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unique nor exceptional in that petitioners’ situation mirrors
that of numerous taxpayers who claimed tax shelter deductions in
the 1980s and 1990s, obtained the tax advantages, promptly forgot
about their “investment”, and now realize that paying their taxes
may require a change of lifestyle.11 See Clayton v.
Commissioner, T.C. Memo. 2006-188; Barnes v. Commissioner, T.C.
Memo. 2006-150.
We also believe that compromising petitioners’ case on
grounds of public policy or equity would not promote effective
tax administration. While petitioners portray themselves as
victims of Hoyt’s alleged fraud and respondent’s alleged delay in
dealing with Hoyt, they take no responsibility for their tax
predicament. We cannot agree that acceptance by respondent of
petitioners’ $90,258 offer to satisfy their estimated $260,143
tax liability would enhance voluntary compliance by other
taxpayers. A compromise on that basis would place the Government
11 Of course, the examples in the regulations are not meant
to be exhaustive, and petitioners’ situation is not identical to
that of the taxpayers in Fargo v. Commissioner, 447 F.3d 706, 714
(9th Cir. 2006), affg. T.C. Memo. 2004-13, regarding whom the
Court of Appeals for the Ninth Circuit noted that “no evidence
was presented to suggest that Taxpayers were the subject of fraud
or deception”. Such considerations, however, have not kept this
Court from finding investors in Hoyt’s shelters to be culpable of
negligence, see, e.g., Keller v. Commissioner, T.C. Memo. 2006-
131, nor prevented the Courts of Appeals for the Sixth, Ninth,
and Tenth Circuits from affirming our decisions to that effect in
Hansen v. Commissioner, 471 F.3d 1021 (9th Cir. 2006), affg. T.C.
Memo. 2004-269; Mortensen v. Commissioner, 440 F.3d 375 (6th Cir.
2006), affg. T.C. Memo. 2004-279; and Van Scoten v. Commissioner,
439 F.3d 1243 (10th Cir. 2006), affg. T.C. Memo. 2004-275.
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