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Discussion
A taxpayer who substantially prevails in an administrative
or court proceeding may be awarded a judgment for reasonable
administrative or litigation costs incurred in such proceedings.
Sec. 7430(a)(1) and (2). A judgment of administrative or
litigation costs may be awarded under section 7430 if a taxpayer
(1) was the "prevailing party", (2) exhausted the administrative
remedies available to the taxpayer within the IRS, and (3) did
not unreasonably protract the proceedings. Sec. 7430(a), (b)(1),
(b)(4). A taxpayer must satisfy each of these three requirements
to be entitled to a judgment under section 7430. Respondent
concedes that petitioner exhausted the administrative remedies
available to her within the IRS. We are left to decide (1)
whether petitioner was the "prevailing party", (2) whether
petitioner did not unreasonably protract the proceedings, and (3)
whether the amounts petitioner claims as administrative and
litigation costs are reasonable.
To qualify as the "prevailing party", the taxpayer must
establish that (1) the position of the United States in the
proceeding was not substantially justified, (2) the taxpayer
substantially prevailed with respect to the amount in controversy
or with respect to the most significant issue or set of issues
presented, and (3) the taxpayer satisfies the applicable net
worth requirements. Sec. 7430(c)(4)(A). Respondent concedes
that petitioner substantially prevailed with respect to the
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Last modified: May 25, 2011