§6211 — Definition of a deficiency

The definition of a rebate is found in section 6211(b)(2), which is found in subchapter B of chapter 63. Thus, the statement in section 6601(e)(1) that interest is treated as tax, by its very own terms, does not apply when defining what is or is not a rebate under section 6211.

6211, and that amount is a substantial understatement ofincome tax because it exceeds the greater of $5,000 or 10% ofthe amount oftax required to have been shown on petitioner's 2011 return, see sec. 6662(d)(1)(A). It follows that respondent's burden of production has been met. The section 6662(a) accuracy-relatedpenalty does not apply to any portion ofan underpayment as to which there was reasonable cause and the taxpayer acted in good faith, sec.

He further posits that cases contrary to hi s position are therefore distinguishable in that they relied at least in part on the regulation, the validity of which was not directly challenged by the taxpayers in those proceedings . This and other courts have long rejected petitioner's interpretation of section 6211 in cases such as Laing v .

3 Unlike the computation of a deficiency under sec. 6211 or the computation of an understatement for purposes of sec.

This reasoning is flawed for four reasons.

Commissioner, supra, dealt with situations where Congress did not impose any specific limitation on section 6020(b)(2) with respect to the Code sections involved, and we are not prepared to say that those cases were incorrectly decided.

Accordingly, we hold respondent’s additional tax assessment of $20,904 against petitioners was invalidly made since no Notice of Deficiency was issued.

Conclusion For the reasons described above, we hold explicitly what was implicit in several ofour prior cases: the excess ofthe tax shown on a taxpayer's return over rebates made, for the purpose ofcomputing a deficiency, can be a negative number, regardless ofwhether the Commissioner, in fact, made any rebates to the taxpayer for the year in issue.

the tax due and owing to the IRS because the [n]otice does not account for [p]etitioner's payments of$387,687.00 and $374,460.48 on October 29, 2010 and July 26, 2012, respectively." This argument, however, assumes that respondent was required to give petitioner credit for the restitution payments pursuant to section 6211(a).

We hold that they are.

In order to ascertain whether a deficiency within the meaning of section 6211 has been asserted, we must analyze whether section 6211 requires us to examine the petitioner’s original return or his amended return.

We therefore conclude that the payments in issue were estimated tax payments and not amounts assessed (or collected without assessment) as a deficiency pursuant to section 6211(a)(1)(B) .

Applying the plain language of sections 6211 and 6665(b) to the facts presented, we hold that the additions to tax under section 6651(f) determined in the notice of deficiency are not attributable to “deficiencies” within the meaning of section - 7 - 6211(a), and, therefore, the Court lacks jurisdiction over such additions to tax in this case.

Based on our review of section 6404(e) and the Code sections it references, we hold that the Commissioner lacks the authority to abate assessments of interest on employment taxes under section 6404(e).

Discussion The issue we must decide is whether the tentative refunds paid to Acme with respect to 1981 and 1984 constitute rebates to petitioner and the group for purposes of computing the group's deficiencies for 1981 and 1984, if any, pursuant to section 6211.

Two of those passages are related: the definition of a deficiency under section 6211 and the definition of an underpayment under section 6664.

Congress’ intent to include withholding credits in the calculation of an underpayment. Petitioner notes that repealed section 6653, which previously had imposed the fraud penalty, defined an underpayment with reference to a deficiency as defined in section 6211. Section 6211(b)(1) excludes credits for taxes withheld from the calculation of a. deficiency, and consequently such credits did not affect the calculation of an underpayment under repealed section 6653(c). Therefore, petitioner bases hi

g made the foregoing concessions, the only issue for decision was whether the tentative refunds paid to petitioner were rebates or nonrebates to Interlake for purposes of computing the affiliated group’s deficiencies, if any, for 1981 and 1984 under section 6211. Section 1.1502-6(a), Income Tax Regs., provides that each member of an affiliated group is severally liable for any taxes computed on the basis of a consolidated return. The significance of the rebate/nonrebate distinction is that if th

properly comes within our deficiency jurisdiction under section 6214(a) or our overpayment jurisdiction under section 6512(a). We hold that this Court lacks jurisdiction to decide the issue. For purposes of section 6214, deficiencies are defined by section 6211. Section 6211 defines a deficiency as follows: SEC. 6211. DEFINITION OF A DEFICIENCY. (a) In General.-–For purposes of this title in the case of income, estate, and gift taxes imposed by subtitles A and B and excise taxes imposed by chap

rmined by respondent for a nonfiling taxpayer. If that were the case, respondent could preempt the deficiency procedures with respect to all nonfilers. We hold that sec. 301.6211-l(a), Proced. & Admin. Regs., is not an unreasonable interpretation of sec. 6211. See Laing v. United States, 423 U.S. 161, 174 (1976) (citing sec. 301.6211-1, Proced. & Admin. Regs., and stating that “Where there has been no tax return filed, the deficiency is the amount of tax due.”); Schiff v. United States, 919 F.2d

r deficiency assessments have occurred, we can simplify the formula to: Deficiency = Tax Imposed − Tax Reported + Rebates. See Thomas v. Commissioner, T.C. Memo. 2014-118, at *6. The terms “Tax Imposed,” “Tax Reported,” and “Rebate” are derived from section 6211. As used here, “Tax Imposed” means the amount of tax required to be paid under subtitle A of the Code determined without regard to any estimated tax payments, certain prepayment credits, and some unusual circumstances permitting immediat

Moreover, “the [taxpayer’s] overstatement of the taxes withheld on [the taxpayer’s] wages does not constitute a 5 deficiency within the meaning of section 6211.” Bregin v.

