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deficiency. For the taxable years 1986 and 1987, the interest
component of the addition to tax for negligence is codified under
section 6653(a)(1)(B).
Respondent also determined that Kersting program
participants are liable for interest computed at the increased
rate prescribed under section 6621(c). Section 6621(c) provides
that interest on a deficiency shall be computed at an increased
rate with respect to any substantial underpayment attributable to
a tax-motivated transaction.
The interest component of the addition to tax for negligence
and interest computed at the increased rate prescribed under
section 6621(c) are time-sensitive provisions whose impact will
be amplified in these cases as a consequence of the delay
occasioned in large part by the Government misconduct described
herein. With a view to promoting basic fairness and justice in
the Kersting project cases, and to discourage future acts of
Government misconduct, we hold that Kersting program participants
who either have not had decisions entered in their cases or whose
decisions are not yet final are not liable for the interest
component of the addition to tax for negligence under sections
6653(a)(2) and 6653(a)(1)(B) or interest computed at the
increased rate prescribed in section 6621(c).127
127 As previously mentioned, see supra pp. 44-47, there is
an inconsistency between the 1985 piggyback agreements and the
post-1985 piggyback agreements concerning additions to tax: the
1985 piggyback agreements are silent about additions to tax,
while the post-1985 piggyback agreements provide that Kersting
(continued...)
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