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"First, we may not restrain or prevent respondent from reducing a
refund by way of credit or reduction pursuant to section 6402.
Second, we may not review the validity or merits of any reduction
of a refund under section 6402 after such a reduction has been
made by respondent." Winn-Dixie Stores, Inc. v. Commissioner,
supra at 294; see also Steinberg v. Commissioner, T.C. Memo.
1999-311 (no jurisdiction when the taxpayer claimed an
overpayment made for a year not at issue, 1973, should be applied
to the year at issue, 1980).
Addition to Tax and Penalties
Section 6651(a)(1) imposes an addition to tax for failure to
timely file returns "unless it is shown that such failure is due
to reasonable cause and not due to willful neglect". To show
reasonable cause petitioners must demonstrate that they exercised
ordinary business care and prudence but were unable to file their
returns in time. See United States v. Boyle, 469 U.S. 241, 246
(1985). Willful neglect is a conscious, intentional failure, or
reckless indifference. See id. at 245.
It is undisputed that petitioners' 1992 return was not
timely filed. Petitioners claim they did not file their return
because they were involved in a dispute with respondent involving
the section 6672 liability. Involvement in such disputes or
litigation does not excuse petitioners from their obligation to
timely file income tax returns. See, e.g., Osijo v.
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Last modified: May 25, 2011