Gary W. McDonough - Page 23

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               that TEFRA is unfair and that the liabilities accrued                  
               in large part due to the actions of the Tax Matters                    
               Partner (TMP) during the audit and litigation.  Neither                
               the operation of the TEFRA rules nor the TMP’s actions                 
               on behalf of the taxpayer provide grounds to compromise                
               under the equity provision of paragraph (b)(4)(i)(B) of                
               this section.  Compromise on those grounds would                       
               undermine the purpose of both the penalty and interest                 
               provisions at issue and the consistent settlement                      
               principles of TEFRA. * * *                                             
         1 Administration, Internal Revenue Manual (CCH), sec.                        , at 16,378.  Ms. Cochran determined that                       
         petitioner’s case is similar to the example:                                 
              Some of the most obvious similarities--the year, pretty                 
              old, and that seems to match or correlate to the                        
              taxpayer’s circumstances, that this was a TEFRA                         
              proceeding, that an FPAA was issued, * * * They                         
              rejected a settlement offer that had been previous--                    
              that the IRS had previously made.  The taxpayers                        
              entered litigation for a number of years.  And--and                     
              that there were actions of the TMP that the taxpayer                    
              was raising issues of tax-motivated--TMP’s actions as                   
              one of his arguments.                                                   
         The Court agrees with respondent that the example presents                   
         similar circumstances to those in petitioner’s case.  Ms.                    
         Cochran’s testimony accurately reflects those similarities.                  
              Petitioner is correct in asserting that not all the facts in            
         his case are present in the example.  However, it is unreasonable            
         to expect that facts in an example be identical to facts of a                
         particular case before the example can be relied upon.  The                  
         Internal Revenue Manual example was only one of many factors                 
         respondent considered.  Given the similarities to petitioner’s               

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