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made the overpayment” and, subject to certain limitations, to
refund any balance to the person. In lieu of a refund, a
taxpayer can instruct the IRS to credit his overpayment against
the estimated tax for the taxable year immediately succeeding the
year of the overpayment. Sec. 301.6402-3(a)(5), Proced. & Admin.
Regs.
It is well settled that the IRS need only refund, or apply
to the taxpayer’s estimated tax, that portion of the overpayment
that exceeds the taxpayer’s “outstanding liability for any tax”.
Sec. 301.6402-3(a)(6)(i), Proced. & Admin. Regs.; see N. States
Power Co. v. United States, 73 F.3d 764, 767 (8th Cir. 1996)
(quoting United States v. Ryan, 64 F.3d 1516, 1523 (11th Cir.
1995) (“[Section 6402], ‘plainly gives the IRS the discretion to
apply overpayments to any tax liability’”)); Kalb v. United
States, 505 F.2d 506, 509 (2d Cir. 1974) (rejecting the argument
that because the tax overpayment was voluntary, the IRS was bound
to comply with the taxpayer’s direction about how to apply that
payment; section 6402(a) “clearly gives the IRS discretion to
apply a refund to ‘any liability’ of the taxpayer”).
The difficulty in this case is that it was never established
that petitioner owed any tax for 2004. Petitioner repeatedly
brought to respondent’s attention that he did not believe that he
owed tax for 2004. On the contrary, petitioner believed that he
was entitled to a refund of $243.20, and thus it was
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