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Taxpayer Relief Act of 1997 (TRA), Pub. L. 105-34, secs. 1285,
1453, 111 Stat. 1038, 1055.
Requirements Under Section 7430
Under section 7430(a), 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.
Sec. 7430(a) and (b)(1), (3). Similarly, a judgment for
administrative costs incurred in connection with an
administrative proceeding may be awarded under section 7430(a)
only if a taxpayer: (1) Is the "prevailing party"; and (2) did
not unreasonably protract the administrative proceeding. Sec.
7430(a) and (b)(3).
A taxpayer must satisfy each of the respective requirements
in order to be entitled to an award of litigation or
administrative 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 administrative
or court proceeding. See sec. 7430(a)(1) and (2), (c)(1) and (2).
To be a prevailing party, the taxpayer must substantially
prevail 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).
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Last modified: May 25, 2011