Court Opinion

ID: 2963594
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:12:34.10218+00
Date Added: 2024-06-11T11:42:43.635615
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USCA1 Opinion

	

                            United States Court of Appeals
                            United States Court of Appeals
                                For the First Circuit
                                For the First Circuit
                                 ____________________

        No. 95-1173

                                 GRENVILLE CLARK III,

                                 Plaintiff, Appellee,

                                          v.

                              UNITED STATES OF AMERICA,
                              INTERNAL REVENUE SERVICE,

                               Defendants, Appellants.

                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF NEW HAMPSHIRE

                [Hon. Martin F. Loughlin, Senior U.S. District Judge]
                                          __________________________

                                 ____________________

                                        Before

                                Torruella, Chief Judge,
                                           ___________
                                Stahl, Circuit Judge,
                                       _____________
                           and Dominguez,* District Judge.
                                           ______________

                                 ____________________

            Kent L. Jones, Tax  Assistant to the Solicitor General, with  whom
            _____________
        Loretta C.  Argrett, Assistant  Attorney General, and  Gary R.  Allen,
        ___________________                                    ______________
        David   English  Carmack,  and  Sally  J.  Schornstheimer,  Attorneys,
        ________________________        _________________________
        Department of Justice, Tax Division, were on brief for appellants.
            Grenville Clark III pro se. 
            ___________________
                                 ____________________
                                   August 29, 1995
                                 ____________________

        _____________________
        *Of the District of Puerto Rico, sitting by designation.

                      STAHL, Circuit Judge.   In this federal  income tax
                      STAHL, Circuit Judge.
                             _____________

            case,  the government appeals  the district court's  grant of

            summary judgment to taxpayer Grenville Clark III in his  suit

            to recover monies  collected by the Internal  Revenue Service

            ("IRS") by levy.   Although we agree with  the district court

            that  summary judgment for  the taxpayer was  appropriate, we

            reduce the amount of the judgment because  the district court

            erred in finding that  Clark had fully extinguished his  1985

            tax liability.

                                          I.
                                          I.
                                          __

                                  Factual Background
                                  Factual Background
                                  __________________

                      The material  facts are not in dispute.   On August

            14,  1986, Clark and his then-spouse, Marguerite Clark, filed

            their  1985 income  tax  return, which  the  IRS received  on

            August 18, 1986.  The  return indicated a total tax liability

            of  $13,648.00, and on  September 29, 1986,  the IRS assessed

            the Clarks' 1985 tax liability  in that amount.1  Because the

                                
            ____________________

            1.  Typically,  when  the  IRS  receives  a  tax  return,  it
            evaluates the return for  accuracy.  If, as in  this case, it
            finds  the return satisfactory,  it enters an  assessment for
            the amount of  tax the taxpayer calculated to be  owing.  See
                                                                      ___
            26 U.S.C.    6201, 6203.  If it disagrees with the taxpayer's
            determination of  the  tax liability,  the  IRS may  enter  a
            different assessment, but  only after it  issues a notice  of
            deficiency to the  taxpayer and gives him or  her ninety days
            to challenge its calculations in the Tax Court.  26 U.S.C.   
            6201, 6212, 6213.   The IRS has  three years from the  date a
            return  is filed  to make  an  assessment of  liability.   26
            U.S.C.    6501.  If the IRS  discovers that an assessment "is
            imperfect  or incomplete  in any  material  respect," it  may
            correct the problem by making a supplemental assessment if it
            does   so  within  the  three-year  time  period  for  making

                                         -2-
                                          2

            Clarks did not pay the tax in full at the time of filing, the

            IRS added penalties and  interest to the amount due.  The IRS

            then placed a lien upon  their real and personal property and

            demanded that they satisfy the outstanding tax.

