- 21 -
We also agree with Driver 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’ $11,552 offer to satisfy their
estimated $265,023 tax liability would enhance voluntary
compliance by other taxpayers. A compromise on that basis would
place the Government in the unenviable role of an insurer against
poor business decisions by taxpayers, reducing the incentive for
taxpayers to investigate thoroughly the consequences of
transactions into which they enter. It would be particularly
inappropriate for the Government to play that role here, where
the transaction at issue involves a tax shelter. Reducing the
risks of participating in tax shelters would encourage more
11(...continued)
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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