Hoyt Fiasco: $103M Heist + Kevin Brown's Criminal Cover-up
Victim information, evidence, rules of law, IRS viewpoints
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     Why did the IRS lead prosecuting attorney in the Hoyt case quit in disgust?

The Hoyt Fiasco: Questions the IRS doesn't answer

1. Why didn't the IRS remove Jay Hoyt as the Tax Matters Partner as required by its own regulations? See Treas. Reg.301.6231(c)-5T.

The responses now admit that the IRS had the authority to remove Jay Hoyt, but point out that he was never sent the required written notification. The Service never explains why it failed to send this notice and in failing to send the notice, failed to remove him as TMP.

2. Why did the Service open audits on 24 separate tax years (1974 through 1997), but never take any direct action against Jay Hoyt?

The Service's responses always discuss the amount of time it takes a partnership year to be audited, sent an adjustment notice, be tried in Tax Court, and for the Tax Court to render an opinion. This is NOT our question. Our problem deals with the number of different audits and separate tax years that were examined. For example, when the Service opened its audit of the partnerships' 1984 tax year, it was clear that Jay Hoyt had not stopped forming and selling new partnerships that the Service considered abusive tax shelters.

Our question is, "Why did the Service allow Jay Hoyt to continue to sell 'abusive tax shelters' and not use its authority to file an injunction against him concerning the continued sale of the partnerships? (See IRC 7407 and 7408 for the ability to enjoin tax return preparers and promoters of abusive tax shelters.) Instead, the service allowed year after year to go by, allowing the damage to the US government fisc and to the individual partners increase exponentially.

What was their motive for sitting back and waiting for Hoyt to form more partnerships and defraud more taxpayers, except to achieve more tax adjustments in lieu of simply stopping the whole thing?

3. Why did the Service fail to assess tax return preparer penalties against Jay Hoyt, even though these penalties were investigated by the Service?


4. Why did the Service fail to inform the Tax Court that when Jay Hoyt signed the partnerships' settlement agreement for the years 1981 through 1986, he was under investigation by the Service for tax return preparer penalties concerning the same partnerships?


5. Why did the Service fail to inform the Tax Court that, during the course of audit of the 1981 through 1986 years, Jay Hoyt had been under criminal investigation by the Service? The Service's criminal investigation concerned Hoyt's activities in promoting and managing the selfsame partnerships that the Service was auditing.


6. Why did the Service decide to settle the 1981 through 1986 partnership cases through Jay Hoyt (without the presence of an attorney), knowing full well the extent of his conflict of interests and criminal activity relating to the operation of the partnerships.


7. Is it fair that many individual investors who were themselves the victim of fraud are being asked to pay interest and penalties totaling $400,000 to $600,000 – in most cases, many times their net worth? Why does the IRS refuse to consider the collection potential in this case, unless and until they achieve their multi million dollars in uncollectible adjustments for 24 tax years?


Last updated: Friday, October 09, 2020

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Disclaimer: The facts represented here are as accurate as a reasonable investigation can determine. Mindconnection hosts this site at no charge to the Hoyt victims, to expose this miscarriage of justice.