. 340, 344 (1982). The nonmoving party may not rest upon the mere allegations or denials of his pleading, but must set forth specific facts showing that there is a genuine dispute for trial. Rule 121(d); Sundstrand Corp. v. Commissioner, 98 T.C. at 520.
As previously indicated, the parties agree that petitioners have an overpayment of $26, 464.19 for 2014. Respondent contends that this overpayment is barred by statute from being refunded or credited to petitioners. More specifically, respondent contends that because petitioners had not made any payments with respect to 2014 during the applicable "lookback period" of two years before the date that the Form 872 was fully executed, i.e., between July 17, 2016, and July 17, 2018, there is no amount available for credit or refund to them under section 6511.
Pursuant to section 6512(b)(1), the Tax Court is authorized to determine the amount of any overpayment of tax in respect of a taxable year for which a deficiency has been determined. However, section 6512(b)(3) imposes limits on the amount of any overpayment that may be credited or refunded. As relevant here, section 6512(b)(3) provides that the Tax Court may only order that a credit or refund be made if it determines that the portion of the tax to be credited or refunded was paid "within the period which would be applicable under section 6511(b)(2), (c), or (d), if on the date of the mailing of the notice of deficiency a claim had been filed (whether or not filed) stating the grounds upon which the Tax Court finds that there is an overpayment". § 6512(b)(3)(B).
Section 6511(c) is titled "Special Rules Applicable in Case of Extension of Time by Agreement." In a case such as the instant one, where the period of limitations for assessment has been extended by agreement, section 6511(c)(1) provides that the period for filing a claim for credit or refund "shall not expire prior to 6 months after the expiration of the period within which an assessment may be made pursuant to the agreement". Furthermore, regarding a claim timely filed within this period, as extended, section 6511(c)(2) provides the following:
the amount of the credit or refund shall not exceed the portion of the tax paid after the execution of the agreement and before the filing of the claim or the making of the credit or refund, as the case may be, plus the
portion of the tax paid within the period which would be applicable under subsection (b)(2) if a claim had been filed on the date the agreement was executed.
Section 6511(b)(2) provides for two alternative "lookback periods": a three-year period and a two-year period. § 6511(b)(2)(A), (B).
In opposing respondent's motion for partial summary judgment, petitioners seemingly argue that the three-year, not two-year, period is applicable (which allows the agreed-upon overpayment to be refunded to them) because "oral claims were made throughout the audit process." Respondent acknowledges in his motion papers that had petitioners made a written claim for refund within three years of filing the 2014 return, the lookback period would have been three years before the date of the fully executed Form 872 rather than two years, but counters that (1) the parties have stipulated that petitioners did not make a written claim for refund before the November 26, 2019, notice of deficiency, (2) there is no record in the administrative file of any oral statements allegedly being made that would constitute an oral claim for refund, and (3) even if the alleged oral statements had been made, they have no legal effect in this case. It is petitioners' (and not respondent's) argument that lacks merit.
As respondent correctly points out, petitioners have already stipulated that they did not make a written claim for refund before the IRS issued the November 26, 2019, notice of deficiency to them. We treat a stipulation "as a conclusive admission by the parties, and the Court will not permit a party to change or contradict a stipulation, except in extraordinary circumstances." Shackleford v. Commissioner, T.C. Memo. 1995-484, slip op. at 15; see also Rule 91(e). We also note that petitioners have not "asked to be relieved [from the binding effect] of this stipulation, and we will therefore hold * * * [them] to it." See Winter v. Commissioner, T.C. Memo. 2010-287, slip op. at 28.
While a taxpayer's request for refund that does not meet all of the requirements of a formal claim for refund may nevertheless be treated as a claim that may later be perfected for the purposes of the limitations of section 6511, United States v. Kales, 314 U.S. 186, 194 (1941), as respondent also correctly points out, even an informal request for refund must include a written component, American Radiator & Standard Sanitary Corp. v. United States, 318 F.2d 915, 920 (Ct. Cl. 1963); see also Goldin v. Commissioner, T.C. Memo. 2004-129, slip op. at 4 (and cases cited thereat) ("An informal refund claim must have a written component that gives the Commissioner sufficient notice of the fact that the taxpayer believes he or she has been erroneously subjected to tax and that a refund is sought for a certain year or years."); Knox v. United States, 1993 U.S. Dist. LEXIS 10250, at *6-7 (D. Mass. July 9, 1993); Treas. Reg. § 301.6402-2(b)(1) (prescribing the requirements for a claim for refund). Conversations between a taxpayer or a taxpayer's representative and an IRS revenue agent may not serve as a substitute for a written claim for refund. Sicanoff Vegetable Oil Corp. v. United States, 181 F.Supp. 265, 269 (Ct. Cl. 1960). Thus, even if petitioners' allegations regarding oral statements made during the examination of the 2014 return are accepted as true, those statements do not constitute a valid informal or protective claim for refund.
Accordingly, there is no genuine dispute of material fact in this case; the applicable "lookback period" is two years and begins on the date that the Form 872 was fully executed, i.e., on July 17, 2018. During this period, no payments of tax with respect to 2014 were made by petitioners; as reflected in the statement of account, their last payment was on June 6, 2016. Consequently, no amount of the agreed-upon overpayment for 2014 may be refunded or credited to petitioners.
Premises considered, it is hereby
ORDERED that respondent's Motion for Partial Summary Judgment, filed February 7, 2022, is granted. It is further
ORDERED that there is no deficiency in income tax or penalty under section 6662(a) due from petitioners for the 2014 taxable year; and for such taxable year, there is an overpayment of income tax of $26, 464.19 but refund or credit of this overpayment is barred by sections 6511 and 6512(b)(3).