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A. Requirements for a Judgment Under Section 7430
Under section 7430(a), 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). Similarly,
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).
A taxpayer must satisfy each of the respective requirements
in order to be entitled to an award of administrative or
litigation costs under section 7430. 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: (1)
Substantially prevail with respect to either the amount in
controversy or the most significant issue or set of issues
presented; and (2) satisfy the applicable net worth requirement.
Sec. 7430(c)(4)(A). Respondent concedes that petitioner has
satisfied the requirements of section 7430(c)(4)(A). Petitioner
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Last modified: May 25, 2011