T.C. Summary Opinion 2003-138
UNITED STATES TAX COURT
ALAN C. AND ESTHER R. SCHWEMMER, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 9461-02S. Filed September 30, 2003.
Alan C. Schwemmer and Esther R. Schwemmer, pro sese.
Huong T. Duong, for respondent.
PAJAK, Special Trial Judge: This matter is before the Court
on respondent’s motion for summary judgment, filed pursuant to
Rule 121(a). This case was heard pursuant to the provisions of
section 7463 of the Internal Revenue Code in effect at the time
the petition was filed. The decision to be entered is not
reviewable by any other court, and this opinion should not be
cited as authority. Unless otherwise indicated, all section
references are to the Internal Revenue Code, as amended, and all
- 2 -
Rule references are to the Tax Court Rules of Practice and
Procedure. Respondent contends that there is no genuine issue as
to any material fact. Thus, the notice of determination should
be sustained as a matter of law.
Summary judgment is intended to expedite litigation and
avoid unnecessary and expensive trials. Fla. Peach Corp. v.
Commissioner, 90 T.C. 678, 681 (1988). Summary judgment may be
granted with respect to all or any part of the legal issues in
controversy “if the pleadings, answers to interrogatories,
depositions, admissions, and any other acceptable materials,
together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that a decision may be
rendered as a matter of law.” Rule 121(a) and (b); Sundstrand
Corp. v Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965
(7th Cir. 1994); Zaentz v. Commissioner, 90 T.C. 753, 754 (1988);
Naftel v. Commissioner, 85 T.C. 527, 529 (1985). The moving
party bears the burden of proving that there is no genuine issue
of material fact, and factual inferences will be read in a manner
most favorable to the party opposing summary judgment. Jacklin
v. Commissioner, 79 T.C. 340, 344 (1982).
We are satisfied that there is no genuine issue as to any
material fact and that a decision may be rendered as a matter of
law. As explained below, we shall grant respondent’s motion for
summary judgment.
- 3 -
On March 27, 2000, respondent issued a joint notice of
deficiency to petitioners. In the notice, respondent determined
deficiencies in petitioners’ Federal income taxes together with
penalties as follows:
Year Deficiency Sec. 6662(a) penalty
1996 $10,500 $2,100
1997 10,294 2,059
The deficiencies were based on respondent’s determinations, which
are described in pertinent part below. Respondent determined
that the BVE and Sweetbush Business Trusts, purportedly created
by petitioners, are shams with no economic substance and
increased petitioners’ business income by the gross receipts of
the trusts, less ordinary and necessary business expenses.
Respondent also determined gross income from the bank deposits
method, flowthrough losses from the disregarded trusts, and
increased Social Security benefits. Respondent further
determined that petitioners were subject to self-employment tax,
with a deduction for one-half of the self-employment tax.
Petitioners received the aforesaid notice of deficiency.
Petitioners did not petition the Tax Court with respect to the
notice of deficiency.
By notice of determination dated April 15, 2002, respondent
informed petitioners that the notice of liens filed against them
would not be withdrawn because petitioners’ request for a hearing
did not address legal or procedural errors relating to either the
- 4 -
final notice of intent to levy or the notice of Federal lien
filing that were subject to consideration in a hearing, and
because the underlying liability was not subject to consideration
in this hearing under section 6330(c)(2)(B).
Petitioners filed with the Court a petition for lien or levy
action under section 6320(c) or 6330(d). At the time the
petition was filed, petitioners resided in Fresno, California.
Their petition is replete with tax protester type arguments.
Respondent filed a motion for summary judgment. Respondent
contends that petitioners’ challenge to the existence and/or
amount of their tax liabilities for 1996 and 1997 is not properly
before the Court in this proceeding, and that petitioners
otherwise failed to raise a valid issue for judicial review.
Petitioners filed a response in opposition to respondent’s
motion, which is also replete with tax protester type arguments.
Petitioners maintain that the burden is on respondent to prove
the assessments resulting from the notice of deficiency are
valid. Petitioners filed a statement which has as its core
thesis that this case should be:
dismissed for lack of Subject Matter Jurisdiction on the
grounds that the Notice of Determination issued by
respondent was issued on hearsay facts and evidence.
