- 24 - 6. Removal of TMP for Violating a Fiduciary Duty Petitioners contend that Mr. Hoyt should have been removed as TMP by the IRS because of a conflict of interest between Mr. Hoyt's fiduciary duty to petitioners, as partners of the Hoyt partnerships, and his self-interest as the subject of several criminal tax investigations. Petitioners rely on Transpac Drilling Venture 1982-12 v. Commissioner, 147 F.3d 221 (2d Cir. 1998), contending that Transpac holds that the Commissioner has no discretion and must remove a TMP who is under criminal tax investigation. However, the Transpac decision involved distinguishable facts. In Transpac, the IRS began a civil tax audit of the Transpac partnerships in the latter part of 1983. By November 1985, however, the civil audit had uncovered issues which were referred to CID for criminal investigation. See id. at 223. While the criminal investigation was proceeding, the IRS approached limited partners of the Transpac partnerships and asked them to sign extension agreements for the 1982 taxable year. Most of the limited partners refused, so the IRS then approached the partnership's TMP's and made the same extension requests. The TMP's acquiesced and executed the extension agreements and thereafter continued to execute extension agreements through March 1988.14 See id. at 224. 14 As the IRS did not issue FPAA's until November 1989, the 3- year period of limitations would have expired but for the signed extensions.Page: Previous 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 Next
Last modified: May 25, 2011