Applying the mathematical equation contemplated in section 6211, which contains the definition of a deficiency, to the undisputed facts before us strongly suggests what the first page of the Notice expressly shows; that is, there is no deficiency in petitioner’s 2017 federal income tax.

Respondent thereupon withdrew his motion to dismiss for lack ofprosecution and concurrently filed a motion to dismiss for lack ofjurisdiction, contending that there exists no deficiency, within the meaning of section 6211, that this Court hasjurisdiction to redetermine.

The petition includes this sentence: "The IRS has not disclosed what 'Subtitle A - Income Tax' the Notice ofDeficiency pertains to in accord [sic] § 6211 and § 6212." (This statement appears to reflect Mr.

The law underlyingthis conclusion is section 6211, which defines the term "deficiency".

Section 6211 def'mes a deficiency as 20Notice 2006-50, 2006-1 C.B. 1141, has been prospectively vacated by the U.S. District Court for the District ofColumbia. See In re Long-Distance Tel. Serv. Fed. Excise Tax Refund Litig., 853 F. Supp. 2d 138, 145 (D.D.C. 2012). Because Notice 2006-50, supra, was in effect at the time petitioner filed her 2006 F

01 assessment was invalid and therefore respondent improperly verified the appl-icable law. Petitioners argue that 'respondent failed to issue a notice of deficiency notwithstanding that petitioners' 2001 tax liability constituted a deficiency under section 6211. - 20 - Although respondent concedes that no notice of deficiency was issued, respondent argues that petitioners' tax liability as determined does not constitute a deficiency and arose out-of the mathematical errors on the return. This C

It first says that the amount of any adjustment from inconsistent reporting is included in the definition-of "deficiency" under section 6211, which means we have jurisdiction under sections 6212 and 6213(a) .

It first says that the amount of any adjustment from inconsistent reporting is included in the definition of “deficiency” under section 6211, which means we have jurisdiction under sections 6212 and 6213(a).

In order to ascertain whether a deficiency within the meaning of section 6211 has been asserted, we must analyze whether section 6211 requires us to examine petitioner’s original return or his amended return.

For purposes of section 6214, deficiencies are defined by section 6211 as follows: SEC.

the Deficiency or Give Rise to an Overpayment Claim? On the merits of his motion for entry of decision, respondent contends: No matter whether the [disputed refund] check was received or not, the amount of the deficiency in this case, as defined by I.R.C. § 6211, is unaffected. In addition, given the amount of the agreed deficiency in this case ($2,396.00), the amount of the check ($896.00) is too small to produce an overpayment. Thus, although the payment of the check is relevant to a calculat

be taken into account under sec. 6211(a)(1)(B) in determining the deficiencies for those years. See Mitchell v. Commissioner, 51 T.C. 641, 649-650 (1969) (premature assessments of deficiencies were void and therefore are not taken into account under sec. 6211, even though the Commissioner did not abate such assessments until after the petition was filed), revd. on other grounds 430 F.2d 1 (5th Cir. 1970), revd. 403 U.S. 190 (1971). Nor does the refund improvidently made by respondent for 1996 af

es, supra. Petitioner argues that section 301.6211-1(a), Proced. & Admin. Regs., is invalid because it is inconsistent with section - 12 - 6211. We previously have held to the contrary; i.e., the regulation is not an unreasonable interpretation of section 6211. Spurlock v. Commissioner, 118 T.C. 155, 161 n.8 (2002). In so holding, we noted that the Supreme Court cited the regulation in Laing v. United States, supra at 174, stating: “Where there has been no tax return filed, the deficiency is the

provides an exception to the general rule that an addition to tax under section 6651 will be treated as a tax for purposes of the - 6 - deficiency procedures only to the extent that the addition to tax is attributable to a deficiency as defined in section 6211. The Internal Revenue Code does not explicitly provide for the filing or acceptance of amended returns. Badaracco v. Commissioner, 464 U.S. 386, 393 (1984). Although the Commissioner has permitted the use of amended income tax returns, am

pearance and, on June 29, 2003, filed a reply to respondent’s motion for summary judgment, which contained tax-protester boilerplate arguments, including: because petitioner assessed himself as owing “$0.00" in subtitle A taxes for 1996, pursuant to §6211, and because - 6 - * * * the Secretary has no authority to assess a different figure than the “$0.00" which petitioner assessed himself as owing for 1996 subtitle A taxes, the Secretary had no authority to determine that there was a deficiency

relating to deficiency procedures for income, estate, gift, and certain excise taxes), subsection (a) shall not apply to any addition to tax under section 6651, 6654, 6655; except that it shall apply— (1) in the case of an addition described in section 6651, to that portion of such addition which is attributable to a deficiency in tax described in section 6211; or (2) to an addition described in section 6654 or 6655, if no return is filed for the taxable year.

and offered argument in support of respondent’s motion. No appearance was made by or on behalf of petitioner at the hearing. During the hearing, the question was raised whether respondent determined a “deficiency” in this case within the meaning of section 6211. Counsel for respondent argued that the facts in the instant case were tantamount to a “frozen refund” and that the Court had jurisdiction over the petition. In response to petitioner’s challenge to the timeliness of - 4 - respondent’s mo

Section 6211 defines a deficiency as the amount by which the tax imposed by subtitle A or B, or chapter 41, 42, 43, or 44 of the Code exceeds the amount of such tax shown on the taxpayer’s return and the amount of such tax previously assessed. Section 6212(a) also refers to deficiencies with respect to taxes imposed by subtitle A or B, or chapter 4

Discussion The issue we must decide is whether the tentative refunds paid to Acme with respect to 1981 and 1984 constitute rebates to petitioner and the group for purposes of computing the group’s deficiencies for 1981 and 1984, if any, pursuant to section 6211. Section 6211(a) defines the term “deficiency” as the amount by which the tax actually imposed exceeds— (1) the sum of (A) the amount shown as the tax by the taxpayer upon his return, if a return was made by the taxpayer and an amount wa

deficiency procedures for income, estate, - 4 - gift, and certain excise taxes), subsection (a) shall not apply to any addition to tax under section 6651, 6654, or 6655; except that it shall apply-- (1) in the case of an addition described in section 6651, to that portion of such addition which is attributable to a deficiency in tax described in section 6211; or (2) to an addition described in section 6654 or 6655, if no return is filed for the taxable year.