Petitioner demands that respondent provide certified facts
or evidence of a statutory correct assessment or tax
liability to support any claimed deficiency. Lacking a
statutory correct assessment or tax liability the notice of
determination is null and void and this court does not have
Subject Matter Jurisdiction.
- 5 -
Section 6321 imposes a lien in favor of the United States on
all property and rights to property of a person when demand for
payment of that person’s liability for taxes has been made and
the person fails to pay those taxes. The lien arises when the
assessment is made. Sec. 6322. Section 6323(a) requires the
Secretary to file notice of Federal tax lien if such lien is to
be valid against any purchaser, holder of a security interest,
mechanic’s lienor, or judgment lien creditor. Lindsay v.
Commissioner, T.C. Memo. 2001-285, affd. 56 Fed. Appx. 800 (9th
Cir. 2003).
Section 6320 provides that the Secretary shall furnish the
person described in section 6321 with written notice of the
filing of a notice of lien under section 6323. The notice
required by section 6320 must be provided not more than 5
business days after the day the notice of lien is filed. Sec.
6320(a)(2). Section 6320 further provides that the person may
request administrative review of the matter (in the form of an
Appeals Office hearing) within the 30-day period beginning on the
day after the 5-day period described above. Section 6320(c)
provides that the Appeals Office hearing generally shall be
conducted consistent with the procedures set forth in section
6330(c), (d), and (e).
Section 6330(c) provides for review with respect to
collection issues such as spousal defenses, the appropriateness
- 6 -
of the Commissioner’s intended collection action, and possible
alternative means of collection. Section 6330(c)(2)(B) provides
that the existence of the amount of the underlying tax liability
can be contested at an Appeals Office hearing if the taxpayer did
not receive a notice of deficiency or did not otherwise have an
earlier opportunity to dispute such tax liability. Sego v.
Commissioner, 114 T.C. 604, 609 (2000); Goza v. Commissioner, 114
T.C. 176, 180-181 (2000). Section 6330(d) provides for judicial
review of the administrative determination in the Tax Court or a
United States District Court.
Respondent asserts that there is no dispute as to a material
fact and that respondent is entitled to judgment as a matter of
law because section 6330(c)(2)(B) bars petitioners from
challenging the existence or amount of their tax liability for
1996 and 1997 in this proceeding. Respondent also asserts that
petitioners have not raised a valid issue for review; i.e., a
spousal defense, a challenge to the appropriateness of the
collection action, or an alternative means of collection.
The record shows that respondent issued a notice of
deficiency to petitioners for 1996 and 1997. The record also
shows that although petitioners received the notice of
deficiency, they did not file a petition for redetermination with
the Court to dispute the proposed deficiencies. Under such
circumstances, section 6330(c)(2)(B) plainly states that
- 7 -
petitioners are barred from challenging the existence or amount
of their tax liability for 1996 and 1997. Goza v. Commissioner,
supra at 182-183; Sego v. Commissioner, supra at 610.
The notice of determination that the Appeals Office issued
to the taxpayer husband in Sego v. Commissioner, supra at 605,
stated in part, as follows:
Challenges to the existence or amount of liability
were raised * * *
* * * * * * *
The assessments are deemed correct because you have
failed to present any credible evidence to overcome the
Commissioner’s presumption of correctness. * * *
In Sego v. Commissioner, supra, this Court held, inter alia, that
section 6330(c)(2)(B) barred the taxpayers from challenging the
existence or amount of their underlying tax liability in the
judicial proceeding.
In short, petitioners are statutorily barred from
challenging the existence or amount of their income tax liability
for 1996 and 1997 in this proceeding. Petitioners have failed to
raise a spousal defense, make a valid challenge to the
appropriateness of respondent’s intended collection action, or
offer alternative means of collection. These issues are now
deemed conceded. Rule 331(b)(4). Accordingly, in the absence of
a valid issue for review, we conclude that respondent is entitled
to judgment as a matter of law sustaining the notice of
determination dated April 15, 2002.
- 8 -
In order to give effect to the foregoing,
An order granting respondent’s
motion for summary judgment and
decision for respondent will be
entered.