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the settlement and disclosed it to the Court. The
Court entered decisions in favor of the Ts in
accordance with the settlement but allowed the adverse
determinations against other test case petitioners to
stand. The other test case petitioners appealed the
Court’s decisions against them.
After R’s management had discovered the settlement
and disclosed it to the Court and while the other test
cases were on appeal, R made a blanket settlement offer
to Ps and other non-test-case petitioners that was less
advantageous to taxpayers than the T settlement. Ps
accepted R’s offer, and Ps’ counsel and R signed
stipulated decisions in accordance with the terms of
the offer, which were entered as decisions by the
Court.
The Court of Appeals ultimately held that the
misconduct of R’s attorneys in arranging and failing to
disclose the settlement with the Ts constituted “fraud
on the court”. It mandated that “terms equivalent to
those provided in the settlement agreement with [the
Ts] and the IRS” be extended to “appellants [test case
petitioners] and all other taxpayers properly before
this Court.” Dixon v. Commissioner, 316 F.3d 1041,
1047 (9th Cir. 2003), revg. and remanding T.C. Memo.
1999-101, supplemented by T.C. Memo. 2000-116. Ps now
seek to have their stipulated decisions vacated so they
can become entitled to the benefit of the T settlement.
Held, because Ps and their counsel had become
aware of the misconduct of R’s attorneys and of the
pending appeals by test case petitioners when they
entered into their stipulated decisions, Ps are not
entitled to have those decisions vacated.
Declan J. O’Donnell and Robert Alan Jones, for petitioners.
Henry E. O’Neill, for respondent.
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