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(4) Prevailing party.
(A) In general. The term “prevailing party” means any
party in any proceeding to which subsection (a) applies
(other than the United States or any creditor of the
taxpayer involved)--
(i) which establishes that the position of the
United States in the proceeding was not
substantially justified,
(ii) which--
(I) has substantially prevailed with respect
to the amount in controversy, or
(II) has substantially prevailed with respect
to the most significant issue or set of
issues presented, and
(iii) which meets the requirements of the 1st
sentence of section 2412(d)(1)(B) of title 28,
United States Code (as in effect on October 22,
1986) except to the extent differing procedures
are established by rule of court and meets the
requirements of section 2412(d)(2)(B) of such
title 28 (as so in effect).
On July 30, 1996, the version of paragraph (c)(4) of section 7430
quoted above was amended by striking subparagraph (A)(i) and
renumbering subparagraphs (A)(ii) and (iii) as (A)(i) and (ii),
respectively.3 See Taxpayer Bill of Rights 2, Pub. L. 104-168,
sec. 701(a), 110 Stat. 1452, 1463 (1996). Notwithstanding the
1996 elimination of subparagraph (A)(iii) and renumbering of its
contents as subparagraph (A)(ii), when section 7430(c)(4)(D) was
enacted on August 5, 1997, it erroneously referred to
subparagraph (A)(iii). See Taxpayer Relief Act of 1997, Pub. L.
3 The same legislation enacted sec. 6404(g)(now sec.
6404(i)) and that section correctly cross-referenced subparagraph
(A)(ii) of paragraph (c)(4) of sec. 7430 when referring to the
eligibility requirements for a taxpayer seeking Tax Court review
of a failure to abate interest. See Taxpayer Bill of Rights 2,
Pub. L. 104-168, secs. 302(a), 701(c)(3), 110 Stat. 1452, 1457,
1464 (1996).
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