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6653(a)(1)(B), and incremental interest attributable to the
increased rate prescribed in section 6621(c). In Dixon IV, the
Court awarded additional sanctions against respondent by awarding
petitioners attorney’s fees and costs under section 6673(a)(2)
but declined to impose any further sanctions.
Test case and nontest case petitioners appealed. Izen, in
his brief to the Court of Appeals, argued not only that the
misconduct of respondent’s attorneys was a fraud on the court,
but also that the Tax Court had abused its discretion by denying
petitioners’ discovery requests related to allegations of
respondent’s continued misconduct after the trial of the test
cases. Although the Court of Appeals did not address Izen’s
discovery arguments in its opinion, it commented that
respondent’s disclosure of respondent’s attorneys’ misconduct
“was anything but complete”. Dixon v. Commissioner, 316 F.3d at
1045 n.8.
In Dixon V, the Court of Appeals concluded that “the
misconduct, including its persistence and concealment, did indeed
amount to a fraud on the court.” Id. at 1043. As a sanction
against respondent for the misconduct, the Court of Appeals
mandated that “terms equivalent to those provided in the
settlement agreement with [the Thompsons] and the IRS” be
extended to “Appellants [test case petitioners] and all other
taxpayers properly before this Court”. Id. at 1047. Notably,
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