                      As  of  June  13,  1987,  Clark  had  made  several

            payments on  his 1985 tax  liability.  He also  had an unpaid

            tax liability  for  1986 in  the amount  of $13,415.00,  plus

            interest and penalties.  On June 13, 1987, Clark sent the IRS

            a check for $13,415.00, which he  indicated should be applied

            to his 1986 liability by writing in the "memo" portion of the

            check:   "1040 12/31/86 [Clark's  social security  number]."2

                                
            ____________________

            assessments.  26 U.S.C.   6204.
                      Once it  makes an  assessment of  a taxpayer's  tax
            liability for a given year,  the IRS generally has sixty days
            to issue a  notice and demand for payment to the taxpayer, 26
            U.S.C.    6303(a),  and  ten years  to  collect the  assessed
            amount, 26  U.S.C.    6502(a)(1).    Collection may  be  made
            through administrative methods  (including federal liens  and
            levies), see  26 U.S.C.     6321,  6331, or  judicial methods
                     ___
            (suits  to  foreclose  liens  or  to  reduce  assessments  to
            judgment), see 26  U.S.C.    7403.   If it does  not make  an
                       ___
            assessment within three years of  the filing of a return, the
            IRS may not  pursue collection activities after  the close of
            the three-year  period.  26 U.S.C.    6501.  It can, however,
            file suit for collection without  an assessment if it does so
            during the three-year period.  Id.
                                           ___

            2.  In a  letter to the  IRS dated September 22,  1989, Clark
            wrote:
                      This  payment was  voluntarily made,  and
                      the memo  on  the  check  itself  clearly
                      indicates  that I  designated that  it be
                      applied  to   my  1986   Form  1040   tax
                      liability.   This memo conforms  with the
                      instruction found at  line 67 of my  1986
                      return which  asks that I write my social
                      security number  and "1986 Form  1040" on
                      it.

                                         -3-
                                          3

            The IRS, however,  applied the $13,415.00 payment  to Clark's

            outstanding  tax liability  for  1985,  which  paid  off  the

            balance due3  and yielded an  overpayment for that year.   On

            July  17, 1987,  the  IRS  issued Clark  a  refund check  for

            $11,652.28.

                      Clark  and  the  IRS  corresponded  over  the  next

            several  years, both about  the refund and  about the balance

            due on the 1986 account, which had not been credited with the

            $13,415.00 payment.   In his  correspondence, Clark  insisted

            that he  had made a  $13,415.00 payment towards his  1986 tax

            liability, but  did not explicitly  mention that it  had been

            misapplied to his  1985 account and  mostly refunded to  him.

            Clark points out,  however, that the copies  of the cancelled

            check  he repeatedly  sent  to the  IRS  showed code  numbers

            imprinted  by the IRS that  indicated exactly how the payment

            had been applied.

                      Finally, in November 1990, the IRS realized that it

            had  misapplied the  1986 payment  to  Clark's 1985  account.

            Clark continued to insist, however, that as he had designated

            that the  payment be applied  to his 1986 account,  he should

            receive credit  for it there.   In response, the  IRS removed

                                
            ____________________

            3.  According  to our calculations,  the balance due  on June
            19, 1987, the date the IRS received the taxpayer's $13,415.00
            payment, was $1,808.59.   We calculate this number  by adding
            the  payments  Clark  had made  prior  to  the misapplication
            ($14,140.72) and  subtracting  that number  from the  charges
            reflected in his account ($15,949.31).

                                         -4-
                                          4

            the $13,415.00 payment  from his 1985 account and  applied it

            to his 1986  account,4 leaving his 1985 account  with, in the

            IRS's view,  a balance due of $13,415.00,  plus penalties and

            interest.   After  some  additional correspondence  about his

            1985  taxes, the  IRS  collected  $24,546.34  from  Clark  by

            levying upon his  bank accounts and seizing  and subsequently

            selling his car.  Clark then filed a claim with the IRS for a

            refund, but the claim was denied.

                      On  January  3,  1994, Clark  brought  suit  in the

            United   States  District  Court  for  the  District  of  New

            Hampshire, seeking a refund of the $24,546.34, plus interest.

            Both parties  moved for  summary  judgment.   In his  motion,

            Clark  argued  that  the  IRS's  collection  activities  were

            unlawful because they were not done pursuant to an assessment

            as  required by 26 U.S.C.    6502(a)(1), since the assessment

            that  the  IRS  had  entered  in  September   1986  had  been

            extinguished.   The  government  responded  that  assessments

            cannot be extinguished and that its crediting of Clark's 1986

            account  resulted in  an underpayment  in  his 1985  account,

            leaving the  IRS its statutory  rights to collect  the unpaid

            1985 tax liability on the basis of the original assessment.

                                
            ____________________

            4.  Because the  taxpayer  had  already  satisfied  his  1986
            account  to avoid further penalties, the transfer resulted in
            an  overpayment  on  the  1986  account.    Pursuant  to  the
            taxpayer's  direction, the IRS applied the overpayment to his
            tax liabilities for 1988 and 1989.

