- 19 -
Courts will not award litigation costs under section 7430(a)
unless a prevailing party has exhausted the administrative
remedies available to such party within the IRS. Sec.
7430(b)(1). Moreover, no award for reasonable administrative or
litigation costs may be made with respect to any portion of the
civil proceeding during which a prevailing party has
"unreasonably protracted" such proceeding. Sec. 7430(b)(4).
Respondent agrees that petitioner has: (1) Substantially
prevailed with respect to the amount in controversy; (2)
exhausted the administrative remedies available to it; and (3)
shown that the net worth and number of employee requirements have
been met. Respondent contends, however, that respondent's
position was substantially justified so that petitioner is not a
prevailing party for purposes of section 7430. In the
alternative, respondent asserts that: (1) Petitioner has
unreasonably protracted the Court and administrative proceedings;
and (2) the amount of administrative and litigation costs claimed
by petitioner is unreasonable.
Petitioner bears the burden of proving that respondent's
position in the proceedings was not substantially justified or
was unreasonable. Sec. 7430(c)(4)(A)(i); Rule 232(e); Polyco,
Inc. v. Commissioner, supra at 965; Minahan v. Commissioner,
supra at 498; DeVenney v. Commissioner, 85 T.C. 927, 928-930
(1985). The pre-1986 version of section 7430 used the term
"unreasonable." TRA 1986 replaced "unreasonable" with "not
Page: Previous 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NextLast modified: May 25, 2011