Section 6211 defines a deficiency as the amount by which the correct tax due exceeds the sum of: (1) The amount shown by the taxpayer as the tax due on his return if a return was made and (2) amounts previously assessed or collected without assessment. - 14 - Sec. 6211(a)(1)(A) and (B). It is apparent from the language of section 6211(a)(1)(A) tha

- 88 - This Court, however, is without jurisdiction to consider petitioner's contention that she is entitled to a withholding credit under section 31 because under section 6211, a deficiency is determined without regard to the amount of taxes withheld on a petitioner's income.

has clearly and convincingly proven that Hamalee underpaid its taxes for its 1985 and 1986 taxable years, and that the Lees underpaid their taxes for 1987 and 1988. See sec. 6653(c)(1) (an "underpayment" generally is the same as a "deficiency" under sec. 6211). The record clearly convinces us that Hamalee had significant amounts of income that were not reported on its 1985 and 1986 tax returns, and that the Lees had significant amounts of income that were not reported on their 1987 and 1988 tax

has clearly and convincingly proven that Hamalee underpaid its taxes for its 1985 and 1986 taxable years, and that the Lees underpaid their taxes for 1987 and 1988. See sec. 6653(c)(1) (an "underpayment" generally is the same as a "deficiency" under sec. 6211). The record clearly convinces us that Hamalee had significant amounts of income that were not reported on its 1985 and 1986 tax returns, and that the Lees had significant amounts of income that were not reported on their 1987 and 1988 tax

It depends generally on the relationship between the amount of the tax imposed on the taxpayer and the amount the taxpayer showed as the tax on the tax return. The amount of the tax imposed depends on a variety of factors, involving the nature of the tax. The instant case is an estate tax case, and the tax involved is imposed by subtitle

According to the notice of deficiency, LHDC’s 2009 tax return 39 In calculating a deficiency under section 6211, an underpayment under section 6664, and an understatement under 6662, refunds received are treated as rebates to the extent that they were made on the ground that the tax imposed was less than the excess of the sum of the amount shown as the tax by the taxpayer on his return, plus amounts not so shown previously assessed (or collected

3 The term “deficiency” is defined in section 6211, and relevant procedures are set out in sections 6212 through 6216.

In this case the underpayment of tax, as defined in section 6664(a), is equal to and computed in the same manner as the deficiency, see § 6211, 5 and that amount is a substantial understatement of income tax because it exceeds the greater of $5,000 or 10% of the amount of tax required to have been shown on petitioner’s 2020 return, see § 6662(d)(1)

The validity of the notice of deficiency The Bachners argue that because the notice of deficiency did not determine a deficiency under section 6211, the notice was invalid and the Court does not have jurisdiction as to either Mrs.

§ 6665(b)(1) (applying deficiency procedures to the portion of the addition to tax under section 6651 “which is attributable to a deficiency in tax described in section 6211”); Wilson v.

§ 6211 (defining “deficiency” to encompass only income, gift, estate, and certain excise taxes). Moreover, since this is a deficiency proceeding, we do not have jurisdiction over those payroll taxes. See I.R.C. § 6214(a) (granting the Tax Court “jurisdiction to redetermine the correct amount of the deficiency” (emphasis added)); see also Iet

In this case the underpayments of tax, as defined in section 6664(a), are equal to and computed in the same manner as the deficiencies, see § 6211, and those amounts are substantial understatements of income argue, and could not have argued, that he was entitled to the section 911 exclusions as well as head of household filing status.

To demonstrate that the assessments were made, respondent provided copies of the Notice[s] of Deficiency and the Certificate[s] of Assessments, Payments, and Other Specified Matters for the years in issue. These two categories of documents evince that the IRS properly followed the deficiency procedures, which procedures were as follows

To then collect these liabilities from the Sandra E. Sander Lifetime Trust, the IRS would need to invoke transferee liability concepts and show that the Sandra E. Sander Lifetime Trust is a liable transferee of Sandra. But such liability is a “secondary liability.” Steve R. Johnson, Unfinished Business on the Taxpayer Rights Agenda: Achievi

ng to the extent ofthe delinquency of the taxpayer's return.) This Court hasjurisdiction to redetermine a taxpayer's liability for an addition to tax under section 6651(a)(1) only to the extent it is "attributable to a deficiency in tax described in section 6211". Sec. 6665(b)(1). Because the notice ofdeficiency respondent issued to petitioners for their 2008 taxable year reflected an erroneous determination that the deficiency procedures prescribed in subchapter B ofchapter 63 apply, we have tr

ng to the extent ofthe delinquency of the taxpayer's return.) This Court hasjurisdiction to redetermine a taxpayer's liability for an addition to tax under section 6651(a)(1) only to the extent it is "attributable to a deficiency in tax described in section 6211". Sec. 6665(b)(1). Because the notice ofdeficiency respondent issued to petitioners for their 2008 taxable year reflected an erroneous determination that the deficiency procedures prescribed in subchapter B ofchapter 63 apply, we have tr

