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Commissioner establishes that the Commissioner's position was
substantially justified. Sec. 7430(c)(4)(B).
In addition, to obtain a judgment for reasonable litigation
and administrative costs, a taxpayer also must establish that he
did not unreasonably protract the proceedings, and, with respect
to litigation costs only, that he exhausted the administrative
remedies available to him within the Internal Revenue Service.
Sec. 7430(b)(1) and (3).
Respondent concedes that petitioners have met the
requirements of section 7430, but contends that petitioners'
claimed litigation costs are not reasonable and are in excess of
the statutory rate.
Section 7430(c)(1)(B)(iii) defines reasonable litigation
costs to include, in part, reasonable court costs and "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 unless the court determines that a
special factor, such as the limited availability of qualified
attorneys for such proceeding, justifies a higher rate." Section
7430(c)(2) includes reasonable attorney’s fees in its definition
of reasonable administrative costs.
An award of attorney’s fees should not be in excess of the
fees agreed to by the taxpayer and his attorney and actually paid
or incurred by the taxpayer. See Marre v. United States, 38 F.3d
823 (5th Cir. 1994).
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Last modified: May 25, 2011