Monday, May 05, 2008

Tax Court: IRS Attorneys Committed Fraud on the Court - Forums powered by Reason and Principle

In an extraordinary 137-page opinion issued yesterday, Hartman v. Commissioner, T.C. Memo. 2008-124 (5/1/08), Tax Court Judge Beghe held that IRS attorneys committed fraud on the court in the Kersting tax shelter project which affected more than 1,300 cases:

Respondent, Kersting project petitioners, the opinionreading public, and the Court of Appeals for the Ninth Circuit might well consider this opinion a surprising about-face from our opinion in Lewis v. Commissioner, T.C. Mem. 2005-205. We therefore indicate some of the considerations that have led to our change of position. ...

The observation of the Court of Appeals in Dixon V [316 F.3d 1041 (9th Cir. 2003)] that the misconduct of respondent’s attorneys violated the rights of all petitioner participants in the Kersting project to a fair trial of the test cases brought home to us more keenly than we had previously appreciated that our Lewis opinion would result in disparate treatment of those who have agreed to entry of stipulated decisions at various times along the way, as compared with those who have awaited the final outcome. We had a visceral reaction that our Lewis opinion violated some sense of distributive justice, whether derived from notions of equality or of fairness, and that the Dixon V opinion and mandate required a contrary result. Recognizing the incompatibility of the various formulations of distributive justice by political philosophers over the years, we mention those formulations as no more than intimations that we should reconsider our Lewis position in the light of our rereading of the Dixon V opinion. Those intimations have led us to reflect on the various situations of those Kersting project petitioners who were part of the test case proceedings and who agreed to entry of stipulated decisions at different times along the way after the test case proceedings began.

“Men must turn square corners when they deal with the Government.” ... “To say to these appellants, ‘The joke is on you. You shouldn’t have trusted us,’ is hardly worthy of our great Government.” To tell Kersting project petitioners they should not have trusted respondent to try the test cases honestly and fairly and the Tax Court to formulate an appropriate sanction when respondent failed to do so would be equally unworthy. ... “Wisdom too often never comes, and so one ought not to reject it merely because it comes late.” ...
Tax Court: IRS Attorneys Committed Fraud on the Court - Forums powered by Reason and Principle


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