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Accordingly, the threshold issue is whether the position of
the United States in the proceeding was substantially justified.
Sec. 7430(c)(4)(A) and (B). The parties agree that, under
section 7430, the burden of proof rests with respondent to
establish that respondent’s position was substantially justified.
To determine whether respondent has met this burden, the
Court must first identify the point in time at which the United
States is considered to have taken a position and then decide
whether the position taken from that point forward was
substantially justified. The “not substantially justified”
standard is applied as of the separate dates that respondent took
a position in the administrative proceeding as distinguished from
the proceeding in this Court. Sec. 7430(c)(7)(A) and (B); Han v.
Commissioner, T.C. Memo. 1993-386.
With respect to a claim for reasonable administrative costs,
the position of the United States means the position taken by the
United States in any administrative proceeding to which section
7430 applies as of the earlier of (1) the date of the receipt by
the taxpayer of the decision of the IRS Appeals Office, or (2)
the date of the notice of deficiency. Sec. 7430(c)(7)(B). In
this case, petitioner did not take an administrative appeal. No
notice of decision of the IRS Appeals Office was issued or
received by petitioner prior to the date of the notice of
deficiency. Therefore, for purposes of the administrative
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