1 All subsequent section references are to the Internal

Revenue Code in effect for 1999, the taxable year in issue.

T.C. Summary Opinion 2003-24

UNITED STATES TAX COURT

JAMES GILL AND KATIE GILL, Petitioners v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 8023-02S. Filed March 19, 2003.

James and Katie Gill, pro sese.

Michael D. Zima, for respondent.

ARMEN, Special Trial Judge: This case was heard pursuant to

the provisions of section 7463 of the Internal Revenue Code in

effect at the time that the petition was filed.1 The decision to

be entered is not reviewable by any other court, and this opinion

should not be cited as authority.
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2 Form SSA-1099 for 1999 includes the following eight

boxes: Box 1 “Name”; Box 2 “Beneficiary’s Social Security

Number”; Box 3 “Benefits Paid in 1999"; Box 4 “Benefits Repaid to

SSA in 1999"; Box 5 “Net Benefits for 1999 (Box 3 minus Box 4)”; Box

6 “Voluntary Federal Income Tax Withheld”; Box 7 “Address”; and

Box 8 “Claim Number (Use this number if you need to contact

SSA.)”.

Respondent determined a deficiency in petitioners’ Federal

income tax for the taxable year 1999 in the amount of $577.

The only issue for decision is whether respondent should be

estopped from collecting an erroneous refund paid in respect of

what respondent concedes was petitioners’ properly reported tax

liability for the year in issue. We hold that respondent should

not be so estopped.

Background

Some of the facts have been stipulated, and they are so

found. Petitioners resided in Cocoa, Florida, at the time that

their petition was filed with the Court.

In 1999, petitioner Katie Gill (Mrs. Gill) received, inter

alia, Social Security benefits in the amount of $7,614. The

Social Security Administration issued a Form SSA-1099, in respect

of such benefits. Although the record does not include a copy of

the Form SSA-1099 that was sent to Mrs. Gill, box 5 would

presumably have shown the amount of $7,614.2

Respondent’s Instructions for Form 1040A for 1999 direct the

taxpayer to report on line 13a (Social Security benefits) the

amount from box 5 of the taxpayer’s Form SSA-1099. Respondent’s
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3 The Worksheet reflects the statutory formula set forth in

sec. 86 that determines the amount of Social Security benefits

that is includable in the taxpayer’s gross income.

4 The parties agree that petitioners’ reported tax

liability of $4,256 represents petitioners’ correct tax liability

for 1999.

Instructions then direct the taxpayer to report on line 13b

(“Taxable amount (see page 28)”) the portion of the taxpayer’s

Social Security benefits that is taxable pursuant to the

Worksheet on page 29 of the Instructions.3

In completing their 1999 Form 1040A, petitioners left line

13a blank and placed the figure “3807.00" in line 13b. The

figure “3807.00" represents one-half of the Social Security

benefits that were received by Mrs. Gill in 1999; that figure

also correctly represents the amount of such benefits that was

properly includable in petitioners’ income for 1999.

On their 1999 Form 1040A, petitioners reported adjusted

gross income in the amount of $41,053, taxable income in the

amount of $28,353, and tax in the amount of $4,256.4 Petitioners

enclosed with their return a check in the amount of the

difference ($256.65) between their reported liability ($4,256)

and the total amount of their withholding ($3,999.35).

Upon receiving petitioners’ 1999 return, respondent

mistakenly concluded that petitioners had overreported their

income by $3,807; i.e., the amount reported on line 13b as the

taxable amount of Social Security benefits received. Respondent
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5 The amount of $580.99 was calculated as follows:

Liability reported and paid per return $4,256.00

less: Liability as recalculated by respondent -3,679.00

Decrease in tax 577.00

plus: Interest due petitioners 3.99

Amount of refund check 580.99

then recalculated petitioners’ tax liability as $3,679 and, in

July 2000, issued a refund check in the amount of $580.99.5

Upon receiving the refund check, petitioners questioned the

matter by contacting one of respondent’s representatives at an

“800 number”. The representative agreed with petitioners that

respondent had made a mistake and requested that petitioners

return the refund check. Petitioners did so. However, a couple

of months thereafter, by letter dated September 7, 2000, another

of respondent’s representatives advised petitioners as follows:

We received the returned refund check for $580.99. Our

records show you incorrectly figured your pensions and

annuities as taxable social security. The refund is

correct and will be reissued.

