T.C. Memo. 2011-70

UNITED STATES TAX COURT

PETER P. SCHWENDEMAN, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 12945-09L. Filed March 28, 2011.

James R. Cooper, for petitioner.

Louis H. Hill and Terry Serena, for respondent.

MEMORANDUM OPINION

THORNTON, Judge: Pursuant to sections 6320(c) and 6330(d),

petitioner seeks review of respondent’s determination sustaining

the filing of a notice of Federal tax lien (NFTL) with respect to

section 6672 trust fund recovery penalties for the taxable 
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quarters ending December 31, 2003, March 31, 2004, and June 30,

2004 (the quarters at issue).1 

Background

The parties submitted this case fully stipulated pursuant to

Rule 122. The parties’ stipulation of facts and the attached

exhibits are incorporated herein by this reference. When he

petitioned the Court, petitioner resided in Ohio.

By letter dated March 3, 2006, respondent notified

petitioner of proposed assessments of civil penalties under

section 6672 for the quarters at issue for failing to withhold

and pay over employment taxes of an entity known as Carpe Diem

Management Co. The letter offered petitioner an administrative

appeal. By letter dated March 20, 2006, petitioner timely

protested the proposed assessments. After a conference with

petitioner and petitioner’s counsel, on October 18, 2007,

respondent’s Appeals officer denied petitioner’s administrative

appeal. 

On December 3, 2007, respondent assessed against petitioner

section 6672 penalties of $69,889 and $37,004, respectively, for

the first two quarters of 2004. On December 24, 2007, petitioner

paid minimal amounts of these assessments ($58 for the first

1Unless otherwise indicated, all section references are to

the Internal Revenue Code (Code), as amended, and all Rule

references are to the Tax Court Rules of Practice and Procedure. 

All amounts are rounded to the nearest dollar. 
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quarter of 2004 and $18 for the second quarter), representing the

tax that respondent determined should have been withheld for one

employee of Carpe Diem Management Co. for each of these quarters. 

That same day petitioner filed with the Internal Revenue Service

(IRS) claims for refund and abatement with respect to these two

quarters. By letter dated February 28, 2008, respondent denied

these claims.

On April 7, 2008, respondent assessed against petitioner a

section 6672 penalty of $11,865 for the last quarter of 2003. On

April 17, 2008, petitioner paid $25 of this assessment, again

representing the tax that respondent determined should have been

withheld for one employee, and the same day filed with the IRS a

claim for refund and abatement with respect to the last quarter

of 2003. By letter dated April 25, 2008, respondent denied this

claim.

On August 26, 2008, respondent filed in Licking County,

Ohio, the NFTL which is at issue. On the same date respondent

sent to petitioner a Notice of Federal Tax Lien Filing and Your

Right to a Hearing under IRC 6320. In response, on September 8,

2008, petitioner timely submitted a Form 12153, Request for a

Collection Due Process or Equivalent Hearing. On this form

petitioner described the reason for his request as follows: “A

payment has been made on these assessments and attached is a copy

of a complaint for refund, United States District Court for the
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Southern District of Ohio, Eastern Division, at Columbus. These

assessments and liens are contested.” On September 11, 2008,

petitioner commenced the refund suit in the above-named District

Court to contest the underlying liabilities.

On December 18, 2008, petitioner’s counsel and an Appeals

Office settlement officer participated by telephone in a

collection due process hearing. The settlement officer opined

that petitioner could not dispute his underlying liability in the

collection proceeding because he had previously disputed it

during his administrative appeal. According to the settlement

officer’s case activity record, petitioner’s counsel indicated

that he “just wanted to buy some time”, that he did not wish to

discuss collection alternatives, and that he did not want the IRS

to take any action during the pendency of petitioner’s refund

suit in District Court. 

On April 29, 2009, respondent issued to petitioner a Notice

of Determination Concerning Collection Action(s) Under Section

6320 and/or 6330 (the determination notice), sustaining the NFTL. 