6503(a)(1) provides: The running ofthe period oflimitations provided in section 6501 * * * on the making ofassessments or the collection by levy or a proceeding in court, in respect ofany deficiency as defined in section 6211 (relating to income, estate, gift and certain excise taxes), shall (after the mailing ofa notice under section 6212(a)) be suspended for (continued...) -27- as redetermined by the Tax Court "shall be assessed and shall be paid upon notice and demand from the Secretary." The

sessable was not (and could not have been) considered by this Court in petition- er's prior deficiency case. See White v. Commissioner, 95 T.C. 209, 213 (1990) (holding that underpayment interest is excluded from the definition ofa "defi- ciency" in section 6211). And respondent agrees that petitioner has had no other - 10 - prepayment opportunityto dispute such interest.4 Petitioner properly advanced its challenge to the assessed interest during the CDP hearing, and the SO considered and reject

In their petitions, they reiterated that they had "paid all deficiencies for 2003, 2004, 2005, and 2006, and there is nothing due." It is apparent that petitioners used the word "deficiencies," not as the technical term defined in section 6211 but to mean unpaid tax liabilities.

OPINION LAUBER, Judge: The Internal Revenue Service (IRS or respondent) deter- mined under section 6211¹ deficiencies in petitioner's Federal income tax for 2011 and 2012 as follows: Year Deficiency 2011 $3,749 2012 1,391 ¹All statutoryreferences are to the Internal Revenue Code (Code) in effect for the years at issue, and all Rule references are to the Tax Court Rules ofPrac- tice and Procedure.

In their petitions, they reiterated that they had "paid all deficiencies for 2003, 2004, 2005, and 2006, and there is nothing due." It is apparent that petitioners used the word "deficiencies," not as the technical term defined in section 6211 but to mean unpaid tax liabilities.

2Section 6211 defines a deficiency and includes the disallowance ofa refundable credit under section 36B as a negative amount oftax. Sec. 6211(b)(4). The Commissioner's disallowance ofthe refundable credit creates a deficiency in tax. See Voigt v. Commissioner, T.C. Memo. 2004-62; Wilson v. Commissioner, T.C. Memo. 2001-139. - 4 - computation which

Although neither section 6201(a)(4) nor section 6213(b)(5) explicitly provides that assessed restitution amounts may not be considered in the definition ofa deficiency under section 6211, we believe common sense dictates that they not be included as "amounts previously assessed * * * as a deficiency" for purposes ofthat section.

us to examine deficiencies in petitioners' income tax for the tax years at issue. For purposes ofsection 6663 and as relevant here, section 6664(a) defines the term "underpayment" in essentially the same terms as the term "deficiency" is defined by section 6211. See Feller v. Commissioner, 135 T.C. 497, 507 (2010) ("In a case involving a deficiency and fraud in which no excess withholding credits are claimed, * * * the terms 'deficiency' and 'underpayment' can be used interchangeably."); see al

438, 447 (2001); see also Rule 142(a); Welch v.

The deficiency violates IRC §§ 6211 and 6212 because it has been based on Subtitle C wages, not Subtitle A.

SERVED NOV 1320f4 -2- [*2] MEMORANDUMFINDINGS OF FACT AND OPINION LAUBER, Judge: For the taxable years 1997-2000 the Internal Revenue Service (IRS or respondent) determined deficiencies in petitioners' Federal in- come tax under section 6211 and civil fraud penalties under section 6663(a).2 The deficiencies stem from petitioners' underreporting ofincome from their family business, White Sands, which comprised a group ofsurfand skateboard shops.

Rept. No. 103-772, at 14 (1994), 1994 U.S.C.C.A.N. 3647, 3654. -33- The powerto impose civil and criminal penalties for violation oflaw is an essential attribute ofsovereignty. The Commission and national authorities are authorized to impose the same types ofpenalties, under the same EC law, for the same types ofanticompetitive

SERVED NOV 1320f4 -2- [*2] MEMORANDUMFINDINGS OF FACT AND OPINION LAUBER, Judge: For the taxable years 1997-2000 the Internal Revenue Service (IRS or respondent) determined deficiencies in petitioners' Federal in- come tax under section 6211 and civil fraud penalties under section 6663(a).2 The deficiencies stem from petitioners' underreporting ofincome from their family business, White Sands, which comprised a group ofsurfand skateboard shops.

Section 6211 defines a "deficiency," - 7 - and section 6212 authorizes the IRS to send a "notice ofdeficiency" ifit deter- mines a deficiency with respect to a taxpayer's tax. Upon receipt ofa notice of deficiency, the taxpayermay petition this Court forredetermination ofthe deficiency. Sec. 6213(a). The petition must be filed within 90 days ifthe

SERVED NOV 1320f4 -2- [*2] MEMORANDUMFINDINGS OF FACT AND OPINION LAUBER, Judge: For the taxable years 1997-2000 the Internal Revenue Service (IRS or respondent) determined deficiencies in petitioners' Federal in- come tax under section 6211 and civil fraud penalties under section 6663(a).2 The deficiencies stem from petitioners' underreporting ofincome from their family business, White Sands, which comprised a group ofsurfand skateboard shops.

6211 (West 2003 & 2013 Supp.). Because Fiore rarely obtained retainers--he preferred to bill clients after work was complete--the client trust fund had very little money in it. -5- [*5] Fiore did use legal billing software known as the Tussman Program. The Tussman Program can track billable hours, generate bills, and produce financial reports

Section 6212 authorizes the Commissioner to send a notice ofdeficiency alerting a taxpayerthat the Commissionerbelieves he owes more than he has reported. A taxpayer has 90 days from the date that notice was mailed to file a petition with this Court. Sec. 6213(a). Subject to exceptions not relevant here, the Commissioner may not assess,

The definition of deficiency as found in section 6211 does not take into account the increases in a taxpayer's Federal income tax liability for subsequent periods required by section.

