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taxpayer. An award of administrative and litigation costs may be
made where the taxpayer (1) is the “prevailing party”, (2) has
exhausted available administrative remedies (in the case of
litigation costs), (3) did not unreasonably protract the
administrative or judicial proceeding, and (4) claimed reasonable
costs. Sec. 7430(a), (b)(1), (3), (c). One way for a taxpayer
to establish that the taxpayer is the prevailing party is by a
comparison of the amount of the last qualified offer with the
portion of the judgment attributable to the adjustments at issue
when that qualified offer was made. Sec. 7430(c)(4)(E); sec.
301.7430-7T(b)(3), Temporary Proced. & Admin. Regs., 66 Fed. Reg.
727 (Jan. 4, 2001).
Section 7430(c)(4)(E) and (g) provides, in part, as follows:
SEC. 7430(c). Definitions.--For purposes of this
section--
* * * * * * *
(4) Prevailing party.--
* * * * * * *
(E) Special rules where judgment less than
taxpayer’s offer.--
(i) In general.--A party to a court proceeding
meeting the requirements of subparagraph (A)(ii)
shall be treated as the prevailing party if the
liability of the taxpayer pursuant to the judgment
in the proceeding (determined without regard to
interest) is equal to or less than the liability of
the taxpayer which would have been so determined if
the United States had accepted a qualified offer of
the party under subsection (g).
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Last modified: May 25, 2011