- 15 -
the Commissioner that she disagreed with the proposed change, and
she mailed a letter outlining her position. The Commissioner
replied to the letter but did not address her contentions. The
taxpayer wrote again requesting that her situation be addressed.
The Service issued a statutory notice to the taxpayer after
it received information from the third party payor supporting the
$4,147.50 figure. After the taxpayer filed a petition in the Tax
Court and the Commissioner filed an answer, the Commissioner
obtained the correct information from the third party payor
confirming the taxpayer's assertions. The parties filed a
stipulated decision with the Court in which the taxpayer
substantially prevailed as to this issue. Later, the taxpayer
filed a motion for award of reasonable administrative and
litigation costs and fees.
The Court held that the taxpayer was entitled to recover
administrative and litigation costs. The Court concluded that
the Commissioner was not substantially justified because, at the
time the Commissioner issued the statutory notice and filed an
answer, the Commissioner had an insufficient basis in fact to
determine that the taxpayer received $4,147.50 of other income.
The instant case is distinguishable from Cole v.
Commissioner, supra. Petitioner did not file a timely return for
1987 or 1988, nor did he correspond with the Service or advise
the Service of a dispute prior to the issuance of the notices of
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: May 25, 2011