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A. Requirements for a Judgment Under Section 7430
A judgment for litigation costs incurred in connection with
a court proceeding may be awarded only if a taxpayer: (1) Is the
"prevailing party"; (2) has exhausted his or her administrative
remedies within the IRS; and (3) did not unreasonably protract
the court proceeding. See sec. 7430(a), (b)(1), (3).
A taxpayer must satisfy each of the respective requirements
in order to be entitled to an award of litigation costs under
section 7430. See Rule 232(e). Upon satisfaction of these
requirements, a taxpayer may be entitled to reasonable costs
incurred in connection with the court proceeding. See sec.
7430(a)(2), (c)(1).
To be a prevailing party, the taxpayer must establish that
he or she has substantially prevailed with respect to either the
amount in controversy or the most significant issue or set of
issues presented and satisfy the applicable net worth
requirement. See sec. 7430(c)(4)(A); Rule 232(e).
Respondent contends that petitioner has not satisfied the
requirements of section 7430(c)(4)(A); i.e, that he has not
6(...continued)
before Aug. 5, 1997 (Specifically, most of the amendments made by
RRA 1998 apply only to costs incurred more than 180 days after
July 22, 1998, and certain amendments made by RRA 1998 apply
retroactively to Aug. 5, 1997.) The petition herein was filed on
February 20, 1997, and petitioner has not claimed costs incurred
more than 180 days after July 22, 1998. The amendments made by
TRA and RRA 1998 therefore do not apply in the present case.
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