Images in Motion of El Paso, Inc. - Page 16

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          factual differences, Haas Associates Accountancy Corp. does not             
          dictate the result in this case.                                            
               In explaining the exhaustion of administrative remedies                
          provision the House of Representatives Ways and Means Committee’s           
          report states:                                                              
               * * *  This provision of the bill is intended to                       
               preserve the role that the administrative appeals                      
               process plays in the resolution of tax disputes by                     
               requiring taxpayers to pursue such remedies prior to                   
               litigation.  A taxpayer who actively participates in                   
               and discloses all relevant information during the                      
               administrative stages of the case will be considered to                
               have exhausted the available administrative remedies.                  
               Failure to so participate and disclose information may                 
               be sufficient grounds for determining that the taxpayer                
               has not exhausted administrative remedies and,                         
               therefore, is ineligible for an award of litigation                    
               costs.                                                                 
                    The committee recognizes that the exhaustion of                   
               remedies requirement may be inappropriate in some                      
               cases. * * * Therefore, taxpayers are required to                      
               exhaust available administrative remedies unless the                   
               court determines that, under the circumstances of the                  
               case, such requirement is unnecessary. [H. Rept. 97-                   
               404, at 13 (1981); emphasis added.]                                    
          See Staff of Joint Comm. on Taxation, General Explanation of the            
          Tax Equity and Fiscal Responsibility Act of 1982 (the so-called             
          Blue Book), at 448 (J. Comm. Print 1982).                                   
               The cited legislative history shows Congress enacted the               
          exhaustion of administrative remedies requirement because it was            
          concerned with taxpayers attempting to bypass administrative                
          review, which would create an incentive to undermine a principal            
          forum to resolve a dispute.  See also Payment of Attorneys’ Fees            
          in Tax Litigation:  Hearing Before the Subcomm. on Select Revenue           





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