- 31 -
F.3d at 1173. The Court of Appeals held that pursuant to section
301.6231(c)-5T, Temporary Proced. & Admin. Regs., supra, a
criminal tax investigation of a TMP does not impose an obligation
on the Commissioner to treat partnership items as nonpartnership
items. Id. at 1176. Further, the Court of Appeals held that the
regulation in question “vests discretion in the Commissioner to
notify a partner that he or she is under criminal investigation”
and that “Until such notice is given, partnership items remain
partnership items.” Id. (emphasis added.)
In Phillips, the Tax Court and the Court of Appeals both
held that section 301.6231(c)-5T, Temporary Proced. & Admin.
Regs., supra, is not a mandatory regulation requiring the
Commissioner to act in every instance of a criminal tax
investigation, as petitioner asserts. To the contrary, the
regulation at issue vests discretion in the Commissioner to
determine if and when to notify a partner that he or she is under
criminal investigation. Phillips v. Commissioner, 114 T.C. at
129, 272 F.3d at 1176.
In the instant case, as in Phillips, respondent did not
provide Jay Hoyt with notice that he was under criminal
investigation. Contrary to petitioner’s argument, respondent
clearly had no obligation to notify Jay Hoyt of such activity.
Because the act of notifying a partner about a criminal
investigation pursuant to section 301.6231(c)-5T, Temporary
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