The $52,615.80 section 6662(a) accuracy-relatedpenalty imposed in the notice is computed with reference to the amount shown in the notice as petitioners' "Total Corrected Tax Liability", $263,079, which amount, in turn, includes the amount assessed pursuantto the first amended return. The various issues raised in the pleadings include is

Section 6212(a) provides that if the Commissioner determines a deficiency in income tax, "he is authorized to send notice of such deficiency to the taxpayer by certified mail or registered mail." The notice of deficiency "shall be sufficient" if mailed to the taxpayer at his last known·address, unless the Commissioner has been

§§ 6211 16." (emphasis supplied)- (citations omitted)). - 14 - In particular, the exclusions from the "no-second-notice" rule of section 6212(c), which are contained in section 6230(a) (2) (C) and are restricted to a notice issued under section 6230(a) (2) (B), would be unavailable if an error in a computational adjustment is deemed to be "another

6651 is treated as a tax for purposes of the deficiency procedures only to the extent that the addition to tax is attributable to a deficiency as defined in sec.

The rebate versus nonrebate distinction arises from the definition of the term o "deficiency" in section 6211; rebate refunds can be included in deficiency computations, while nonrebate refunds cannot .

defines dan income tax deficiency as the amount by which the tax imposed under the -income tax provisions of the Code exceeds the excees of-- # (1) them sum of (A) the amount shown as the tax by the taxpayer upon * * * [her] return * * * plus (B) the amounts previously assessed (or collected without assessment) as a deficiency, ov

6664 (a) defines an "underpayment" for purposes of section 6663 (with exceptions not here relevant) essentially as a "deficiency".as defined by section 6211., As applicable herein, that is.

underpayment of tax. Rice v. Commissioner, supra. Petitioners first argue that no underpayment exists because the disallowed withholding credits do not meet the definition of an underpayment under section 6664, taking into account the provisions of section 6211. However, we have found that restrictions in section 6211(b) (1), excluding estimated tax and withholding credits from the calculation of a deficiency, no longer apply to an underpayment". Feller v. Commissioner, 135 T.C. 497, 507-508 (2

underpayment of tax. Rice v. Commissioner, supra. Petitioners first argue that no underpayment exists because the disallowed withholding credits do not meet the definition of an underpayment under section 6664, taking into account the provisions of section 6211. However, we have found that restrictions in section 6211(b) (1), excluding estimated tax and withholding credits from the calculation of a deficiency, no longer apply to an underpayment". Feller v. Commissioner, 135 T.C. 497, 507-508 (2

lates to ‘affected items which require partner level determinations,’ then the IRS must send a notice of deficiency to that partner, thereby initiating proceedings against him individually, pursuant to the standard deficiency procedures set forth in I.R.C. §§ 6211-16." (Emphasis supplied.) (Citations omitted.)). In the context of a sec. 6212(a) notice of deficiency, we laid down a general rule of not looking behind the notice to determine its validity in Greenberg’s Express, Inc. v. Commissioner

1160 (1980), the Court of Appeals for the Ninth Circuit again addressed what constitutes a "return", but this time the issue arose under section 6211, which defines a deficiency, former section 6653(b), which imposed a 50-percent fraud penalty on any part of an underpayment due to fraud, and former section 6653(c), which defined "underpayment" to mean "deficiency" as defined in section 6211.

rovides that?"[t]he tax imposed by subtitle A and the tax shown on the return shall both be determined * * * without regard to the credit under section 31" (i .e ., the credit - 10 - for income tax withheld from wages) ;6 and the regulations under .section 6211 provide : For example, assume that the amount of income tax shown by the taxpayer upon his return for the taxable year is $600 and the amount claimed as a credit under section 31 for income tax withheld at the source is $900 .

Rather , section 6214 confers on this Court jurisdiction to redetermine a "deficiency" ; and section 6211 defines a "deficiency" as an amount of "tax" .

A "deficiency" is defined in section 6211,(a) a s the amount by which the tax imposed * * * exceeds the excess of-- - 10 - (1) the sum of (A) the amount shown as the tax by the taxpayer upon his return * * * plus (B) the amounts previously assessed (or collected without assessment) as a deficiency, over- (2) the amount of rebates Briefly, the deficiency in this case is the di

; see also 'Estate of Forc{ey v .

The version of section 6653(c) (1) effective for Barrow's 1987 and 1988, and BACO's 1988 and 1989, returns states that For purposes of this section, the term "underpayment" means * * * a deficiency as defined in [section 6211] (except that, for this purpose, the tax shown on a return referred to in section 6211(a) (1) (A) shall be taken into account only if such return was filed on or before the last day prescribed for the filing of such return * * * And for purposes of section 6653(c) (1), "'a

Respondent contends that hospital taxes play no role in the determination of a deficiency within the meaning of section 6211 and that neither additional hospital tax liabilities nor hospital tax overpayments are included in a 3(...continued) circumstances, the Court does not consider petitioners’ equitable recoupment claim to be a “new issue” within the meaning of Rule 155, and respondent does not contend otherwise.

Respondent contends that hospital taxes play no role in the determination of a deficiency within the meaning of section 6211 and that neither additional hospital tax liabilities nor hospital tax overpayments are included in a comphtation for entry of decision because we lack jurisdiction over hospital taxes.

Petitioners rely upon the definition of deficiency in section 6211 and argue they made a payment which should be characterized as an amount collected without assessment as a deficiency under section 6211(a)(1)(B).

