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suit ordinarily must be filed within 2 years after the making of
the refund. Sec. 6532(b).5
Neither party disputes the following facts relating to
taxable year 1985: Petitioners' actual tax liability is
$185,097;6 the amount of tax due shown on petitioners' 1985
Federal income tax return (Form 1040) was $250,323; respondent
determined an additional adjustment in the amount of $16,812; and
petitioners received a refund of $97,312. Finally, the parties
also agree that respondent never assessed the additional
liability of $72,747 shown on the fourth amended return and that
petitioners owe the above amount but did not remit a payment.
Petitioners claim that there was no overpayment for taxable
year 1985 and that the refund of $65,937 is a nonrebate refund.
Respondent, however, having accepted the third amended tax return
and issued a refund based upon the overpayment reflected therein,
5Sec. 6532(b) provides as follows:
Suits by United States for Recovery of Erroneous
Refunds.--Recovery of an erroneous refund by suit under
section 7405 shall be allowed only if such suit is
begun within 2 years after the making of such refund,
except that such suit may be brought at any time within
5 years from the making of the refund if it appears
that any part of the refund was induced by fraud or
misrepresentation of a material fact.
6We granted respondent's motion for leave to file an
amendment to answer out of time. By this motion, respondent
revised petitioners' income tax liability and deficiency to
$185,097 and $81,211, respectively.
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