TAX COURT OPINION

Case: Richard D. Green & Hae K. Han
Docket Number: 12955-07L
Judge: Foley
Opinion Type: memo
Filed: 05/19/2009
Pages: 8

I T .C . "Memo . 2009 ;;10 5 UNITED STATE S,TAXICOUR T RICHARD D . GREEN AND HA K . HAN, Petitioners v . COMMISSIONER OF,INTERNAL REVENUE, Responden t Docket No . 12955-07L . Filed May 19, 2009 . i . .. , . . ~ is y . . Richard D . Green andiHae K . Han, pro sese . Andrew M . Stroot , for respondent . ti MEMORANDUM FINDING S OF FACT AND OPINIO N FOLEY Judge : < The issue for decision .is whether to sustain the decision by respondent to proceed with collection relating,tio petitioners' 1999, 2000, and 2001 'tax ",;liabilities .- I I ~ I SERVE 19 - 2 - FINDINGS OF FAC T Inj,December 2003, petitioners untimely filed their 1998 , 1999, 2000, and 2001 joint Federal income tax returns an d reported, among other items, the following information : Ye'"alr 1998 19+99 2060 200 .1 E t 's imat e Tax Payments Tax Withheld Overpayment / (Balance Due) ' 2$46,643 67,073 8,742 -- $34,000 33,;979 40,495 62,118 $67,07 3 8,74 2 (55, 881 ) (12,265 ) 1C.tecks in the amounts of the balances due accompanied the 2000 and 2001 returns . 2This amount includes a $25,000 tax payment petitioners made by check on Oct . 19, 1999 . Petitioners' 1998 return, for which petitioners received a 6- month extension, was filed December 15, 2003 . Respondent treate d petitioners' reporting of the $67,073 overpayment (19 .9 8 overpayment) . as a refund claim (1998 refund claim), and on April 20, 2004, respondent's Philadelphia Service Center issued Letter 105C, Claim Disallowance Letter . In the letter, responden t denied the refund claim because the 1998 return was not filed .within 3 years of the return's due date . February 24, 2006, respondent's Wheaton, Maryland, office issued Letter 1058A, Final Notice of Intent to Levy and Notice of Your Right to a Hearing, relating to petitioners' 1999, 2000, and .. 2001 unpaid tax liabilities . Petitioners sent a letter dated February 25, 2006,- to respondent' s Philadelphia sPhiladelphia Service Cente r requesting reconsideration of the it '1998 refund claim . In a letter .dated March 8, 2 006,' to respondent's Wheato n Maryland, office, petitioners requested "abatement- abatement' f penalt i 2s'!" relating to 1999 through' 2001 . On March . 14,; (cid:127) 2006 petitione r s ' . 'l .. sent respondent's- Wheaton, Maryla nd, office an addendum -to petitioners' . February 25 Better .' In-the addendum, . Ms . .Han st a t e d that from 2000 to 2002 she was, . ' p ursuarnt, to section 6511 (h)r, financially disabled and involved in a ;discrimination an d wrongful termination lawsuit . -' 'S h e ,also stated that-she had ; n is authorized anyon e to conduct he r financial affairs . On-March 15, 2006, re;sponde n t teceived :petitioners ' Form 12153, Request for a Collection Du e Proce .ss .Hearing, in whic h petitioners disputed the proposed levyland, requested a hearin g relating to 1998 , 1999 , 20'00, and 2001 Petitioners, on Agri Il 5 ± 2006, faxed respondent alietter d ated .March 23, 2006,. from - . Lawrence J . Carroll, a clinical psychologist . In the letter, , Mr Carroll stated .th-at-from 2000' t 2002 "Ms-. Han suffered an ., episode . of ,Major Depressive Diso r der" that "prevented Ms .,Ha n from managing her financial affai a-S . . 1 Unless otherwise indicated, all section references are ,t o the Internal Revenue Code !of 1986, as amended . -4- On August 2, 2006, Settlement Officer William DeBeau held a face-to-face .hearing with petitioners during which petitioners disputed the disallowance of the 1998 refund claim .- Petitioners { stated that they intended to apply the $25,000-tax payment (i .e ., which was reported on petitioners' 1998 return as part of the 1998 estimated tax payments) to their 1999 tax liability . . Petitioners also renewed their assertion of Ms . Han's financial disability and request for reconsideration of the 1998 refund claim . Respondent, on December 14, 2 0. 06, applied the $25,000 tax payment to petitioners' 1999 tax liability and, on January 12, 2007, issued a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 (initial determination), sustaining the -collection activity relating to 1999, 2000, and 2001 : The initial determination stated that the 1998 overpayment had been forfeited because petitioners "did not claim the refund within the three . year time frame to do so . " In a letter dated January 17, 2007, petitioners requested a new notice of determination because the initial determination did not address the financial disability claim . Pursuant to petitioners' request, respondent, on January 30, 2007, held another!iface-to-face hearing solely to discuss the financial disability issue . At .the hearing, respondent gave petitioners a petitioners' requet for a1-new d e termination . On. M y :9, 2007, respondent issued {a- second notice o f determination(cid:127) (final determination denying petitioners ' appa l relating to the proposed levy 'and rejecting M Han" s claim o f financial . disability . Responden t -cited Ms . Han's activ e participation in- her lawsuit as evidence of her ability'to aridil'e' 11. her financial affair's,and stated that Richard D .