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The regulation does not require that petitioners present to
the Appeals officer all evidence later adduced at trial.
Instead, we are to consider whether petitioners exhausted their
administrative remedies by providing relevant information in an
attempt to settle the case in the context of the case development
at the time of the Appeals conference.
At all pertinent times, petitioners were represented by tax
professionals. They participated in the Appeals conference in a
manner that provided relevant information in an attempt to
resolve the case without litigation. The standard with respect
to exhaustion of administrative remedies was intended to preserve
the important role that the administrative Appeals process plays
in the resolution of tax disputes. It was not intended to
require taxpayers to adduce all possible arguments or evidence.
Petitioners’ approach to settlement was a reasonable attempt to
convince the Appeals officer that the examiner’s finding was in
error.
In the circumstances of this case, we hold that petitioners
exhausted their administrative remedies and are entitled to their
litigation costs for the period commencing 3 days before trial,
as decided by the Court of Appeals for the Ninth Circuit.
To reflect the foregoing,
Decision will be entered
under Rule 155.
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