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This case is governed by Commissioner v. Lundy, 516 U.S.
___, 116 S. Ct. 647 (1996). In Lundy, income taxes of the
taxpayers (husband and wife) were withheld from their wages
during 1987. On September 26, 1990, the Commissioner issued a
notice of deficiency to the taxpayer-husband. Three months
later, on December 22, 1990, the taxpayers filed their 1987 joint
return. Id. at ___, 116 S. Ct. at 649.
The Court framed the issue as follows: "[W]e must determine
which of these two look-back periods to apply when the taxpayer
fails to file a tax return when it is due, and the Commissioner
mails the taxpayer a notice of deficiency before the taxpayer
gets around to filing a late return." Id. at ___, 116 S. Ct. at
652. The Supreme Court held that the 2-year period applied:
We reach this conclusion by following the
instructions set out in section 6512(b)(3)(B). The
operative question is whether a claim filed "on the
date of the mailing of the notice of deficiency" would
be filed "within 3 years from the time the return was
filed." * * * In the case of a taxpayer who does not
file a return before the notice of deficiency is
mailed, the claim described in section 6512(b)(3)(B)
could not be filed "within 3 years from the time the
return was filed." No return having been filed, there
is no date from which to measure the 3-year filing
period described in section 6511(a). Consequently, the
claim contemplated in section 6512(b)(3)(B) would not
be filed within the 3-year window described in section
6511(a), and the 3-year look-back period set out in
section 6511(b)(2)(A) would not apply. The applicable
look-back period is instead the default 2-year period
described in section 6511(b)(2)(B), which is measured
from the date of the mailing of the notice of
deficiency, see section 6512(b)(3)(B). The taxpayer is
entitled to a refund of any taxes paid within two years
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