If you have any questions, please call Ms. Robbin

Cooley * * * .

Petitioners contacted Ms. Cooley, who insisted that

petitioners had incorrectly reported their Social Security

benefits as taxable. Thereafter, upon receipt of the second

refund check, petitioners cashed it.

Ultimately, well over a year later, respondent concluded

that petitioners had correctly reported their Social Security

benefits and that respondent had erred in issuing petitioners a
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6 We need not decide whether sec. 7491, concerning burden

of proof, applies to the present case because the facts are not

in dispute and the issue is one of law. See Higbee v.

Commissioner, 116 T.C. 438 (2001).

refund check. Accordingly, by notice dated March 22, 2002,

respondent determined a deficiency in petitioners’ income tax for

1999 in the amount of $577.

Discussion6

The parties agree that petitioners’ correct tax liability

for 1999 is $4,256, which is the amount reported by petitioners

as their tax liability on their 1999 Form 1040A. Nevertheless,

petitioners contend that they should not be liable for any

deficiency. At trial, petitioner James Gill expressed his view

as follows:

I’m very frustrated. I feel that I have been

harassed. I have tried over the years to do my own

taxes correctly and I did do them correctly in this

case, Your Honor.

If the Government makes a mistake, my feelings are

they ought to write it off. That was their –- I don’t

have the money, I have more debt problems; I have, you

know, a need for the money. The situation has changed

since 1999 and when I filed this return.

Essentially, petitioners seek to estop respondent from pursuing

the present action against them. 

Although the doctrine of equitable estoppel is applicable

against the Commissioner, it is well established that the

doctrine is applied against the Commissioner with the utmost

caution and restraint. Schuster v. Commissioner, 312 F.2d 311,
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317 (9th Cir. 1962), affg. 32 T.C. 998 (1959) and First W. Bank &

Trust Co. v. Commissioner, 32 T.C. 1017 (1959); Boulez v.

Commissioner, 76 T.C. 209, 214-215 (1981), affd. 810 F.2d 209

(D.C. Cir. 1987); Estate of Emerson v. Commissioner, 67 T.C. 612,

617 (1977). The rationale for this rule of law has been

articulated as follows:

the tendency against Government estoppel is

particularly strong where the official’s conduct

involves questions of essentially legislative

significance, as where he conveys a false impression of

the laws of the country. Obviously, Congress’s

legislative authority should not be readily

subordinated to the action of a wayward or

unknowledgeable administrative official. Accordingly,

the general proposition has been that the estoppel

doctrine is inapplicable to prevent the Commissioner

from correcting a mistake of law. See Automobile Club

v. Commissioner, 353 U.S. 180 [, 183-184 (1957)]. [Fn.

ref. and further citations omitted.]

Schuster v. Commissioner, supra at 317. In short, “the policy in

favor of an efficient collection of the public revenue outweighs

the policy of the estoppel doctrine in its usual and customary

context.” Id.

Although we can appreciate petitioners’ frustration, the

fact of the matter is that the events of the present case do not

provide a basis for estopping respondent from collecting an

erroneous refund paid in respect of what respondent concedes was

petitioners’ properly reported tax liability for the year in

issue. See Kronish v. Commissioner, 90 T.C. 684, 695-697 (1988);

Century Data Sys., Inc. v. Commissioner, 86 T.C. 157, 165 (1986);
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7 In an action for redetermination of a deficiency, this

Court does not generally have jurisdiction over interest. 

Accordingly, the decision that we shall enter will speak only to

petitioners’ liability for the $577 deficiency in income tax. 

However, we note that at trial, counsel for respondent

acknowledged that interest on the deficiency will be abated by

respondent.

see also Dixon v. United States, 381 U.S. 68, 72-73 (1965);

McGuire v. Commissioner, 77 T.C. 765, 779-780 (1981). 

Accordingly, we are left with no alternative but to sustain

respondent’s deficiency determination.

Reviewed and adopted as the report of the Small Tax Case

Division.

To reflect the foregoing,

Decision will be entered

for respondent.7