- 16 -
so. Such failure led respondent to take a position in the notice
of deficiency that was not supported by information already in
respondent’s possession. In other words, respondent’s position
in the notice of deficiency was contrary to fact and law and
therefore not substantially justified within the meaning of
section 7430(c)(4)(B). See Pierce v. Underwood, 287 U.S. 552
(1988).
Respondent relies on Harrison v. Commissioner, 854 F.2d 263
(7th Cir. 1988), affg. T.C. Memo. 1987-52, for the proposition
that the Commissioner should not be liable for a taxpayer’s costs
for the period of time that it may reasonably take to review
documentation submitted by the taxpayer. However, that case is
clearly distinguishable. There, the Commissioner issued a notice
of deficiency before the examination was completed in order to
toll the running of the period of limitations. Because the
Commissioner had not received the taxpayers’ consent to extend
the period of limitations, the Court of Appeals concluded that
the issuance of the notice was reasonable, notwithstanding the
fact that the Commissioner ultimately conceded the case.
In the present case, the statute of limitations was of no
legitimate concern to respondent at the time that the notice of
5(...continued)
of limitations were imminent. However, in the present case, the
year under examination was 1998; accordingly, the statute of
limitations on assessment was of no legitimate concern to
respondent in July 1999. See sec. 6501(a).
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NextLast modified: May 25, 2011