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judgment may be awarded under section 7430 if a taxpayer (1) was
the “prevailing party”, (2) exhausted the administrative remedies
available to the taxpayer within the Internal Revenue Service,4
and (3) did not unreasonably protract the proceedings. Sec.
7430(a) and (b)(1), (3). Respondent’s position is that
petitioner is not a “prevailing party”, failed to exhaust his
administrative remedies, and unreasonably protracted the
proceedings.
For a taxpayer to qualify as the “prevailing party”, it must
be established that (1) the position of the United States in the
proceeding was not substantially justified, (2) the taxpayer has
substantially prevailed with respect to the amount in controversy
or with respect to the most significant issue or set of issues
presented, and (3) the taxpayer satisfied the applicable net
worth requirements. Sec. 7430(c)(4)(A). Respondent concedes the
second and third of these criteria. Respondent argues, however,
that the position taken by the United States against petitioner
was substantially justified. Rule 232(e); Dixson Intl. Service
Corp. v. Commissioner, 94 T.C. 708, 714-715 (1990); Gantner v.
Commissioner, 92 T.C. 192, 193 (1989), affd. 905 F.2d 241 (8th
Cir. 1990).
4 This requirement does not apply to an award for reasonable
administrative costs. Sec. 7430(b)(1).
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Last modified: May 25, 2011