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meetings, pertinent documentation pertaining to the issues in
dispute was provided to respondent. Subsequently, respective
settlements were reached.
Discussion
1. General
Section 7430(a) provides that the prevailing party in any
administrative or court proceeding may be awarded a judgment for
(1) reasonable administrative costs incurred in connection with
such administrative proceedings within the IRS, and (2)
reasonable litigation costs incurred in connection with such
court proceedings. Sec. 7430(a), (c).5 However, there is an
exception to the "prevailing party" rule if the United States
establishes that its position was substantially justified. Sec.
5 Sec. 7430(c)(1), as applicable to these cases, provides
that reasonable litigation costs include reasonable fees paid or
incurred for the services of attorneys in connection with the
court proceeding, except that such fees shall not be in excess of
$110 per hour. Sec. 7430(c)(2), as applicable in these cases,
provides that the term "reasonable administrative costs" only
includes "costs incurred on or after the earlier of (i) the date
of the receipt by the taxpayer of the notice of the decision of
the Internal Revenue Service Office of Appeals, or (ii) the date
of the notice of deficiency."
The Internal Revenue Service Restructuring & Reform Act of
1998 (RRA 1998), enacted July 22, 1998, amended the above-noted
sections. Pub. L. 105-206, secs. 3101(a)(1), (g), 112 Stat. 685,
727-729. The amendments apply to services performed or costs
incurred more than 180 days after the date of the enactment of
this Act (180 days after July 22, 1998). RRA 1998 sec. 3101(g),
112 Stat. 729. Accordingly, RRA 1998 is not applicable to the
instant cases.
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