                                         -5-
                                          5

                      The district  court relied  on the  Fifth Circuit's

            decision in United States v.  Wilkes, 946 F.2d 1143 (5th Cir.
                        _____________     ______

            1991), to hold that a full payment extinguishes an assessment

            and  that  subsequent  refunds  do  not  revive  extinguished

            assessments.  The district court also found that Clark's 1985

            assessment  had  been extinguished.    Although acknowledging

            that Clark was getting "an undeserved windfall," the district

            court  granted  Clark's  motion for  summary  judgment,  thus

            rendering  moot  the government's  cross  motion  for summary

            judgment.  The government appeals.

                                         II.
                                         II.
                                         ___

                                      Discussion
                                      Discussion
                                      __________

            A.  Standard of Review
            ______________________

                      As  always, we review  a district court's  grant of

            summary judgment de novo and, like the district court, review
                             __ ____

            the facts in the light most favorable to the nonmoving party.

            See,  e.g., Udo  v.  Tomes, 54  F.3d 9,  12 (1st  Cir. 1995).
            ___   ____  ___      _____

            Summary  judgment   is  appropriate   when  "the   pleadings,

            depositions,  answers to  interrogatories, and  admissions on

            file, together with  the affidavits, if any,  show that there

            is  no genuine  issue as  to any  material fact and  that the

            moving party is entitled  to a judgment as a matter  of law."

            Fed. R. Civ. P. 56(c).

            B.  Analysis
            ____________

            1.  Can Assessments be Extinguished?

                                         -6-
                                          6

                      The government argues that the district court erred

            in  holding  that assessments  are  extinguished  by payment.

            Under  the   government's  theory,   assessments  cannot   be

            extinguished, so  if there is  an underpayment of  the amount

            recorded in  the assessment at  any time during  the ten-year

            period  for collection, then the IRS may institute procedures

            to collect that amount.  The government  reasons that because

            Clark's 1985 account reflected an underpayment of $13,415.00,

            plus  interest and  penalties,  after  the  IRS  removed  the

            misapplied  $13,415.00  payment,  and  because  the  ten-year

            limitations period had  not expired, the IRS  was entitled to

            implement  administrative  procedures to  collect  the amount

            due.  The government's argument has essentially three prongs.

                      First,  the  government   argues  that  assessments

            cannot be extinguished because they are merely administrative

            records of  a  taxpayer's tax  liability  for a  given  year.

            According  to the government, assessments are not affected by

            payment, but  remain as  permanent records  of tax  liability

            regardless of whether  the taxpayer satisfies  that liability

            or not.   As such, assessments are not  like promissory notes

            or mortgages, which  create liability and are  cancelled when

            the debt is satisfied.  In fact, the government contends that

            assessments create no  liability at all, since  tax liability

            is created by the Internal  Revenue Code and may be collected

                                         -7-
                                          7

            even  without an  assessment if  the  IRS brings  suit within

            three years of the filing of a return.  

                      Second,  the  government argues  that  the Internal

            Revenue Code's  distinction between rebate  refunds and  non-

            rebate  refunds5  supports  its  position  that   assessments

            cannot be  extinguished.    This argument  is  based  on  the

            government's contention that when the IRS erroneously refunds

            an amount  to a taxpayer, it  can reclaim that amount  in two

            ways:    (1) by  bringing an  erroneous-refund suit  under 26

            U.S.C.     7405,  or  (2)  through administrative  collection

            procedures.6   Under  the  government's view,  if assessments

            can be extinguished, then the IRS would not be able to pursue

                                
            ____________________

            5.  Rebate  refunds are generated when the IRS recalculates a
            taxpayer's  tax  liability for  a  given year,  as  when, for
            example,  a  taxpayer  submits  an  amended   return  showing
            additional deductions.  According to the government, when the
            IRS issues a rebate refund, the original assessment is abated
            to  the  extent  of  the  refund  so  that  it  reflects  the
            taxpayer's actual  tax liability  for the  year in  question.
            Non-rebate  refunds, on  the  other  hand,  stem not  from  a
            recalculation  of the  taxpayer's tax  liability,  but rather
            from a  determination that  the taxpayer  paid more  than the
            assessed  amount.   According to  the government,  non-rebate
            refunds  do not affect the original assessment, which remains
            intact as an accurate record of the taxpayer's tax liability.

