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I. Section 7430
Recovery of administrative costs is governed by section
7430(a), which permits a taxpayer who is a “prevailing party” in
any administrative proceedings brought by or against the United
States to recover reasonable administrative costs incurred by him
or her in connection with such proceedings. See sec. 7430(a)(1).
To be a “prevailing party”, the taxpayer must, inter alia,
substantially prevail with respect to the amount in controversy
or the most significant issue or set of issues presented. Sec.
7430(c)(4)(A).6 A taxpayer will not qualify as a prevailing
6 SEC. 7430(c) provides in part:
(4) Prevailing party.--
(A) In general.–-The term “prevailing party”
means any party in any proceeding to which
subsection (a) applies (other than the United
States or any creditor of the taxpayer involved)--
(i) 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, and
* * * * * * *
(B) Exception If United States Establishes That Its
Position Was Substantially Justified.--
(i) General Rule.–-A party shall not be treated as
the prevailing party in a proceeding to which
subsection (a) applies if the United States establishes
(continued...)
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Last modified: May 25, 2011