Images in Motion of El Paso, Inc. - Page 35

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                 10/24/02       Draft of request                 .25                  
                                for Appeals Office                                    
                                conference                                            
                 10/29/02       Draft of request                 .25                  
                                for Appeals Office                                    
                                conference                                            
            2/28/03 - 3/28/03   Review and analysis            13.25                  
                                of IRS Notice of                                      
                                Determination of                                      
                                Worker                                                
                                Reclassification,                                     
                                several conferences                                   
                                with client and her                                   
                                workers. Research of                                  
                                Federal tax laws and                                  
                                numerous cases                                        
          The issue for decision is whether these are recoverable as                  
          litigation fees.                                                            
               Section 301.7430-4(c)(3)(i), Proced. & Admin. Regs.,                   
          provides that litigation costs include “Costs incurred in                   
          connection with the preparation and filing of a petition with the           
          United States Tax Court or in connection with the commencement of           
          any other court proceeding”.  Two examples are provided in                  
          section 301.7430-4(c)(4), Proced. & Admin. Regs.,7 and we find              
          aspects of the reasoning of each to be applicable here.  Section            
          301.7430-4(c)(4), Examples (1) and (2), Proced. & Admin. Regs.,             
          provides:                                                                   


               7We note that the Internal Revenue Service Restructuring and           
          Reform Act of 1998, Pub. L. 105-206, sec. 3101(a)(2), 112 Stat.             
          727, expanded the period for which administrative costs are                 
          recoverable. See sec. 7430(c)(2)(B).  Although the examples have            
          not been updated to reflect this change, petitioner has requested           
          only litigation costs; thus, the examples are applicable here.              




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