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Respondent’s Posttrial Settlement Offer
Early in January 1993, respondent made mass mailings
extending a “global settlement” proposal to all known Kersting
non-test-case petitioners, including those who had signed
piggyback agreements. Respondent’s letters to the Kersting
program participants explained that, after the trial of the test
cases:
It subsequently came to our attention that two of
the test case petitioners had entered into settlement
agreements with the Service prior to the trial, and
that these agreements were not disclosed to the Tax
Court or the other test case petitioners. The
settlement agreements provided that these particular
test case petitioners could proceed to trial, but would
receive the benefit of the better of their pretrial
settlement agreement or the results of the trial. The
Tax Court has since been advised of this situation and
has concluded that the outcome of the trial was not
affected by the testimony of these test case
petitioners. This means that the Tax Court opinion, as
it pertains to other Kersting cases, remains unchanged.
However, in light of these recent developments, we have
concluded that in fairness all petitioners be afforded
an opportunity to settle their cases.
In general, the global settlement proposal contained in the
January letters represented a revival of the official settlement
that respondent had offered during 1982 through 1986. It
permitted petitioners to resolve their cases by agreeing to pay
deficiencies that were 7 percent less than those determined in
their deficiency notices. Additionally, respondent would impose
no penalties or additions to tax, and petitioners would pay
interest only at the generally applicable (i.e., non-tax-
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