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As a result of the filing of petitioner's motion, the Court
ordered that the decision entered on August 21, 1996, be vacated
and set aside, and that the vacated decision be refiled as a
stipulation of settlement. Respondent was ordered to file a
written response to petitioner's motion. See Rules 232(f),
231(c). In the response, respondent objected to petitioner's
motion, contending that respondent's position was substantially
justified both in the administrative proceeding and in the Court
proceeding.
Discussion
A taxpayer who substantially prevails in an administrative
or Court proceeding may be awarded a judgment for reasonable
costs incurred in such proceedings. Sec. 7430(a)(1) and (2). A
judgment may be awarded under section 7430 if a taxpayer (1) is
the "prevailing party", (2) exhausted the administrative remedies
available to the taxpayer within the IRS (if the judgment is for
litigation costs), 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 and did not
unreasonably protract the proceedings. Therefore, the Court is
left to decide whether petitioner was the prevailing party.
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