                    130 T.C. No. 15



                UNITED STATES TAX COURT



    STEVEN G. AND ELAINE R. STROUBE, Petitioners v.
      COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 12628-07L.             Filed June 19, 2008.


     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 sec. 6320, I.R.C.
Petitioners filed a cross-motion for partial summary
judgment on this same procedural issue.

     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. Rule 162, Tax Court Rules of Practice and
Procedure.

     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 Rule 162, Tax Court Rules of Practice and
                                - 2 -
     Procedure, to vacate decisions entered in one or more
     of the related tax deficiency (or TEFRA partnership)
     cases.

          Held, further, in this collection case under sec.
     6320, I.R.C., however, petitioners may not raise an
     issue of whether a fraud on the Court occurred in an
     income tax deficiency case.


     Declan J. O’Donnell, for petitioners.

     Randall L. Preheim, for respondent.



                               OPINION

     SWIFT, Judge:    This matter is before us in this collection

case under section 6320 on respondent’s motion for summary

judgment and on petitioners’ cross-motion for partial summary

judgment.    On January 29, 2008, a hearing was held and arguments

were heard on the parties’ cross-motions in Denver, Colorado.

     All section references are to the Internal Revenue Code, and

all Rule references are to the Tax Court Rules of Practice and

Procedure.


                             Background

     On 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
                                - 3 -
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 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 Freedman v. Commissioner, docket No. 2471-89,

petitioners1 filed petitions in this Court challenging the above

tax deficiencies for 1977, 1978, 1980, and 1981.

     In Vulcan Oil Tech. Partners v. Commissioner, 110 T.C. 153

(1998), affd. without published opinions sub nom. Tucek v.

Commissioner, 198 F.3d 259 (10th Cir. 1999), and Drake Oil Tech.

Partners v. Commissioner, 211 F.3d 1277 (10th Cir. 2000),

petitions also were filed in this Court challenging the above

TEFRA partnership income tax adjustments respondent had

determined against petitioners and others relating to their

investments in Dillon Oil for 1984 and 1985.




     1
        Petitioners are two of the four individuals who joined in
the petition in Freedman v. Commissioner, docket No. 2471-89.
                              - 4 -
     Both the above tax deficiency cases were part of the Elektra

Hemisphere tax shelter project that was litigated in the test

case of Krause v. Commissioner, 99 T.C. 132 (1992), affd. sub

nom. Hildebrand v. Commissioner, 28 F.3d 1024 (10th Cir. 1994).

See also Vulcan Oil Tech. Partners v. Commissioner, supra;

Acierno v. Commissioner, T.C. Memo. 1997-441, affd. without

published opinion 185 F.3d 861 (3d Cir. 1999); Karlsson v.

Commissioner, T.C. Memo. 1997-432; Vanderschraaf v. Commissioner,

T.C. Memo. 1997-306, affd. without published opinion 211 F.3d

1276 (9th Cir. 2000), affd. without published opinion sub nom.

Estate of Lawrenz v. Commissioner, 238 F.3d 429 (9th Cir. 2000).

In these cases, respondent’s disallowance of the tax losses

claimed by individual taxpayers and by partnerships relating to

investments in Elektra Hemisphere tax shelters were sustained.

     More specifically as it relates to petitioners, in Acierno

v. Commissioner, supra, we held that the Dillon Oil tax shelter

in which petitioners invested was similar to the tax shelters

that were involved in Krause and that the investors in Dillon

Oil, including petitioners, were bound by the final adverse

Opinion in Krause.

     Louis Coppage (Coppage) was a general partner of the Denver-

based partnerships, including Dillon Oil, and he was a witness in

Krause.
                                - 5 -
     On September 27, 1999, we entered a decision in Freedman v.

Commissioner, supra.   On June 13, 2002, we entered an order of

dismissal and decision in Vulcan Oil Tech. Partners v.

Commissioner, supra.

     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 section 6320 relating to

the filed Federal tax lien.

     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 section

6320 respondent’s Appeals officer conducted by telephone with

petitioners’ counsel an Appeals Office collection hearing.

     During the collection hearing with respondent’s Appeals

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
                                - 6 -
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 Krause v. Commissioner,

supra.   In particular, petitioners’ counsel alleged that, as part

of a “secret deal” to obtain Coppage’s testimony in the Krause

test case, respondent had promised to Coppage an abatement of all

tax deficiencies determined against Coppage relating to his

investments in Elektra Hemisphere tax shelters.

     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 section 6320; and

respondent’s Appeals Office sustained the filing of respondent’s

Federal tax lien.

     On June 4, 2007, petitioners filed their petition under

section 6320.   On January 29, 2008, we held a hearing concerning

the parties’ cross-motions.


                              Discussion

     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 section 6320.    Respondent
                                  - 7 -
believes that a negative answer to this procedural issue is

called for as a matter of law, and petitioners raise no other

issue.

     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.   Rule 162.

     Petitioners’ allegation that a fraud on the Court occurred

in the trial of Krause v. Commissioner, 99 T.C. 132 (1992)

(assuming a reasonable and good faith basis therefor exists),

should have been raised therein or in one of the other tax

deficiency cases that were filed in this Court which related to

the Krause test case, which were controlled thereby, and in which

decisions have been entered on the basis of the Krause final

Opinion.

     In Freedman v. Commissioner, docket No. 2471-89, and in

Vulcan Oil Tech. Partners v. Commissioner, 110 T.C. 153 (1998),

petitioners had vehicles to raise an allegation of fraud on the
                               - 8 -
Court relating to the Federal income tax deficiencies which

respondent determined against them and which the Court sustained.

Because petitioners disputed in the above cases their Federal

income tax liabilities and failed to make any attempt to vacate

the decisions in those cases on the basis of an alleged fraud on

the Court, by statute respondent’s Appeals Office and this Court

are expressly precluded from considering in this collection case

any issue challenging the existence or the amount of petitioners’

related underlying tax liabilities.    Secs. 6320(c),

6330(c)(2)(B);2 Goza v. Commissioner, 114 T.C. 176, 180-181

(2000); see also Dixon v. Commissioner, 316 F.3d 1041 (9th Cir.

2003), revg. on other grounds and remanding T.C. Memo. 1999-101;

Estate of Campion v. Commissioner, 110 T.C. 165, 170 (1998),

affd. without published opinions sub nom. Tucek v. Commissioner,

198 F.3d 259 (10th Cir. 1999), and Drake Oil Tech. Partners v.

Commissioner, 211 F.3d 1277 (10th Cir. 2000).

     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


     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.
                               - 9 -
partnership case) relating thereto and may not be raised in a

subsequent collection case under section 6320 or 6330 in which

the taxpayer’s Federal income tax liability is not in issue.

     Under Rule 162, unless the Court shall otherwise permit, a

motion to vacate must be filed within 30 days after a decision

has been entered, and sections 7481(a)(1) and 7483 provide that a

Tax Court decision becomes final 90 days after entry of a

decision if no party files a notice of appeal.

     We emphasize that in Dixon v. Commissioner, supra, neither a

section 6320 nor a section 6330 collection case was involved, and

Dixon provides no support for petitioners’ cross-motion for

partial summary judgment.

     Petitioners have failed to raise any bona fide issue,

collection alternative, or genuine issue of material fact.    See

Rule 121(b).   Respondent’s Appeals officer met the requirements

of section 6330(c), and summary judgment in favor of respondent

is appropriate.3



     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 (1992), affd. sub nom. Hildebrand v. Commissioner,
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.
                                - 10 -
     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.
