- 33 -
it imposed a requirement that taxpayers show prejudice as a
result of the misconduct.” Id. Taking our cue from Henry v.
Commissioner, supra, we conclude that, given the foregoing
language of the Court of Appeals in Dixon V, respondent’s
position in Dixon III was not substantially justified. Cf.
Golembiewski v. Barnhart, 382 F.3d 721, 724 (7th Cir. 2004)
(“Strong language against the government’s position in an opinion
[of a reversing appellate court] discussing the merits of a key
issue is evidence in support of an award of EAJA fees.”).
D. Conclusion
We conclude that petitioners are entitled to relief under
section 7430.
III. Amount of Award
A. Respondent’s Position
Respondent argues that, even if petitioners are entitled to
relief under section 7430, we should determine the amounts of
their awards by giving effect to section 7430’s hourly rate cap
and by denying compensation for services respondent alleges are
“redundant, excessive and unnecessary.”29
B. Applicability of Statutory Rate Cap
The rate cap to which fee awards under section 7430 are
generally subject applies “unless the court determines that * * *
a special factor, such as the limited availability of qualified
29 Respondent does not quantify that argument in terms of
noncompensable hours.
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