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On April 15, 2003, respondent filed an objection to
petitioner’s motion for award of litigation costs. Respondent
contends that petitioner is not the prevailing party within the
meaning of section 7430(c)(4)(B)(i) because respondent’s position
was substantially justified. In addition, respondent contends
that petitioner unreasonably protracted the proceedings.
Petitioner requests a hearing on the motion if respondent
contests the motion. We, however, conclude that a hearing is not
necessary. Rule 232(a)(2). Accordingly, we decide petitioner’s
motion on the basis of the motion with affidavits and
respondent’s objection with exhibits.
Discussion
Subject to certain limitations, the prevailing party in any
court proceeding may be awarded a judgment for reasonable
litigation costs incurred in connection with such court
proceeding. Sec. 7430(a)(2). The prevailing party must exhaust
the administrative remedies available to it within the Internal
Revenue Service, and the prevailing party must not have
unreasonably protracted any portion of the administrative or
court proceeding. See sec. 7430(b)(1), (3).
The term “prevailing party” means “any party * * * which (I)
has substantially prevailed with respect to the amount in
controversy, or (II) has substantially prevailed with respect to
the most significant issue or set of issues presented”. Sec.
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