Peter M. and Susan L. Hoffman - Page 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           

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Last modified: May 25, 2011