Scott Thomas and Jennifer Gundry - Page 5




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               Petitioners contend that, even though they incorrectly                 
          reported the amount of their wage and salary income on page 1 of            
          their return, the second page of their return and their                     
          computation of tax was based on the correct amount of their wage            
          and salary income but admittedly did not include the $198 in                
          dividend and interest income.  Therefore, petitioners contend               
          that, since respondent remitted $2,426 to them as the refund of             
          an overpayment, respondent is precluded from issuing a notice of            
          deficiency simply to rectify an error that respondent committed.            
          Petitioners further contend that the interest on the deficiency             
          should be abated if they are held liable for the amount of the              
          deficiency because the refund was based on an error by                      
          respondent.                                                                 
               The law is well settled that the granting of a refund does             
          not preclude the Commissioner from issuing a notice of deficiency           
          to recover the refund.  See Gordon v. United States, 757 F.2d               
          1157, 1160 (11th Cir. 1985); Beer v. Commissioner, 733 F.2d 435,            
          437 (6th Cir. 1984), affg. T.C. Memo. 1982-735; Warner v.                   
          Commissioner, 526 F.2d 1, 2 (9th Cir. 1975), affg. T.C. Memo.               
          1974-243.  The taxpayers in Gordon v. United States, supra, and             
          in Warner v. Commissioner, supra, made the same argument that               
          petitioners are making here; i.e., that the Commissioner should             
          not be allowed to make refunds and then demand repayment.  To               
          this argument, the Courts of Appeals stated: "'Alas, the                    





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