Section 6211 defines a deficiency as the amount by which the tax imposed by subtitle A or B or chapter 41, 42, 43, or 44 of the Internal Revenue Code exceeds the amount of such tax shown on the taxpayer's return and the amount of such tax previously assessed. - 7 - Section 6212(a) authorizes the Secretary³ to issue notices of deficiency with respe

Provisions related to employment taxes are contained in subtitle C, and subtitle C - 7 - is not mentioned in section 6211 or section 6212(a) .

he taxpayer's claim of an overpayment for the year(s) in issue under sec. 6512(b) (1). entered under section 6201-(a)r (1) Moreover, . the tax that . petitioners reported .due on their return is excluded f.rom the . definition of a deficiency under section 6211 (a) . The question that remains under section 6330 (c) (2) (B) is wheth r petitioners "did .not otherwise. haver an opportunity . to dispute such tax liability" for 2000. Respondent contends that the pl rase quoted' above should be cinter

Definition of Underpayment.–For purposes of this section, the term “underpayment” means-- (1) Income, estate, gift, and certain excise taxes.--In the case of a tax to which section 6211 (relating to income, estate, gift, and certain excise taxes) is applicable, a deficiency as defined in that section (except that, for this purpose, the tax shown on a return referred to in section 6211(a)(1)(A) shall be taken into account only if such return was filed on or before the last day prescribed for the

- 5 - Discussion Section 6861(a) provides in pertinent part that if the Secretary believes that the assessment or collection of a deficiency as defined in section 6211 will be jeopardized by delay, he shall, notwithstanding section 6213(a), immediately assess such deficiency and make notice and demand for the payment thereof.5 Within 5 days after the date an assessment is made under section 6861 or levy is made under section 6331(a), the Commissioner

Obviously, the “return” referred to in that definition must be a 15(...continued) (1) in the case of an addition described in section 6651, to that portion of such addition which is attributable to a deficiency in tax described in section 6211; or (2) to an addition described in section 6654 or 6655, if no return is filed for the taxabl

However, the Court lacks jurisdiction to consider this argument because, under section 6211, a deficiency is determined without regard to the amount of tax withheld on a taxpayer's income.

5) by definition Section 6211 precludes that a deficiency can exist with respect to a zero return please see page 11 of petitioner answer to jurisdiction to hear the matter!

encouraged petitioner to request the Tax Court “to dispense with the 90 day rule in this situation.” Discussion Section 6861(a) provides in pertinent part that if the Secretary believes that the assessment or collection of a deficiency as defined in section 6211 will be jeopardized by delay, he shall, notwithstanding section 6213(a), immediately assess such deficiency and make notice and demand for the payment thereof.

relating to deficiency procedures for income, estate, gift, and certain excise taxes), subsection (a) shall not apply to any addition to tax under section 6651, 6654, 6655; except that it shall apply— (1) in the case of an addition described in section 6651, to that portion of such addition which is attributable to a deficiency in tax described in section 6211; or (2) to an addition described in section 6654 or 6655, if no return is filed for the taxable year.

to be excepted from “personal interest”; i.e., which category made it 15 Beginning with the Tax Reform Act of 1969, Pub. L. 91- 172, 83 Stat. 487, the Congress began to bring a series of regulatory excise taxes into the definition of “deficiency” in sec. 6211. At the time TRA 1986 was enacted, the definition included the taxes imposed by chs. 41 through 45, in addition to the income, estate, and gift taxes imposed by subtits. A and B. - 36 - necessary to qualify the statement about personal inte

2)(B) of the Taxpayer Relief Act of 1997, Pub. L. 105-34. 111 Stat. 788. Beginning with the Tax Reform Act of 1969, Pub. L. 91-172, 83 Stat. 487, the Congress began to bring a series of regulatory excise taxes into the definition of “deficiency” in sec. 6211. At the time TRA 1986 was enacted, the definition included the taxes imposed by chs. 41 through 45, in addition to the income, estate, and gift taxes imposed by subtits. A and B. Sec. 1.163-8T(c)(l) and (3)(ii), Temporary Income Tax Regs., 5

Existence of an Underpayment The first element in establishing fraud is determining whether any underpayment of tax exists. For 1983 through 1988, section 6653(c)(1) defines an “underpayment” for purposes of section 6653 as a “deficiency” defined by section 6211. Section 6211 generally defines a deficiency as the excess of the correct amount of tax over the amount shown on the return. For 1989 and - 48 - 1990, section 6664(a) defines “underpayment” as “the amount by which any tax imposed by this

ioner, 91 T.C. 874, 909 (1988). B. Existence of an Underpayment The first inquiry is whether any underpayment exists. As relevant to this case, section 6653(c)(1) defines an "underpayment" for purposes of section 6653 as a "deficiency" defined under section 6211. Petitioners filed amended returns for 1987 and 1988, the Forms 1040X, showing additional taxes due. Each of petitioners' amended returns is an admission of a tax underpayment. See Badaracco v. Commissioner, 464 U.S. 386, 399 (1984). Res

Existence of an Underpayment The first element in establishing fraud is determining whether any underpayment of tax exists. For 1983 through 1988, section 6653(c)(1) defines an “underpayment” for purposes of section 6653 as a “deficiency” defined by section 6211. Section 6211 generally defines a deficiency as the excess of the correct amount of tax over the amount shown on the return. For 1989 and - 48 - 1990, section 6664(a) defines “underpayment” as “the amount by which any tax imposed by this

rough the deficiency procedures. - 2 - Held: This Court lacks jurisdiction over the late filing addition to tax assessed by R prior to the issuance of the notice of deficiency, because such addition is not attributable to a deficiency as defined in sec. 6211, I.R.C. Terry R. Wittler, for petitioner. Lisa K. Hartnett, for respondent. VASQUEZ, Judge: A Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, was delinquently filed on behalf of the Estate of Glenn G. Forgey (th

In pertinent parts, section 6211 defines a deficiency, section 6212 provides for a notice of deficiency, section 6213(a) gives a taxpayer the right to file a petition with the Tax Court for a redetermination of the deficiency, and section 6214(a) establishes our jurisdiction to redetermine the correct amount of any deficiency.

