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were intended to streamline the litigation process, economize on
the use of administrative and judicial resources, and reduce the
costs incurred by taxpayers in resolving disputes over tax
shelter adjustments. The Internal Revenue Service, Office of
Chief Counsel, created the Tax Shelter Branch in the National
Office to oversee tax shelter litigation across the country and
to organize individual tax shelter projects. Concurrently, the
Tax Court began working with the Internal Revenue Service and
private parties in tax shelter cases to create what became known
as the test case procedure; i.e., the selection of representative
or test cases from a particular tax shelter project for a single
trial on the merits. See, e.g., Drobny v. Commissioner, T.C.
Memo. 1995-209 (citing H. Conf. Rept. 98-861, at 985-986 (1984),
1984-3 C.B. (Vol. 2) 1, 239-240), affd. 113 F.3d 670 (7th Cir.
1997).
The test case procedure is intended to streamline the
litigation process. To this end, taxpayers who are not selected
as test cases are encouraged to execute a piggyback agreement;
i.e., a stipulation to be bound by the outcome of the test cases.
As a practical matter, the effectiveness of the test case
procedure depends in large part upon the agreement of the
taxpayers not selected as test cases to be bound by the outcome
of the test cases. Normally, taxpayers in a tax shelter project
who decline or otherwise fail to sign a piggyback agreement will
either have their cases set for trial with the test cases or,
after the trial of the test cases, will be ordered to show cause
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