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unpaid tax for 1997, and we have jurisdiction to
consider facts and issues arising in 1995, a year not
the subject of the notice of determination, insofar as
they are relevant to computing the unpaid tax for 1997.
Held, further, since P's Federal income tax return
and payment for 1995 were untimely, resulting in the
assessment of additions to tax for late filing and
payment, R's application of P's 1997 remittance against
the 1995 liability was proper.
In July 1998, P mailed a check to R for $1,776. R
posted the check to P's 1997 account for the erroneous
amount of $11,776. As $11,776 exceeded all unpaid
assessments for 1997, R issued P a refund for 1997 of
$5,513 in August 1998. After subsequently discovering
his error, R applied four of P's 1999 remittances,
totaling $6,500, to P's 1997 account. P claimed in his
hearing request and herein that he had not received
proper credit for all payments made with respect to
1999.
Held: R's application of P's 1999 remittances to
P's 1997 account to recoup the erroneous nonrebate
refund for 1997 contravenes O'Bryant v. United States,
49 F.3d 340 (7th Cir. 1995). These 1999 remittances
should have been applied against unpaid taxes that are
the subject of the instant levies. Consequently, the
levies must be reconsidered by R on remand.
P claimed in his Appeals hearing and herein that
the proposed levy for 1999 should not be sustained
because R improperly changed the amounts shown as due
on P's Federal income tax return for 1999. R concedes
that he disallowed, pursuant to sec. 6213(b)(1),
I.R.C., certain miscellaneous itemized deductions
claimed on that return and made an assessment based
thereon without issuing a notice of deficiency to P as
required by sec. 6213(a), I.R.C. As a consequence, R
contends, P is entitled in the instant proceeding to de
novo review under sec. 6330(c)(2)(B), I.R.C., of his
entitlement to these deductions, with any modifications
resulting from the Court's review to be reflected in
the amount of the assessment and levy.
Held: the 1999 levy, insofar as it is based on the
disallowance of P's miscellaneous itemized deductions,
may not proceed, as the assessment upon which it is
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