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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.
5.8.11.2.2(3), 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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