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
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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.
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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
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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.
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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
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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
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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.
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In order to give effect to the foregoing,

 An order granting respondent’s

motion for summary judgment and

 decision for respondent will be

entered.