“Deficiency” is a term of art, and, according to section 6211, deficiency does not deal with the realm of employment taxes.

The issues for decision are: (1) Whether there are deficiencies at issue in these cases within the meaning of section 6211; and (2) whether petitioner had earned income during the years in issue, entitling him to a section 32 earned income credit for each year.

affd. 959 F.2d 16 (2d Cir. 1992). a. Existence of Underpayment The first element of section 6653(b)(1) is whether any underpayment of tax exists. Section 6653(c)(1) defines an "underpayment" for purposes of section 6653 as a "deficiency" defined by section 6211. We have found that, for 1983, petitioner understated his income by $1,260,000 and, for 1985, erroneously failed to report a gain realized on the sale of the Wedtech shares. Each omission resulted in a deficiency in tax; - 11 - petitione

d in White v. Commissioner, supra, follows from a combined reading of sections 6211(a), 6230(a), and 6601(e)(1), which together provide that interest computed under the increased rate under section 6621(c) is not a "deficiency" within the meaning of section 6211. Because our authority in affected items proceedings derives from our jurisdiction to redetermine a deficiency under subchapter B of chapter 63, see sec. 6230(a)(2), we generally have no authority to consider additional interest under se

d in White v. Commissioner, supra, follows from a combined reading of sections 6211(a), 6230(a), and 6601(e)(1), which together provide that interest computed under the increased rate under section 6621(c) is not a "deficiency" within the meaning of section 6211. Because our authority in affected items proceedings derives from our jurisdiction to redetermine a deficiency under subchapter B of chapter 63, see sec. 6230(a)(2), we generally have no authority to consider additional interest under se

from this general rule additions to tax under section 6651. As further provided in paragraph (1) of section 6665(b), however, the exclusion is not applicable “to that portion of such addition which is attributable to a deficiency in tax described in section 6211”. Thus, the determination of whether we have jurisdiction over any portion of the assessed addition to tax turns on whether a deficiency within the meaning of section 6211 exists in this case. See Estate of Young v. Commissioner, supra a

In pertinent parts, section 6211 defines a deficiency, section 6212 provides for a notice of deficiency, section 6213(a) gives a taxpayer the right to file a petition with the Tax Court for a redetermination of the deficiency, and section 6214(a) establishes our jurisdiction to redetermine the correct amount of any deficiency.

lowing our careful review of the record, we conclude that respondent has clearly and convincingly proven that petitioner underpaid his taxes for each year in issue. See sec. 6653(c)(1) (an “underpayment” generally is the same as a “deficiency” under sec. 6211). The record clearly convinces us that petitioner had gross income in 1986 and 1987, and that he should have filed returns and reported that income. The first prong is satisfied. As to the second prong, fraud is defined as an intentional wr

[Emphasis added.] Section 183(e)(4) explicitly provides that with respect to the taxpayer's activity for which a section 183(e) election is made, the normal statutory period for the "assessment of any deficiency" shall not expire until 2 years after the required filing date of the last return in the 5- or 7-year period referred to in section 183(e).

Section 6211 generally defines a deficiency as the excess of the correct amount of tax over the amount shown on the return. Section 6501 governs the period of limitations for assessment of a deficiency. An “overpayment” is the excess of the amount of tax that has been paid over the amount of tax that is properly due. Bachner v. Commissioner, 109 T.

derpayment of tax that was required to be shown on the taxpayer's return at the time it was filed." Prior to the 1989 enactment of sections 6663 and 6664, the fraud penalty provided for by section 6653(b) was based on an "underpayment" that was generally defined in section 6653(c) as a "deficiency" within the meaning of section 6211.

(4) Section 6211 “presupposes that an original assessment has been made.” Petitioner, by selectively analyzing statutes, regulations, and case precedent out of context, has reached the conclusion that amounts he received from any and all sources do not constitute income. Petitioner, following in the footsteps of numerous others who have unsuccessfully

Section 6653(c)(1) defines an underpayment in the case of a tax to which section 6211 is applicable as "a deficiency as defined in [section 6211]." Under section 6211, the term deficiency means "the amount by which the tax imposed * * * exceeds the excess of * * * the amount shown as the tax by the taxpayer upon his return." In determining whether an underpayment exists, the tax shown on the taxpayer's return "shall be

Commissioner, 74 T.C. 1097, 1102 (1980). Section 6212(a) provides that if the Secretary determines that there is a deficiency, he is authorized to send notice of such deficiency to the taxpayer. Pursuant to section 6213(a), the taxpayer may then file a petition with the Tax Court, within a specified time, for a redetermination

Commissioner, 74 T.C. 1097, 1102 (1980). Section 6212(a) provides that if the Secretary determines that there is a deficiency, he is authorized to send notice of such deficiency to the taxpayer. Pursuant to section 6213(a), the taxpayer may then file a petition with the Tax Court, within a specified time, for a redetermination

T.C. 527, 529 (1985); see also sec. 7442. In general, the Congress has empowered us to redetermine deficiencies which have been determined by - 3 - respondent. See secs. 6213 and 6214; Murphree v. Commissioner, 87 T.C. 1309, 1311 (1986); see also sec. 6211 (meaning of the word "deficiency"). When respondent has not determined a deficiency for a year, we generally may not redetermine if a deficiency or overpayment is present for that year. See sec. 6214(b) ("The Tax Court in redetermining a defi

Underpayments of Tax For purposes of the fraud addition to tax, the term "underpayment" means a "deficiency", as defined in section 6211, except that the tax shown on the tax return is taken into account only if that tax return was filed on or before the last day prescribed for filing that tax return, determined with regard to any extension of time for that filing.

