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The National Office did not maintain a policy prohibiting
the settlement of a test case. However, the Commissioner's
practice of withdrawing project settlement offers once the
project test cases have been set for trial would serve to bar
settlements in test cases and nontest cases alike.38
2. Regional Counsel
Benjamin C. Sanchez (Mr. Sanchez) served as Regional Counsel
for the Western Region during the period in question. His view
of District Counsel's settlement authority in tax shelter cases
differed from the National Office view. In Mr. Sanchez' view,
District Counsel had authority to settle tax shelter project
cases only on the basis of the official project settlement offer.
Mr. Sanchez believed that District Counsel was obliged to adhere
strictly to the official project settlement offer because of the
overriding need to ensure consistent treatment of tax shelter
project cases. Although Mr. Sanchez acknowledged that District
Counsel technically had authority to settle a tax shelter project
case on a basis different from the official project settlement
offer, Mr. Sanchez believed that it would be improper to do so.
In his view, disciplinary or other adverse career consequences
might follow if District Counsel deviated from the official
project settlement offer in settling a case.
38 Of course, District Counsel might be reluctant to settle
a test case at a time that removal of the case from the test case
array would require delay in the trial to allow the parties to
select a replacement case.
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