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of the notice of deficiency. If neither is applicable,
the position of the United States is that taken in the
litigation.
H. Rept. 100-1104, supra at 226, 1988-3 C.B. at 716. Section
7430(c)(7), as enacted, provides:
(7) Position of United States.--The term
"position of the United States" means--
(A) the position taken by the United States
in a judicial proceeding to which subsection (a)
applies, and
(B) the position taken in an administrative
proceeding to which subsection (a) applies as of
the earlier of--
(i) the date of the receipt by the
taxpayer of the notice of the decision of the
Internal Revenue Service Office of Appeals,
or
(ii) the date of the notice of
deficiency.
The conference committee modified the rule establishing when
the United States has taken a position for purposes of deciding
if its position is substantially justified. First, the
conference committee deleted the Senate bill language which
limited an award of administrative costs to costs incurred after
the taxpayer submits relevant evidence and legal arguments.
Second, the language approved by the conference committee does
not allow an award of administrative costs for a position
respondent takes before the respondent issues the notice of
deficiency or Appeals issues a notice of decision. The effect
of this change is to protect the Commissioner from claims by
taxpayers that positions taken by, for example, the Examination
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