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Willson v. Comm'r of Internal Revenue Service

United States Court of Appeals, District of Columbia Circuit

November 6, 2015

GEOFFREY KENNETH WILLSON, APPELLANT
v.
COMMISSIONER OF INTERNAL REVENUE SERVICE, APPELLEE

Argued September 24, 2015

Geoffrey K. Willson, Pro se, argued the cause and filed briefs for the appellant.

Clint A. Carpenter, Attorney, United States Department of Justice, argued the cause for the appellee. Tamara W. Ashford, Acting Assistant Attorney General, Michael J. Haungs and John A. Nolet, Attorneys, were on brief. Kenneth W. Rosenberg, Attorney, entered an appearance.

Before: HENDERSON, KAVANAUGH and PILLARD, Circuit Judges.

OPINION

Page 317

Karen Lecraft Henderson, Circuit Judge.

Due to a clerical error by the Internal Revenue Service (IRS), Geoffrey Willson received his 2006 income tax refund twice. When the IRS sought to recover the erroneous refund by levy, Willson challenged the collection efforts first in an IRS administrative proceeding, then in the tax court. At the tax court stage, the IRS changed course; it conceded the levy was an im

Page 318

proper collection method, zeroed out Willson's disputed tax liability and moved to dismiss the case as moot. Willson, however, objected to dismissal. He had paid $5,100 to the IRS during the course of the administrative proceedings and, in his view, he is entitled to a return of these funds. He maintains that this continuing controversy precludes dismissal on mootness grounds. The tax court rejected this contention and so do we. For the following reasons, we affirm the tax court's dismissal of Willson's case as moot.

I.

Breathing life into the adage that no good deed goes unpunished, Willson's tax troubles began when he overpaid his 2004 federal income taxes by more than $28,000. Rather than seek a refund of the overpayment, Willson elected on his 2004 tax return to apply the credit forward to cover his future tax liability. The 2004 overpayment credit more than covered Willson's 2005 tax liability so that, when it came time for Willson to file his 2006 tax return, a total overpayment credit of $13,193.55 remained. On his 2006 return, Willson reported a $0.00 tax liability and an additional $30.00 tax credit, leaving a $13,223.55 overpayment credit at his disposal. Willson again forwent a refund and elected to apply the entire overpayment credit to his 2007 taxes.

When he filed his 2007 tax return, Willson took a different approach to the overpayment credit from the one he had followed the previous three years. Instead of continuing to apply the full amount ($13,223.55) forward to 2008, he requested that the IRS refund him $10,000. The remainder was to be applied to any liabilities for both 2007 and future years.

Unfortunately, the IRS bungled Willson's 2006 and 2007 requests. First, when it processed Willson's 2006 return, it did not carry the overpayment credit forward to 2007 as Willson requested; rather, it sent Willson a $13,223.55 refund check. This should have zeroed out the overpayment credit, leaving Willson liable for his 2007 taxes. But when the IRS processed the 2007 return, it again counted the $13,223.55 credit. In accordance with Willson's request, it applied the credit against his 2007 taxes and then directly deposited the $10,000 refund Willson requested, plus an additional $600 tax relief credit and interest in the amount of $85.48. Willson thus received from the IRS both a $13,223.55 check and a $10,685.48 direct deposit.

Eventually realizing its mistake, the IRS moved to correct it. It entered an overpayment credit reversal on Willson's 2006 tax account, effectively creating a new 2006 tax liability of $13,193.55, and in March 2011 sent Willson final notice that it intended to levy on his property to recover the amount of the new liability in full. In response, Willson requested a Collection Due Process (CDP) hearing to challenge the proposed levy before a neutral IRS hearing officer. The ...


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