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with this information, the agents discharged any duty they owed
the taxpayer and did not misrepresent or conceal any material
facts concerning the embezzlement by the taxpayer’s employee).
Notwithstanding their receipt of the December 30, 1993,
Examination Division letter, the record reflects that many
partners instead chose to ignore the evidence and believe Jay
Hoyt. While believing Jay Hoyt may have ultimately been to their
detriment, the partners’ decision to do so and the failure of
them and the partnerships to discover any of the theft losses
during the years in issue was not due to a false representation
or misleading silence by respondent.
Petitioners’ argument is based on the perspective of the
individual partners, not the partnerships. The party claiming
equitable estoppel must be the party that relied on the
Government’s representations and suffered a detriment because of
that reliance. Norfolk S. Corp. v. Commissioner, 104 T.C. 13, 60
(1995), affd. 140 F.3d 240 (4th Cir. 1998). Here the petitioners
claim that the partnerships relied on respondent’s concealment
and silence to the partnerships’ detriment, then argue that the
partners could not have discovered the loss on their own, but
relied on respondent to take action against Jay Hoyt. To meet
the elements of equitable estoppel, petitioners must establish
that the partnerships suffered to their detriment, not the
partners.
As previously discussed, the partnerships and the partners
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