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proceeding with the Internal Revenue Service (IRS). Under
section 301.7430-2(b), Proced. & Admin. Regs., there are several
requirements that a taxpayer must meet in order to be entitled to
administrative costs. Respondent agrees that petitioner met all
but one of those requirements. In particular, respondent
contends that not all of the costs sought by petitioner were
incurred on or after the administrative proceeding date as
defined in section 301.7430-3(c), Proced. & Admin. Regs.
Under section 7430(c)(2) and section 301.7430-3(c), Proced.
& Admin. Regs., the “administrative proceeding date” is defined
to be the earlier of (1) the date of the receipt by the taxpayer
of the notice of decision of the IRS Office of Appeals, or (2)
the date of the notice of deficiency.
Congress, in the Internal Revenue Service Restructuring and
Reform Act of 1998, Pub. L. 105-206, sec. 3101, 112 Stat. 727,
amended section 7430 in a manner which would have permitted
petitioner to claim additional administrative costs. Those
amendments, however, apply to costs that were incurred more than
180 days after July 22, 1998. Unfortunately, the costs claimed
by petitioner were all incurred prior to October 15, 1998.
Petitioner has explained that, from the very beginning in
1994, respondent’s examiner’s contacts with petitioner, her
business associates, and others made the examination a “painful,
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