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Mr. DeCastro that Mr. Sims had no authority to enter into such a
settlement.64
Mr. Sanchez promptly notified David Jordan (Mr. Jordan),
Acting Chief Counsel (National Office) of the basic facts
surrounding the Thompson settlement. Mr. Jordan told Mr. Sanchez
that Chief Counsel attorneys in the Tax Litigation Division in
the National Office would be brought into the matter for two
reasons: The gravity of the situation and the role of the Tax
Litigation Division in the National Office as the prime liaison
of the Internal Revenue Service with the Tax Court. Mr. Jordan
and Mr. Sanchez agreed that the Tax Court had to be notified
immediately.
Mr. Sanchez assigned Mr. Bakutes to investigate the matter
on behalf of Regional Counsel. Mr. Bakutes spent several weeks
gathering facts, so that the matter could be reported to the Tax
Court. Mr. Bakutes recognized that he needed to move quickly
because the period for appealing the decisions entered in the
Thompson cases would expire on June 11, 1992.
64 Mr. Sanchez believed that Mr. Sims was acting outside
the scope of his employment and authority when he deviated from
the terms of the official project settlement offer in the
Thompson cases, and when he purportedly used as a basis for
settlement a transaction (Bauspar) that had occurred in a tax
year over which he, as District Counsel, had no jurisdiction. We
observe that the Thompsons' participation in the Bauspar program
apparently originated in 1981--one of the years that the
Thompsons had pending before the Court--although the record does
not detail the deductions, if any, claimed by the Thompsons with
respect to the Bauspar program on their 1981 return.
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