TAX COURT OPINION

Case: Allen L. Unger & Kerry E. Mantrop
Docket Number: 7548-13S
Judge: Carluzzo
Opinion Type: bench
Filed: 03/28/2014
Pages: 8

UNITED STATES TAX COURT WASHINGTON, D.C. 20217 ALLEN L. UNGER & KERRY E. MANTROP, ) Petitioners, v. ) Docket No. 7548-13S COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ORDER Pursuant to the determination of the Court as set forth in its bench opinion rendered on February 11, 2014, it is ORDERED that the Clerk of the Court shall transmit herewith to petitioner and to respondent a copy of the pages of the transcript of the trial in the above case before Special Trial Judge Lewis R. Carluzzo at Dallas, Texas, containing his oral findings of fact and opinion rendered at the trial session at which the case was heard. In accordance with the oral findings of fact and opinion, decision will be entered for respondent. (Signed) Lewis R. Carluzzo Special Trial Judge Dated: Washington, D.C. March 28, 2014 SERVED MAR 2 8 2014 Capital Reporting Company 3 1 Bench Opinion by Special Trial Judge Lewis R. 2 Carluzzo 3 Docket No. 7548-13S 4 Allen L. Unger & Kerry E. Mantrop 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 February 11, 2014 The Court has decided to render oral findings of fact and opinion in this case, and the following represents the Court's oral findings of fact and opinion (bench opinion). Unless otherwise noted, section references made in this bench opinion are to the Internal Revenue Code of 1986, as amended, in effect for the relevant period, and rule references are to the Tax Court Rules of Practice and Procedure. This bench opinïon is made pursuant to the authority granted by section 7459(b) and Rule 152. This proceeding for the redetermination of a deficiency is a small tax case subject to the provisions of section 7463 and Rules 170 through 175. Pursuant to section 7463(b), the decision entered in this case shall not be treated as precedent for any other case. Except as provided in Rule 152(c), this bench opinion shall not be cited as authority. Kerry E. Mantrop appeared as a self- represented litigant. Allen L. Unger did not appear 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 4 5 6 7 at trial; he did, however, sign the stipulation of facts. Adam L. Flick appeared on behalf of respondent. In notice of deficiency dated December 31, 2012 (notice), respondent determined a $2,748 deficiency in petitioners' 2010 Federal income tax. The parties have reached an agreement with respect to 8 all of the adjustments made in the notice. The issue 9 for decision is whether respondent's application of 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the refund shown on petitioners' timely filed, joint 2010 Federal income tax return (return) is reviewable in this deficiency proceeding. All of the facts in this case have been stipulated. The stipulated facts are found and summarized as follows. Petitioners lived in Texas at the time the petition was filed. According to the return, petitioners' 2010 Federal income tax liability was overpaid by $1,953.61 (overpayment). On line 75 of the return, petitioners requested that the entire overpayment be applied to their 2011 estimated tax. See sec. 6402(b). As it turned out, petitioners' 2010 Federal income tax was not overpaid. Instead, because petitioners' correct 2010 Federal income tax 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 liability exceeded the amount of tax shown by them on the return, there is, as determined in the notice, a deficiency in that tax. See sec. 6211. At the time the petitioners' return was processed, their 2001 Federal income tax liability (2001 liability) had not yet been fully paid. That being so, instead of refunding the overpayment, respondent applied the overpayment (plus an amount attributable to an allowable credit not claimed on the return) to petitioners' 2001 liability. See sec. 6402(a). In due course, the balance of petitioners' 2001 liability was written off because the period of limitations on collection of that liability had expired. See sec. 6502. Petitioners neither designated nor consented to the application of the overpayment to their 2001 liability. As they see it, the overpayment, plus the previously unclaimed credit, should now be applied against the deficiency. 20 Otherwise, according to petitioners, it would be 21 22 23 24 inequitable to require them to pay "the same tax twice." We begin by confessing that we are somewhat at a loss to identify what tax petitioners believe 25 will be twice paid upon a decision unfavorable to 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 them. Their argument can relate to only one of three years: 2001, 2010 or 2011. Because the majority of their 2001 liability was written off, most of that tax has not been paid once, must less twice. Furthermore, we can envision no set of circumstances that will require, as a direct result of the decision entered in this case, the double payment of (1) the 2010 deficiency, to which petitioners now agree, or (2) the portion of petitioners' 2011 Federal income tax liability, if any, that results from respondent's application of the overpayment to a year ot.her than 2011. Consequently, petitioners' sense of unfairness, although no doubt sincere, is neither supported by the realities of the situation nor shared by the Court. Furthermore, our analysis and resolution of the matter is informed with reference to controlling legal principles and not by considering whether the application of those principles, which are summarized below, is fair or otherwise. On its face, petitioners' return shows an overpayment of income tax. See sec. 6401(a) and (b). As relevant here, in the case of an overpayment of tax shown on a return or refund of tax otherwise due 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company 7 1 2 3 4 5 6 7 8 9 to a taxpayer, respondent may "credit the amount of such overpayment, including any interest allowed thereon, against any liability in respect of an internal revenue tax on the part of the person who made the overpayment." Sec. 6402(a). Section 6402(b) states that respondent "is authorized to prescribe regulations providing for the crediting against the estimated income tax for any taxable year of the amount determined by the taxpayer 10 to be an overpayment of the income tax for a 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 preceding taxable year." This statutory grant of authority was implemented by the promulgation of section 301.6402, Proced. & Admin. Regs. That regulation allows for the designation as shown on petitioners' return. However, it further provides that respondent may ignore such a designation and apply the overpayment to any of the taxpayer's other outstanding Federal tax liabilities. See sec. 301.6402-3(a)(5) and (6). That is what happened here. Furthermore, and perhaps more importantly, under the circumstances, the manner in which the overpayment was shown on the return or treated by respondent plays no role in the computation of the deficiency. See sec. 6211. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 The deficiency is computed with reference to the correct amount of petitioners' 2010 Federal income tax liability and the tax shown on the return. The income tax withholdings giving rise to the overpayment are not part of the equation. See sec. 6211(b)(1). Lastly, we note that the Court's overpayment jurisdiction has not been triggered in this case by the issuance of the notice for the simple reason that petitioners' 2010 Federal income tax has not been overpaid. See secs. 6512(a) and (b). And even if the decision in this case were to shown an overpayment, the Court would be without jurisdiction to review the manner in which respondent applied that overpayment. See sec. 6512(b)(4). It follows that the decision in this case 17 will reflect the agreement of the parties with 18 respect to the deficiency determined in the notice. 19 Nothing in this bench opinion or the decision that 20 will be entered as a result is intended to have any 21 22 23 24 25 effect on any remedy that petitioners might have with respect to a year or years other than the year here in issue. To reflect the foregoing, decision will be entered for respondent. 866.488.DEPO www.CapitalReportingCompany.com 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Capital Reporting Company 9 This concludes this bench opinion. (Whereupon, at 12:12 p.m., the above- entitled matter was concluded.) 866.488.DEPO www.CapitalReportingCompany.com