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return. I.R.C. �6651(b) does not state the tax shall
be reduced by any payment of tax eventually claimed on
the return as it does when I.R.C. �6651(b) addresses
immediately after the above-quoted section the amount
of any credit claimed on the return.
Accordingly, neither the Internal Revenue Service
nor this Court may ignore the statutory language which
states such tax payments by Ron Mason “shall” reduce
the tax upon which the penalty is calculated. Thus,
Ron Mason’s tax liability for 1996 must be reduced by
the 1995 tax liability for 1996. If there is no tax
liability for 1996 then there is [sic] no additions to
tax under I.R.C. ��6651(a)(1) and (a)(2). * * *
The short answer to the above-quoted argument of petitioner
is that although petitioner overpaid his tax liability for 1995,
he is barred by the statute of limitations from applying that
overpayment as a credit to his tax liability for taxable year
1996, see sec. 6511(b)(2)(A), and the parties so stipulated. The
parties also stipulated that petitioner underpaid his tax for his
taxable year 1996 in the amount of $40,882.69.
The long answer to petitioner’s argument is that petitioner
misconstrues section 6651(b). Contrary to the contentions of
petitioner, section 6651(b) is not “the subsection which actually
imposes the I.R.C. ��6651(a)(1) and (a)(2) penalties.” As
pertinent here, section 6651(b) states:
SEC. 6651. FAILURE TO FILE TAX RETURN OR TO PAY TAX.
(b) Penalty Imposed on Net Amount Due.–-For pur-
poses of--
(1) subsection (a)(1), the amount of tax required
to be shown on the return shall be reduced by the
amount of any part of the tax which is paid on or
before the date prescribed for payment of the tax and
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