            6.  The government contends that the legislative history of  
            7405 shows that the section was not intended to  be the IRS's
            exclusive  method for collecting  erroneous refunds.  Rather,
            as  a Senate  Report  explaining the  predecessor  of    7405
            states,  "the erroneous  refund may  [also]  be recovered  by
            assessment in  the ordinary manner."   S. Rep. No.  960, 70th
            Cong.,  1st Sess.  42  (1928); see  also Brookhurst,  Inc. v.
                                           ___  ____ _________________
            United States, 931 F.2d 554,  557 (9th Cir.) (IRS not limited
            _____________
            to    7405  because imperfect  assessment  may be  reassessed
            within three  years from  date tax  return was  filed), cert.
                                                                    _____
            denied, 502 U.S. 907 (1991).
            ______

                                         -8-
                                          8

            administrative  collection procedures  to recover  non-rebate

            refunds.  The government explains that if an erroneous refund

            was  a rebate  refund,  then  before  the IRS  can  implement

            administrative collection  procedures, it must  first enter a

            supplemental assessment,  since the  original assessment  was

            abated  to the extent of the  refund and does not reflect the

            taxpayer's true tax liability; the  IRS has the authority  to

            enter  a supplemental  assessment  under  26  U.S.C.     2604

            because  erroneous  rebate  refunds  constitute  deficiencies

            under  26 U.S.C.    6211.  The  government contends, however,

            that if  the erroneous refund  was a non-rebate  refund, then

            the original assessment  still reflects the  taxpayer's total

            tax  liability and  so  provides  a  basis  for  implementing

            administrative  collection   procedures  immediately.     The

            government  argues that not only is there no need for the IRS

            to  enter a  supplemental assessment,  but  that it  actually

            could  not,  since  non-rebate  refunds  do   not  constitute

            deficiencies under    6211 and since the  original assessment

            still  exists and there  cannot be two  valid assessments for

            the  same tax  liability.   The  government  reasons that  if

            assessments could be extinguished, then the IRS would not  be

            able  to  pursue   administrative  collection  procedures  to

            recover erroneous non-rebate refunds.  Because the government

            thinks that  administrative collection  procedures should  be

                                         -9-
                                          9

            available for recovering non-rebate refunds, it contends that

            assessments cannot be extinguished.

                      Third,  the  government  cites   three  cases  that

            support  its view  that  assessments cannot  be extinguished.

            See Davenport v.  United States, 136 B.R. 125,  127 (W.D. Ky.
            ___ _________     _____________

            1991) (holding that "[a]  non-rebate erroneous refund  simply

            gives back to the taxpayer  a part of the taxpayer's assessed

            tax and the assessed balance due may be collected by ordinary

            collection procedures");  Sanfellipo v.  United States,  90-2
                                      __________     _____________

            U.S.  Tax Cas.  (CCH)    50,567, at  85,943 (N.D.  Cal. 1990)

            (taxpayer's payment  of assessments "did  not extinguish  the

            liabilities or otherwise foreclose the IRS from attempting to

            collect the erroneous refunds"); Groetzinger v. Commissioner,
                                             ___________    ____________

            69 T.C. 309, 315-16 (1977) (viewing all transactions together

            to   determine  that   erroneous   refund   resulted  in   an

            underpayment of tax).

                      We decline to adopt the government's  position that

            assessments cannot be  extinguished.  Instead, we  follow the

            Fifth  and  Seventh  Circuits,  the  only  circuits  to  have

            addressed  this  issue  thus  far, in  holding  that  when  a

            taxpayer  tenders payment on  a tax assessment,  that payment

            extinguishes the  assessment to  the extent  of the  payment.

