Daniel C. Greer and Winnie L. Greer - Page 20

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         Madison was certainly not prudent, and his failure to obtain                 
         expert tax advice regarding the merits of the tax scheme was                 
         negligent.  Accordingly, the additions to tax under section 6653             
         are sustained.  See Barlow v. Commissioner, 301 F.3d 714, 724 (6th           
         Cir. 2002), affg. T.C. Memo. 2000-339.                                       
              Anticipating the potential application of section 6653(a)(2),           
         petitioners assert that respondent has incorrectly computed the              
         underpayment of tax which is attributable to negligence and                  
         subject to the addition to tax, based upon 50 percent of the                 
         interest payable under section 6601.  Petitioners argue to reduce            
         the deficiencies in 1981 and 1982 computed under section                     
         6211(a)(1), despite respondent’s repayment of the $189,769 with              
              Petitioners rely upon the definition of deficiency in section           
         6211 and argue they made a payment which should be characterized             
         as an amount collected without assessment as a deficiency under              
         section 6211(a)(1)(B).  They further argue this amount should not            
         be reduced by the subsequent repayment because that repayment was            
         not a rebate under section 6211(a)(2).                                       
              There is a body of law holding that the deficiency procedures           
         may not be used to correct amounts collected and then erroneously            
         refunded because such erroneous payments are not rebates.  See,              
         e.g., O’Bryant v. United States, 49 F.3d 340 (7th Cir. 1995).  In            
         addition, amounts characterized as payments of tax are not                   

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