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reasonable litigation costs. To obtain such an award, the
prevailing party must establish that: (1) She has exhausted the
administrative remedies available; (2) she has "substantially
prevailed" in the controversy; (3) she satisfies certain net
worth requirements; (4) the position of the United States in the
proceeding was not substantially justified; (5) she has not
unreasonably protracted the proceedings; and (6) the amount of
the costs sought is reasonable. Sec. 7430(b) and (c).
Petitioner bears the burden of proving that she satisfies each of
these requirements. Rule 232(e).6
Respondent concedes that petitioner has substantially
prevailed and that she satisfies the net worth requirements.
Exhaustion of Administrative Remedies
The threshold requirement imposed on a taxpayer asserting a
claim pursuant to section 7430 is the exhaustion of
administrative remedies before suit is filed. Section 301.7430-
1(b)(1), Proced. & Admin. Regs., provides that where an Appeals
Office conference is available, administrative remedies are
exhausted only if the taxpayer (1) participated7 in such a
6In the Taxpayer Bill of Rights 2, Pub. L. 104-168, sec.
701(b), 110 Stat. 1452, 1463 (1996), sec. 7430(c)(4) was amended
to require the Government to establish that its position was
substantially justified. This amendment is effective for
proceedings commenced after July 30, 1996.
7A taxpayer or her representative "participates" in an
Appeals conference "if the party or qualified representative
(continued...)
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