The determination notice concluded that the filing of the NFTL

was appropriate, that petitioner was not entitled to challenge

his underlying liability in this collection proceeding, that

petitioner had offered no collection alternatives, that all

relevant legal and procedural requirements had been followed, and

that the NFTL appropriately balanced the need for efficient
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collection with concerns that the collection action should be no

more intrusive than necessary.

Discussion

Section 6321 imposes a lien in favor of the United States on

all property and property rights of a person who is liable for

and fails to pay tax after demand for payment has been made. The

lien arises when assessment is made and continues until the

liability is paid or becomes unenforceable by lapse of time. 

Sec. 6322. For the lien to be valid against certain third

parties, the Secretary must file a notice of Federal tax lien;

within 5 business days thereafter, the Secretary must provide

written notice to the taxpayer. Secs. 6320(a), 6323(a). The

taxpayer then has 30 days to request an administrative hearing

before an Appeals officer. Sec. 6320(a)(3)(B), (b)(1); sec.

301.6320-1(c)(1), Proced. & Admin. Regs. 

At the hearing the person may raise any relevant issue

relating to the unpaid tax or filed lien, including spousal

defenses, challenges to the appropriateness of the collection

action, and offers of collection alternatives. Sec.

6330(c)(2)(A). The person may challenge the underlying tax

liability if the person did not receive a notice of deficiency or

did not otherwise have an opportunity to dispute the liability. 

Sec. 6330(c)(2)(B); Sego v. Commissioner, 114 T.C. 604, 609

(2000). After receiving a notice of determination, the person
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may seek judicial review in this Court. Sec. 6330(d)(1). If the

validity of the underlying tax liability is properly at issue, we

review that issue de novo. Sego v. Commissioner, supra at 610. 

Other issues we review for abuse of discretion. Id.

On brief petitioner acknowledges that he cannot challenge

his underlying liability in this collection proceeding. 

Petitioner does not contend that the NFTL was in any way

improper, that the settlement officer failed properly to consider

collection alternatives, that the settlement officer improperly

determined that the NFTL balanced the need for efficient

collection of taxes against concerns that the collection action

be no more intrusive than necessary, or that the settlement

officer failed to verify that all applicable laws and

administrative procedures had been satisfied with respect to the

NFTL. We deem petitioner to have conceded or waived any such

issues. See, e.g., Lunsford v. Commissioner, 117 T.C. 183, 187

(2001). Petitioner’s sole contention and request for relief, as

stated in his brief, is that respondent “should be required to

delay collection until the United States District Court has

concluded its proceedings on underlying liability.”2 

2We take judicial notice that, according to court records in

the Public Access to Court Electronic Records system as of the

date of this opinion, petitioner’s refund suit remains pending in

the District Court.
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The lien in question arose by operation of law on December

3, 2007, when respondent first assessed petitioner’s section 6672

tax liabilities. See sec. 6322. The lien continues until the

assessed liabilities are satisfied or become unenforceable by

reason of lapse of time.3 See id. The lien represents merely

the Government’s claims against petitioner’s property and does

not per se effect a seizure of petitioner’s property or otherwise

deprive him of property. See Saltzman, IRS Practice and

Procedure, par. 14.04 (rev. 2d ed. 2002). Similarly, the NFTL

does not of itself deprive petitioner of property but affects the

validity and priority of the tax liens against persons such as

purchasers, holders of security interests, judgment creditors,

and mechanics lienors. See sec. 6323. 