            O'Bryant v. United States, 49  F.3d 340, 346 (7th Cir. 1995);
            ________    _____________

            Wilkes, 946 F.2d at 1152; see also Karp v. United States, 868
            ______                    ___ ____ ____    _____________

            F. Supp. 235,  237 (N.D. Ill. 1994); United  States v. Brown,
                                                 ______________    _____

                                         -10-
                                          10

            782 F.  Supp.  321, 324-25  (N.D.  Tex. 1990);  Rodriguez  v.
                                                            _________

            United States, 629 F. Supp. 333, 344 (N.D. Ill. 1986); United
            _____________                                          ______

            States v. Young, 79-2 U.S.  Tax Cas. (CCH)   9609, at  88,221
            ______    _____

            (D. Del.  1979); LaFollette  v. United  States, 176  F. Supp.
                             __________     ______________

            192, 195 (S.D.  Cal. 1959).  We also agree  that an erroneous

            refund  does  not  revive an  extinguished  assessment.   See
                                                                      ___

            O'Bryant, 49  F.3d at 346; Wilkes, 946 F.2d  at 1152.  As the
            ________                   ______

            Seventh Circuit  explained in O'Bryant, 49 F.3d at 346, there
                                          ________

            is a fundamental  difference between money taxpayers  possess

            as   the  result  of  an  erroneous  refund  and  money  they

            originally owed the IRS (their tax liability):  taxpayers who

            receive erroneous refunds owe the IRS "because they have been

            unjustly enriched by it, not because they have not paid their

            taxes."  Thus,

                      [w]hen a  taxpayer mails the IRS  a check
                      in  the full  amount of his  assessed tax
                      liability,  and the  IRS  cashes it,  the
                      taxpayer's  liability  is  satisfied, and
                      unless a new assessment is made later on,
                      any  erroneous,  unsolicited  refund that
                      the IRS happens to send the taxpayer must
                      be handled  on its  own terms,  not under
                      the rubric of the assessed liability.

            Id. at 347.
            ___

                      As our discussion indicates,  we are unpersuaded by

            the  government's  assertion   that  assessments  are  merely

            bookkeeping devices that  cannot be extinguished by  payment.

            Like  the Seventh Circuit, we  think this argument misses the

            point.  

                                         -11-
                                          11

                      Regardless of whether the assessment is a
                      record of the taxpayer's tax liability or
                      is  the liability  itself, the  liability
                      has already been  satisfied and cannot be
                      sued on to collect a refund  that results
                      not   from   that    liability   or   any
                      reevaluation  thereof but  from a  simple
                      mistake.

            Id. at 346.
            ___

                      We  are   also  unpersuaded  by   the  government's

            argument that  the difference between  rebate and  non-rebate

            refunds  shows that assessments  cannot be extinguished.   In

            our  view,   once  an  assessment   has  been  paid,   it  is

            extinguished.   If  the IRS  thereafter  issues an  erroneous

            refund,  it may  recover that  refund under    7405  or under

            administrative   collection    procedures   if    those   are

            available.7  As the Seventh Circuit  observed in O'Bryant, 49
                                                             ________

            F.3d at 347,

                                
            ____________________

            7.  The cases relied on by the government for the proposition
            that after issuing an  erroneous refund, the IRS may  collect
            the   money  either   under      7405   or  by   implementing
            administrative  collection  procedures   all  involve  rebate
            refunds, and thus do not hold either that  assessments cannot
            be extinguished or  that non-rebate refunds may  be collected
            on the basis of the original assessment.  See Brookhurst, 931
                                                      ___ __________
            F.2d  at 555;  Ideal Realty  Co. v.  United States,  561 F.2d
                           _________________     _____________
            1123,  1124-25  (4th  Cir.  1977)  (per  curiam);  Warner  v.
                                                               ______
            Commissioner,  526 F.2d  1, 2 (9th  Cir. 1975);  Black Prince
            ____________                                     ____________
            Distillery, Inc. v. United States, 586 F. Supp. 1169, 1170-71
            ________________    _____________
            (D.N.J.  1984) (erroneous refund given on basis of taxpayer's
            refund   claim  that   incorrectly  reported   operating-loss
            deductions).  In United States v. C & R Invs., Inc., 404 F.2d
                             _____________    _________________
            314, 315-16  (10th Cir.  1968), which  involved a  non-rebate
            refund,  the Tenth Circuit remanded  the case to the district
            court  to   determine  whether  deficiency   procedures  were
            available. 

                                         -12-
                                          12

                      it is an unjustified leap of logic to say
                      that because nonrebate  refunds cannot be
                      recovered by  reassessment, they  must be
                      collectible  by  resort to  the  original
                      assessment.   There is  no indication  in
                      the Code  that Congress  intended such  a
                      result  and   we  refuse  to   reach  it,
                      especially when doing so would require us
                      to mischaracterize an erroneous refund as
                      tax liability.

