Respondent moves for summary judgment on a procedural issue as to whether petitioners' allegation that a fraud on this Court occurred during the trial of a tax shelter tax deficiency test case may be raised in this collection case under
Held: The typical and proper method to raise an allegation that a fraud on this Court occurred during the trial of a tax deficiency case is by filing a motion to vacate the decision entered in the specific tax deficiency case in which the alleged fraud occurred.
Held, further, if other tax deficiency cases (or TEFRA partnership cases) have been filed that are related to and controlled by a test case in which a fraud allegedly occurred, there also may be situations in which the alleged fraud may be raised by filing a motion under
Held, further, in this collection case under
*258 SWIFT, Judge: This matter is before us in this collection case under
All section references are to the Internal Revenue Code, and all Rule references are to the Tax Court Rules of Practice and Procedure.
BACKGROUNDOn their 1977 through 1985 individual Federal income tax returns, petitioners claimed tax benefits relating to investments in a tax shelter partnership named Dillon Oil Technology Partners (Dillon Oil). Dillon Oil was one of many related tax shelter partnerships that in the 1970s and early 1980s invested in so-called enhanced oil recovery technology, interests in which were sold to individual taxpayers. The generic name used to describe these particular tax shelter partnerships was Elektra Hemisphere.
In audits of returns of individual investors, including petitioners, and *17 of the related Elektra Hemisphere non-TEFRA and TEFRA partnerships, respondent disallowed claimed flow-through loss deductions relating to Dillon Oil and to the other Elektra Hemisphere partnerships. Relating to respondent's disallowance of petitioners' claimed Dillon Oil loss deductions, respondent determined Federal income tax deficiencies against petitioners in the cumulative total amount of $ 421,170 for 1977, 1978, 1980, 1981, 1984, and 1985.
In
In
Both *18 the above tax deficiency cases were part of the Elektra Hemisphere tax shelter project that was litigated in the test case of
More specifically as it relates to petitioners, in
Louis Coppage *19 (Coppage) was a general partner of the Denver-based partnerships, including Dillon Oil, and he was a witness in Krause.
On September 27, 1999, we entered a decision in
On the basis of and consistent with the disallowed loss deductions in the above opinions and decisions, respondent timely assessed the above income tax deficiencies against petitioners.
On October 27, 2005, respondent filed a Federal tax lien relating to the above outstanding Federal income tax deficiencies that had been assessed against petitioners. On November 3, 2005, respondent mailed to petitioners a notice of their right to an Appeals Office collection hearing under
*260 On November 17, 2005, petitioners mailed to respondent a request for a collection due process hearing relating to the above filed Federal tax lien. On October 12, 2006, under
During the collection hearing with respondent's Appeals *20 Office, petitioners did not propose any collection alternatives such as an offer-in-compromise or an installment agreement. Rather, petitioners requested abatements of all outstanding Federal income taxes respondent had assessed against them and refunds of all Federal income taxes they had paid relating to their investments in Dillon Oil. The sole stated basis for petitioners' requested refunds and abatements was set forth in a letter from petitioners' counsel alleging that a fraud on the Court had occurred during the trial of
On May 1, 2007, respondent's Appeals Office mailed to petitioners its notice of determination in which it was concluded that an allegation of fraud occurring in the trial of a tax deficiency case should be raised in the tax deficiency case itself, not in a collection case under
On June 4, 2007, petitioners filed their petition under
Respondent moves for summary judgment on the procedural issue as to whether petitioners' allegation that a fraud on this Court occurred during the trial of a tax deficiency test case may be raised in this collection case under
*261 On this same procedural issue, petitioners move for partial summary judgment seeking an affirmative answer. If petitioners prevail on this procedural issue, petitioners ask for an evidentiary hearing with regard to their allegation that a fraud on the Court occurred during the trial of the Krause test case.
Generally, the proper method to raise and resolve an allegation that a fraud on this Court occurred in a tax deficiency case would be to file a motion to vacate the decision entered in the specific tax deficiency case in which the fraud allegedly occurred.
Petitioners' allegation that a fraud on the Court occurred *22 in the trial of
In
We conclude that an alleged fraud on the Court occurring in an income tax deficiency test case should be raised in the test case or in another income tax deficiency case (or TEFRA partnership case) relating thereto and may not be raised in a subsequent collection case under
Under
We emphasize that in
Petitioners have failed to raise any bona fide issue, collection alternative, or genuine issue of material fact. See
For the reasons stated, we shall grant respondent's motion for summary judgment, and we shall deny petitioners' cross-motion for partial summary judgment.
To reflect the foregoing,
An appropriate order and decision will be entered.
Footnotes
1. Petitioners are two of the four individuals who joined in the petition in
Freedman v. Commissioner↩, docket No. 2471-89 .2.
Sec. 6330(c)(2)(B) provides as follows:(B) Underlying liability. -- The person may also raise at the hearing challenges to the existence or amount of the underlying tax liability for any tax period if the person did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability.↩
3. We note that at the Jan. 29, 2008, hearing on the parties' instant cross-motions, the Court asked petitioners' counsel for a brief explanation of the factual basis for the allegation that a secret agreement between respondent and Coppage had been entered into during the trial of
Krause v. Commissioner, 99 T.C. 132">99 T.C. 132 (1992), affd. sub nom.Hildebrand v. Commissioner, 28 F.3d 1024">28 F.3d 1024 (10th Cir. 1994). Petitioners' counsel offered merely supposition, surmise, and bizarre inference, and he provided absolutely no credible factual support for his allegation that a fraud on this Court occurred in the Krause↩ trial.