Offset of refund
In Murphy v. Commissioner, T.C. Memo 2019-72, Filed June 11, 2019, the Tax Court ruled that a Settlement Officer did not abuse discretion in failing to consider a credit from a tax year not in question, to offset a liability from the year at issue. This was a Collection Due Process (CDP) hearing that was triggered by the filing of a final notice of intent to levy issued by the IRS relating to a balance due on 2015. The taxpayers argued that the liability could be resolved if the Settlement Officer would address a failed claim for refund on their 2011 tax period. For the 2011 period, the IRS has filed a Substitute for Return. Ultimately, the taxpayers filed a return on May 7, 2016 which the IRS treated as a claim for refund and denied. During the CDP hearing, the Officer explained that the 2011 tax period was not subject to a levy notice and therefore she lacked jurisdiction to address the refund claim. The Tax Court ruled that it lacked jurisdiction over the 2011 claim for refund. Additionally, the Tax Court ruled the Settlement Officer had not abused her discretion in handling the matter.