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Fees Awards Act of 1976 (CRAFAA), see 42 U.S.C. sec. 1988 (2000),
a fee-shifting statute designed to encourage private enforcement
of civil rights laws).
II. Entitlement to Relief Under Section 7430
A. Respondent’s Position
Respondent contends that petitioners are not entitled to any
relief under section 7430 because (1) they have failed to
demonstrate that they “paid or incurred” the claimed fees and
expenses, and (2) respondent’s position on appeal was
substantially justified.
B. Paid or Incurred Requirement
1. Overview
Unlike certain other fee-shifting statutes, section 7430
generally allows the recovery of attorney’s fees only to the
extent such amounts have been paid or incurred.23 Sec.
7430(a)(2), (c)(1)(B)(iii); see Frisch v. Commissioner, 87 T.C.
838, 844 (1986) (distinguishing CRAFAA, under which a court “may
allow the prevailing party * * * a reasonable attorney’s fee”);
cf. Blanchard v. Bergeron, 489 U.S. 87, 96 (1989) (fee award
under CRAFAA is not limited to the amount the prevailing party
owes his attorney pursuant to contingent fee agreement). For
purposes of section 7430, fees are “incurred” when there is a
legal obligation to pay them. E.g., Grigoraci v. Commissioner,
23 But see sec. 7430(c)(3)(B), providing an exception for
pro bono services.
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