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We disagree with petitioners’ interpretation of the December
1995 letter. Petitioners mistakenly equate an evaluation of the
issues in controversy and release of jurisdiction with a final
determination. The letter’s content does not point to a final
determination as required by section 301.7430-3(c)(2), Proced. &
Admin. Regs. The letter merely served to notify petitioners that
AO Rawley had finished his consideration and that respondent’s
District Director would take further action. Moreover, in
December of 1995, respondent had yet to even include the Rathbun
children in his examination. Since respondent failed to reach a
final determination, the cases were returned to the Appeals
Office following issuance of additional 30-day letters.
For this reason, we conclude that the December 1995 letter
was not an IRS Appeals Office notice of decision. In light of
our conclusion that petitioners never received a notice of
decision, it is unnecessary for us to discuss whether petitioners
substantially prevailed in their administrative proceedings.
IV. Conclusion
Respondent did not take a position in petitioners’ cases
because the December 1995 letter was not an Appeals Office notice
of decision. Given that respondent never took a position for
purposes of section 7430(c)(4), petitioners are not “prevailing
parties” entitled to administrative costs under section 7430, and
we so hold.
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