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contained in the Equal Access to Justice Act and incorporated by
reference in sec. 7430(c)(4)(A)(ii)). Reasonable attorney’s fees
may not exceed the rate of $125 per hour (as adjusted for
inflation) unless “a special factor, such as the limited
availability of qualified attorneys for such proceeding, the
difficulty of the issues presented in the case, or the local
availability of tax expertise, justifies a higher rate.” Sec.
7430(c)(1)(B)(iii).15
Respondent publishes the inflation-adjusted rate cap on an
annual basis. The hourly rate cap for fees incurred in 2001 (the
earliest year for which petitioners claim fees) is $140. Rev.
Proc. 2001-13, 2001-1 C.B. 337, 341. The hourly rate cap for
fees incurred between 2002 and 2005 is $150. Rev. Proc. 2001-59,
2001-2 C.B. 623, 628; Rev. Proc. 2002-70, 2002-2 C.B. 845, 850;
Rev. Proc. 2003-85, 2003-2 C.B. 1184, 1190; Rev. Proc. 2004-71,
2004-2 C.B. 970, 976. The hourly rate cap for fees incurred in
2006 is $160. Rev. Proc. 2005-70, 2005-47 I.R.B. 979, 985.
B. Tax Court’s Authority To Award Appellate
Fees Under Section 7430
Before we evaluate petitioners’ appellate fee requests under
section 7430, we address the threshold issue of our authority to
15 The latter two examples of special factors were added by
the Internal Revenue Service Restructuring and Reform Act of
1998, Pub. L. 105-206, sec. 3101(a)(2), 112 Stat. 727, effective
for costs incurred after Jan. 18, 1999, id. sec. 3101(g), 112
Stat. 729. All of the costs sought by petitioners were incurred
after Jan. 18, 1999.
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