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proceedings. Given the facts of this case, we find petitioner
did not unreasonably protract these proceedings within the
meaning of section 7430(b)(3).
II. Reasonableness of Litigation Costs
Section 7430 limits the prevailing party to an award of
reasonable litigation costs.3 Section 7430(c)(1)(B)(iii)
generally limits the hourly rate for attorney’s fees.4 A
taxpayer may recover attorney’s fees above the statutory limit if
the court determines the existence of a special factor such as:
(1) Limited availability of qualified attorneys for the
proceeding; (2) the difficulty of the issues presented in the
case; or (3) the local availability of tax expertise. Sec.
7430(c)(1)(B)(iii).
Petitioner seeks to recover attorney’s fees in excess of the
statutory limit based on two reasons. First, petitioner argues
that its counsel’s “knowledge of substantive and procedural
federal income tax law, and his experience in litigation of tax
controversies, is far more extensive than the knowledge and
experience of a tax attorney who is merely well-qualified to
3 Reasonable litigation costs include, inter alia,
reasonable court costs and fees paid or incurred for the services
of attorneys in connection with a court proceeding (attorney’s
fees). Sec. 7430(c)(1).
4 Rev. Proc. 2002-70, sec. 3.32, 2002-2 C.B. 845, 850; Rev.
Proc. 2003-85, sec. 3.33, 2003-2 C.B. 1184, 1190; and Rev. Proc.
2004-71, sec. 3.35, 2004-2 C.B. 970, 976, state that the hourly
rate for attorney’s fees during 2003-2005 is $150.
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