-8-
of a barred tax liability, whether voluntary or involuntary,
automatically becomes an ‘overpayment’ and hence subject to
mandatory refund [under section 6402(a)]”). If petitioners’
liability for the tax attributable to the cancellation of
indebtedness income was eliminated by the expiration of the
period of limitations, petitioners cannot be liable for any
interest or a penalty.
Respondent contends that the additions to tax were timely
assessed pursuant to exceptions to the general 3-year period of
limitations. Sec. 6501(c)(7), (e). Respondent has conceded that
petitioners were not contractually obligated to file the amended
return as part of the plea agreement that settled the criminal
proceeding. Moreover, respondent has conceded that petitioners
are not estopped from asserting the defense of period of
limitations merely because they voluntarily filed an amended
return and paid the additional tax liability.
A. Standard of Review
Where the validity of the underlying tax liability is
properly at issue in an appeal brought under section 6330(d),
the Court will review the taxpayer’s liability under the de novo
standard. Where the underlying liability is not at issue, the
Court will review the Commissioner’s administrative determination
for abuse of discretion. Sego v. Commissioner, 114 T.C. 604, 610
(2000). To determine which standard of review applies, the Court
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011