                      Finally,  because  their   holdings  are  logically

            excluded by ours, we disagree with Davenport, Sanfellipo, and
                                               _________  __________

            Groetzinger.
            ___________

            2.  Was Clark's 1985 Assessment Extinguished?

                      Although  not invited to do  so by either party, we

            nonetheless find it necessary to consider whether Clark fully

            satisfied  the assessment  for his  1985 tax liability.   The

            district court held that the 1985 assessment was extinguished

            no  later  than July  20,  1987, the  date  on which  the IRS

            misapplied Clark's $13,415.00  payment to his  1985 account.8

            That  misapplication, however,  had  two  results:    (1)  it

            satisfied  Clark's $1,808.59  outstanding tax  liability, and

                                
            ____________________

            8.  Given the thrust of the government's brief on appeal, and
            because  the  IRS  removed the  $13,415.00  payment  from the
            taxpayer's 1985 account and moved  it to his 1986 account, we
            assume for  the  purposes of  this  case that  taxpayers  may
            direct how the IRS must apply their payments.  Cf. Rodriguez,
                                                           ___ _________
            629 F. Supp. at  344 (checks tendered to satisfy  outstanding
            tax  liability for three years extinguished liability for all
            three years,  even though the  IRS applied too much  money to
            one account and too little  to another and therefore issued a
            refund);  Young, 79-2 U.S. Tax Cas. (CCH) at    88,220-88,221
                      _____
            (payment made towards  individual tax liability  extinguished
            assessment, even though  the IRS credited the  payment to the
            taxpayer's sole proprietorship tax account and refunded it).

                                         -13-
                                          13

            (2)  it generated a large overpayment, which the IRS refunded

            to Clark.

                      This situation is similar to that considered by the

            Fifth Circuit in Wilkes, which  involved income taxes paid by
                             ______

            an  estate.  Because the estate  had miscalculated the amount

            of tax due, it paid $218.11 less than the  actual amount due.

            The   IRS,  however,   erroneously   credited  an   unrelated

            taxpayer's payment  to the  estate's account,  which had  two

            results:  (1)  it satisfied the outstanding  $218.11 balance,

            and (2)  it generated in  a large overpayment, which  the IRS

            refunded  to  the  estate.   Several  years  later,  the  IRS

            realized  its mistake  and  sued  the  estate to  reduce  the

            assessment  to judgment, hoping thereby to collect the entire

            tax   liability  again   on  the   basis   of  the   original

            assessment.9    The Fifth  Circuit  held  that  the  IRS  was

            entitled  to recover only  $218.11, the  only portion  of the

            assessment  remaining  that  had  not  been  extinguished  by

            payment.  Wilkes,  946 F.2d at 1152.   Accordingly, the Fifth
                      ______

            Circuit entered  judgment against  the estate,  but only  for

            $218.11,  that   portion  of  the  assessment  that  remained

            unextinguished.  Id.
                             ___

                                
            ____________________

            9.  There  was some question  in that case  about whether the
            IRS  had  ever actually  entered  an assessment.    The Fifth
            Circuit, however, assumed arguendo that  it had.  Wilkes, 946
                                      ________                ______
            F.2d at 1148.

                                         -14-
                                          14

                      We  follow   the  Fifth   Circuit  and   hold  that

            assessments may only  be extinguished by payment  tendered by
                                                              ________

            the  taxpayer,  and  not  by an  IRS  error.    Prior  to the

            misapplication,  Clark  had  paid all  but  $1,808.59  of the

            amount due under his 1985 assessment.  Accordingly,  prior to

            the misapplication,  Clark had  extinguished the  assessment,

            except  for the $1,808.59  still outstanding.   It has always

            been Clark's position  that he never tendered  the $13,415.00

            towards the 1985  assessment; rather, that amount  was always

            to  be applied  to his  1986  liability.   Thus, Clark  never

            tendered  the  $1,808.59  due  under  the  1985   assessment.

            Because he never tendered the $1,808.59, Clark still remained

            liable for  it.   The IRS was  therefore entitled  to collect

            that amount under the original assessment.

                                         III.
                                         III.
                                         ____

                                      Conclusion
                                      Conclusion
                                      __________

                      For the foregoing  reasons, we affirm the  grant of

            summary  judgment  to Clark,  but reduce  the amount  of that

            judgment by $1,808.59,  plus interest due, which the  IRS was

            entitled to  collect.   This case is  remanded for  action in

            accordance with this opinion.

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