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The general rule set forth in section 7430(a) is qualified
by the limitations contained in section 7430(b) and the
definitions contained in section 7430(c). The flush language of
section 7430(c)(2) provides that "reasonable administrative
costs" shall only include costs incurred on or after the earlier
of the date that the taxpayer receives an Appeals Office notice
of decision or the date a notice of deficiency is issued to the
taxpayer.
The Court has narrowly construed the relief provided in
section 7430. In Estate of Gillespie v. Commissioner, 103 T.C.
395 (1994), the Commissioner issued a 30-day letter proposing to
increase the taxpayer’s estate tax liability by approximately $9
million. The taxpayer filed a protest with the appropriate
Appeals Office, and the matter was settled in the taxpayer’s
favor. After the Appeals Office rejected the taxpayer’s request
for an award of administrative costs, the taxpayer filed a
petition for an award of administrative costs with the Court.
Relying on the flush language of section 7430, and noting that
the Commissioner had not issued either an Appeals Office notice
of decision or a notice of deficiency to the taxpayer, we granted
the Commissioner’s motion for summary judgment that the taxpayer
was not entitled to an award under section 7430.
In Ball v. Commissioner, supra, the taxpayer filed
delinquent tax returns for 1984, 1985, and 1986. The
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Last modified: May 25, 2011