James H. Swanson and Josephine A. Swanson - Page 40

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          4 months.  Contrary to the language of section                              
          601.106(d)(3)(iii)(a), Statement of Procedural Rules, however,              
          Appeals in this case did not arrange a settlement conference                
          within 45 days of receipt of petitioners' case.  Petitioners                
          could not, therefore, have refused to participate in an Appeals             
          Office conference, as none was ever offered.                                
               We note that when a 30-day letter has been issued, the                 
          procedural rules provide that, in general, the taxpayer is                  
          entitled, as a matter of right, to an Appeals Office conference.            
          See sec. 601.106(b), Statement of Procedural Rules.  No such                
          right exists, however, once the taxpayer's case is docketed in              
          the Tax Court.  Furthermore, once the case is docketed, there is            
          no provision in the procedural rules for a taxpayer request for             
          an Appeals Office conference.                                               
               Based on the foregoing, we find that petitioners have                  
          exhausted their administrative remedies within the meaning of               
          section 7430 and the regulations thereunder.                                
               4. Whether Petitioners Unreasonably Protracted the                     
          Proceedings                                                                 
               Based upon the record, we find that petitioners did not                
          protract the proceedings.                                                   
               5. Whether the Fees Sought in This Matter Are Reasonable               
               As discussed below, we find that the amount sought by                  
          petitioners in this matter for litigation costs is not reasonable           
          and must be adjusted to comport with the record.                            




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