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duties to Mr. and Mrs. Bergevin. During that same time
period, Jay Hoyt was also under tax return preparer
penalty investigation by the IRS, which also
contributed to his conflicts of interest and his
inability to represent Mr. and Mrs. Bergevin.
Notwithstanding the effect of IRS investigations on the
TMP’s fiduciary duties to the partners, the IRS
determined in 1989 that a number of circumstances
caused Jay Hoyt to have debilitating conflicts of
interest and that he, in fact, breached his fiduciary
duty to the partners. For example, Mr. Hoyt apparently
did not raise questions concerning the treatment of
guarantee payments to the investors, when those
payments were not paid to the investors but credited as
IRA payments that were later disallowed by the IRS.
However, to raise this issue, Hoyt would have to admit
to his fraudulent actions concerning the IRA plan,
which of course he did not. The effect of Hoyt’s
conflicts of interest on the tax assessments ultimately
suffered by his victims should be considered under the
expanded RRA 1998 equity provisions.
4. Offer in Compromise or Other Collection Alternative
Mr. and Mrs. Bergevin will not be able to pay the full
Hoyt liability, which is currently estimated to be
approximately $130,000, which amount includes both the
assessed years 1981 through 19861 and the unassessed
years 1987 through 1996. The entire liability should
be considered when determining Mr. and Mrs. Bergevin’s
ability to pay. Consideration should also be give
[sic] to the financial hardship payment will cause when
Mr. and Mrs. Bergevin retire. See Code sec. 7122(c)(1)
as added by section 3462(a) of RRA 1998 (Public Law No.
105-206). Any tax payment by the Bergevins will
significantly impact their ability to provide for
necessary living expenses during retirement. In the
Conference Report of RRA 1998, Congress expressed its
intent “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. 599, 105th Cong.,
2d Sess 289 (1998). We are currently in process of
updating Mr. and Mrs. Bergevin’s financial information
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Last modified: March 27, 2008