As best we understand it, petitioner’s claim for relief is

not directed toward the NFTL to which the notice of determination

relates but rather toward some possible future collection action

that respondent might decide to take, such as making a levy upon

his property pursuant to section 6331 or instituting a court

action to enforce the lien pursuant to section 7403. Construed

broadly, petitioner’s contention appears to be that the

settlement officer abused her discretion in not acceding to his

request that the IRS suspend future collection action during the

3If the assessed liabilities, plus interest, are fully

satisfied or become legally unenforceable, the Secretary must

issue a certificate of release of the lien. See sec. 6325. 
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pendency of petitioner’s refund suit in District Court. But he

does not allege, and the record does not suggest, that respondent

has proposed or commenced any such collection action, apart from

filing the NFTL. Hence any future collection action is purely

speculative and not a proper object of relief in this proceeding

to review respondent’s determination sustaining the NFTL.4 

In any event, the Code generally precludes the IRS from

making a levy or beginning any court proceeding to collect a

“divisible” tax (such as the section 6672 trust fund penalty)

where the taxpayer has commenced a refund suit for the recovery

of the portion of the divisible tax paid. See sec. 6331(i)(1),

(4)(A).5 These provisions of section 6331 would appear to render

4Petitioner’s various administrative challenges to the sec.

6672 penalties did not preclude respondent’s filing the lien. 

Statutory restrictions against the Commissioner’s making a levy

during the pendency of a refund suit, as contained in sec.

6331(i) and 6672(c), are inapplicable because this case involves

a lien rather than a levy and for the additional reason, if any

be thought necessary, that the lien was filed more than 30 days

after the refund claims were denied and before the District Court

refund suit was commenced.

5The refund suit procedures are explained in Univ. of Chi.

v. United States, 547 F.3d 773, 785 (7th Cir. 2008):

As a general rule, to challenge an assessment in a

district court, a taxpayer must pay the full amount of

the assessed tax and then pursue a refund. Full

payment is a jurisdictional prerequisite imposed by

Congress. Where a tax is “divisible,” however, “the

taxpayer may pay the full amount on one transaction,

sue for a refund for that transaction, and have the

outcome of this suit determine his liability for all

the other, similar transactions.” The government will

(continued...)
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moot or unnecessary petitioner’s request that respondent suspend

future collection action during the pendency of his refund suit.6

We find no abuse of discretion by the settlement officer in this

regard. 

We have also considered whether petitioner’s contention

might be construed as seeking to enjoin future collection action

by respondent during the pendency of his District Court refund

suit. Section 6330(e)(1), as made applicable to this proceeding

by section 6320(c), provides that during the pendency of a

collection proceeding and for 90 days after the entry of a final

decision therein, respondent’s “beginning of a levy or

proceeding” may be enjoined “in the proper court, including the

Tax Court.” But the Tax Court’s jurisdiction in this regard is

strictly limited: “The Tax Court shall have no jurisdiction

under this paragraph to enjoin any action or proceeding unless a 

5(...continued)

usually bring a counterclaim for the remainder of the

tax due. Employment taxes are considered divisible

taxes. [Citations omitted.]

6Similarly, pursuant to sec. 6672(c) the IRS generally may

not proceed with “a levy or proceeding in court” to collect an

unpaid sec. 6672 penalty if within 30 days after notice and

demand the taxpayer (1) pays an amount which is not less than the

minimum amount required to commence a proceeding in court with

respect to his liability for the penalty, (2) files a claim for

refund of the amount so paid, and (3) posts a bond for 150

percent of the unpaid penalty. This prohibition expires,

however, if a refund suit is not commenced in the appropriate

District Court or the Court of Claims within 30 days of the

denial of the pertinent refund claim. Sec. 6672(c)(2).
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timely appeal has been filed under subsection (d)(1) and then 

only in respect of the unpaid tax or proposed levy to which the 

determination being appealed relates.” Sec. 6330(e)(1). As

previously indicated, the record does not suggest that the IRS

has proposed or begun any levy action or proceeding with respect

to the tax liabilities to which the notice of determination

relates. Furthermore, inasmuch as the liens arose automatically

by operation of law and the NFTL has already been filed, it is

not meaningful to speak of “enjoining” the liens or the NFTL.

Accordingly, we sustain respondent’s determination 

sustaining the filing of the NFTL.

Decision will be entered

for respondent.