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Under section 7430(a), a judgment for litigation costs
incurred in connection with a court proceeding may only be
awarded if a taxpayer: (1) Is the "prevailing party"; (2) has
exhausted his or her administrative remedies within the Internal
Revenue Service (IRS); and (3) did not unreasonably protract the
court proceeding. Sec. 7430(a) and (b)(1), (3). A taxpayer must
satisfy each of these three requirements in order to be entitled
to a judgment under section 7430. Rule 232(e). Upon
satisfaction of these requirements a taxpayer may be entitled to
"reasonable litigation costs". Sec. 7430(a)(2), (c)(1).
Respondent concedes that petitioner was the prevailing party
in the court proceeding. Respondent also concedes that
petitioner exhausted his administrative remedies within the IRS.
Respondent contends, however, that petitioner unreasonably
protracted the court proceeding and that the litigation costs
claimed are unreasonable.
B. Unreasonable Protraction of the Court Proceeding
Pursuant to section 7430(b)(3), "No award for reasonable
litigation * * * costs may be made * * * with respect to any
portion of the * * * court proceeding during which the prevailing
party has unreasonably protracted such proceeding."
Respondent mailed petitioner a proposed settlement document
on three separate occasions--the earliest on March 16, 1998.
Respondent contends that petitioner unreasonably protracted the
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Last modified: May 25, 2011