Martin and Sharon Smith - Page 21




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               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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