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1. The Equitable Provisions of RRA 1998 Concerning
Offers in Compromise
The Conference Report of RRA 1998 directs that “the IRS
[in formulating these rules] take into account factors
such as equity, hardship, and public policy where a
compromise of an individual taxpayer’s income tax
liability would promote effective tax administration.”
H. Conf. Rep. No. 599, 105th Cong., 2d Sess. 289
(1998). The legislative history also specifies that
the IRS should utilize this new authority “to resolve
longstanding cases by forgoing penalties and interest
which have accumulated as a result of delay in
determining the taxpayer’s liability.” Id. The Hoyt
partnership cases clearly qualify as “longstanding”
cases and interest should be abated in an offer in
compromise. The Commissioner’s current position on
these cases, to abate no interest because the IRS does
not believe it contributed to the delay, is
inconsistent with the broad legislative intent to go
outside the narrow constraints of interest abatement
under 26 U.S.C. sec. 6404(e) and simply abate interest
in longstanding cases.
Furthermore, it has been established by Jay Hoyt’s
March 2001 conviction that he defrauded the partners
and that the partners were his unwitting victims. (The
I.R.S. also determined that the partners were
“unwitting victims” in his appeals supporting statement
concerning the TEFRA cases). Thus, application of RRA
1998's equitable provisions should take into account
the extraordinary circumstances of these victims. The
IRS’ refusal to consider the equities of these cases is
inconsistent with legislative intent.
Therefore, the collection alternative of an “effective
tax administration” offer should be considered.
* * * * * * *
3. Opportunity to be Heard
Mr. and Mrs. Bergevin had no opportunity to be heard
during the examination process. Jay Hoyt, the TMP, was
under criminal investigation by the IRS during the
examination process and was subject to impermissible
conflicts of interests due to that investigation that
rendered him incapable of performing his fiduciary
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Last modified: March 27, 2008