For purposes of section 6653, the term "underpayment" is defined in section 6653(c)(1) for income tax as: a deficiency as defined in * * * [section 6211] (except that, for this purpose, the tax shown on a return referred to in section 6211(a)(1)(A) shall be taken into account only if such return was filed on or before the last day prescribed for the filing of such return, determined with regard to any extension of time for such filing) * * * Therefore, for purposes of determining the e

n at the time it was filed. Prior to the 1989 enactment of sections 6663 and 6664, the fraud penalty provided for by section 6653(b) was based on an “underpayment” that was generally defined in section 6653(c) as a “deficiency” within the meaning of section 6211. Neither the fraud penalty nor interest is within the definition of a “deficiency” pursuant to sections 6211 and 6601(e). See White v. Commissioner, 95 T.C. 209 (1990); Estate of DiRezza v. Commissioner, 78 T.C. 19 (1982). Finally, the p

Section 6653(c)(1) defines "underpayment" as a deficiency as defined in section 6211, except that in making the deficiency calculation under section 6211, section 6653(c)(1) states that "the tax shown on a return referred to in section 6211(a)(1)(A) shall be taken into account only if such return was filed on or before the last day prescribed for the filing of such return".

Section 6211 defines the term "deficiency" by reference to the tax shown on the taxpayer's return, and specifically provides that the "tax imposed by subtitle A and the tax shown on the return shall both be determined without regard to payments on account of estimated tax". (Emphasis added.) Sec. 6211(a)(1)(A) and (b)(1). Consistent therewith, sect

yment of tax, and (2) some part of the underpayment resulted from fraud. Rule 142(b); Bagby v. Commissioner, 102 T.C. 596, 607 (1994). In the case of income tax for which a timely return was filed, an underpayment includes a deficiency as defined in section 6211. Sec. 6653(c)(1). Section 6211 defines a deficiency as “the amount by which the tax imposed * * * exceeds * * * the amount shown as the tax by the taxpayer upon his return”. However, any amount of additional tax shown on an amended retur

The amount of the deficiency as defined in section 6211 is, therefore, zero.

The Court held that increased interest under section 6621(c) is not treated as a deficiency for purposes of section 6211 as provided by section 6601(e)(1), and thus the Court did not have jurisdiction to redetermine additional interest in an affected item proceeding under section 6230(a)(2)(A)(i).

Section 6653(c)(1) defines "underpayment" as a deficiency as defined in section 6211, except that for this purpose section 6653(c)(1) provides that "the tax shown on a return referred to in section 6211(a)(1)(A) shall be taken into account only if such return was filed on or before the last day prescribed for the filing of such return".

5Both parties agree that there is no estate tax deficiency and that petitioner is entitled to a decision that it has overpaid its estate tax, regardless of any effect that the doctrine of equitable recoupment might have. - 6 - limitations if the main action is timely, use of recoupment based on an otherwise time-barred claim is limited

n of proving, by clear and convincing evidence, that there is an underpayment. Sec. 7454(a); Rule 142(b); DiLeo v. Commissioner, supra at 873. Section 6653(c)(1) defines an underpayment for the purposes of section 6653 as a deficiency as defined by section 6211. However, as in Franklin v. Commissioner, T.C. Memo. 1993-184, respondent presented little evidence at trial and little argument in her brief as to the existence and amounts of the underpayments. Respondent did adduce considerable evidenc

Code section 6211 is totally without implementing regulation. - 11 - 15. By law, no penalties can be imposed under a Code section lacking legislative regulation. 16. By law, no tax is due until an assessment is made and _the date for payment arrives. 17. The income tax laws are based on voluntary self- assessment not upon distraint. 18. The 16th Amendm

viewed the record. Following our review, we conclude that respondent has clearly and convincingly proven that petitioner underpaid his taxes for each year in issue. See sec. 6653(c)(1) (an "underpayment" generally is the same as a "deficiency" under sec. 6211). The record clearly convinces us that petitioner had gross income that was not reported on his 1980 through 1982 tax returns. b. Fraudulent Intent To establish fraud under section 6653(b) (for 1980 and 1981) and section 6653(b)(1) (for 198

n of proving, by clear and convincing evidence, that there is an underpayment. Sec. 7454(a); Rule 142(b); DiLeo v. Commissioner, supra at 873. Section 6653(c)(1) defines an underpayment for the purposes of section 6653 as a deficiency as defined by section 6211. However, as in Franklin v. Commissioner, T.C. Memo. 1993-184, respondent presented little evidence at trial and little argument in her brief as to the existence and amounts of the underpayments. Respondent did adduce considerable evidenc

To prove an underpayment, the Commissioner cannot satisfy her burden by relying solely on the taxpayer's failure to prove error in the determination of the deficiencies. Otsuki v. Commissioner, 53 T.C. 96, 106 (1969). Respondent’s case rests heavily on the testimony of Toll and Suval during the trial in this proceeding. As petitioner sta

Both parties agree that there is no estate tax deficiency and that petitioner is entitled to a decision that it has overpaid its estate tax, regardless of any effect that the doctrine of equitable recoupment might have. The term “main action” is used to denote the timely claim as opposed to the time-barred claim upon which the recoupment

on the following language in Logan v. Commissioner, supra at 1226-1227: In an income tax deficiency proceeding, the Court's jurisdiction is generally limited by section 6214 to a redetermination of the correct amount of the deficiency as defined in section 6211. An income tax deficiency is computed with reference to “the tax imposed by subtitle A” (sec. 6211(a)), and as such, all taxes, credits, deductions, exclusions, etc., imposed or allowed in subtitle A are to be taken into consideration in