-Green, her .husband could have prevented loss of the .1998 overpaymentrby timely . filing their return : On 'June 7," 200.7, -petitioners, w h [~ le i residing in Maryland , . file d'. a pet ition4with this Court seekin g review of the final- determiination OPINION,' . Pe.tiitioners contend that,. i n determining whether to'sust!a i n the levy noticei' respondent erre d in-refusing to accept the 1t 99 8 overpayment as a . collection alter native .'(cid:127)-Respondent contends that this Court,-does not have ju r isdiction to review 'responden t denial of petitioners' .199',8 -refun d claim . Pursuant-to section 6 ;330(d ) 1) , our jurisdiction is d e by the scope of respondent's det e rmination . See Freijie .v . Commissioner , 1s25 . T . C . 14 25, (2.0 05) . ."Respondent rescindedgt he initial determination becau"se of it's failure to address th e refund'claim, the January '30 hear ing was scheduled° to discuss. k - 6 - that claim, and petitioners' request for a new determination wa s granted to allow respondent to . address the claim . . Inshort,,ther 1998 refund claim is an integral part of the final determination and,thus the proper, and a permissible, subject of our review . ' We further conclude that petitioners are not entitled to a- refund of the 1998 overpayment as a collection alternative . A claim.lfor refund of an overpayment is required to be filed within 3 years of the time the relevant return was filed . Sec . 6511(a) .. Petitioners filed their 1998 return and refund claim simultaneously . . Thus, petitioners' 1998 refund claim was timely . If a ;refund claim is filed within the 3-year period, the ., refund is limited to the amount of tax paid within the 3-year period, plus the period of any extension of time for filing the return, immediately preceding the claim . Sec . 6511(b)(2 ) (A) . Because petitioners' 1998 return was filed December 15, 2003, and petitioners received a 6-month extension of time to file , petitioners are entitled to a maximum refund of the amount of ta x paid between June 15, 2000,- and December 15, 2003 . During thi s 2 If the underlying tax liability is at issue, we review the Commissioner's administrative determination de novo . Goza v . Commissioner , 114 T .C . 176, 181-182 (2000) . If, however ; the underlying tax liability is not at issue, we review the Commissioner's administrative determination for an abuseof discretion . Sego v . Commissioner , 114 T .C . 604, 610 (2000) . We need not decide which standard of review is applicable because respondent prevails under either standard . period, petitioners did not make any tax-payment's relating to 1998 . Thus, petitioners are no t entitled to a refund . Petitioners contend that, pu rsuant to the financial disability exception of section 6 511(h), the period of limit a ion was suspended from-2000 through 2 002 . The running of the per of limitation may, indeed„ be su s pended while the 'taxpayer !is financially disabled . Sec . 6511( h) (1) An individual will "n however, be considered financiall y disabled unless proof 'of ,, a medically determinable physical of r mental impairment is prbv i in such form and manner as the Commissioner may require . Se c 6511(h)(2)(A) . More specifically, the! Commissioner requires written statement from a physician .3 Rev . Proc . 99-21, sec . lcdi t 1. dedr f 'a I 1999-1 C .B . 960 . Ms . Hang howeve~r, did not establish that s h e was financially disabled . n addition ; she was treated by', clinical psychologist, not a physician, and thus could not and did not provide the requisite do~umentation . Accordingly, f respondent may proceed with the proposed collection action . Contentions we have riot addressed, are irrelevant, moot , r meritless . 3 For purposes of the y financial disability exception of . 'sec . 6511 ( h), only chiropractors and doctors of(cid:127)medicine , osteopath dental 'medicine, podiatric medicilne , and optometry are considered physicians . See 42 U . S .C . sec . I395x ( r_) (1998) . ~¢~ I