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Section 7430 provides for the award of reasonable
administrative and litigation costs to a taxpayer in an
administrative or court proceeding brought against the United
States involving the determination of any tax, interest, or
penalty pursuant to the Internal Revenue Code. An award of
administrative or litigation costs may be made where the
taxpayer: (1) Is the prevailing party, (2) exhausted available
administrative remedies,2 and (3) did not unreasonably protract
the administrative or judicial proceeding. See sec. 7430(a) and
(b)(1), (3).
Prevailing Party
To be a "prevailing party", a taxpayer must (1)
substantially prevail with respect to either the amount in
controversy or the most significant issue or set of issues
presented, and (2) meet the net worth requirements of 28 U.S.C.
sec. 2412(d)(2)(B) (1984). See sec. 7430(c)(4)(A)(i) and (ii).
A taxpayer will not be treated as a prevailing party, however, if
the United States establishes that its position was substantially
justified. See sec. 7430(c)(4)(B).
As we stated earlier, respondent concedes that petitioners
substantially prevailed and met the net worth requirements. The
2This requirement does not apply to an award for reasonable
administrative costs. See sec. 7430(b)(1).
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Last modified: May 25, 2011