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is a prevailing party in an administrative or court proceeding
brought against the United States involving the determination of
any tax, interest, or penalty pursuant to the Code. Section
7430(c)(4)(A) requires that to be a "prevailing party", a
taxpayer must establish that: (1) The position of the United
States was not substantially justified; (2) the taxpayer
substantially prevailed with respect to either the amount in
controversy or the most significant issue or set of issues
presented; and (3) the taxpayer meets the net worth requirements
of 28 U.S.C. sec. 2412(d)(2)(B) (1994). Section 7430(b)(1)
provides that an award of litigation costs may be made only where
a taxpayer has exhausted available administrative remedies. No
award of costs may be made with respect to any portion of an
administrative or judicial proceeding that the taxpayer has
unreasonably protracted, sec. 7430(b)(4), and the costs claimed
must be reasonable in amount. Sec. 7430(c). Petitioner bears
the burden of proving each of the above requirements has been
satisfied.2 Rule 232(e).
2 Sec. 7430 was amended by the Taxpayer Bill of Rights 2,
Pub. L. 104-168, sec. 701, 110 Stat. 1452, 1463-1464 (1996),
effective with respect to proceedings commenced after July 30,
1996. The amendments to the section place on the Commissioner
the burden of establishing that the position of the Commissioner
was substantially justified. Sec. 7430(c)(4)(B). A judicial
proceeding is commenced in this Court with the filing of a
petition. Rule 20(a). Petitioner filed his petition on April 6,
1995. Accordingly, the amendments to sec. 7430 enacted by the
Taxpayer Bill of Rights 2 do not apply here. Maggie Management
(continued...)
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Last modified: May 25, 2011