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Discussion
Section 7430(a) authorizes the award of reasonable
litigation costs paid or incurred in a court proceeding which is
brought by or against the United States in connection with the
determination, collection, or refund of any tax, interest, or
penalty under the Internal Revenue Code. The taxpayer must
establish that he: (1) Is the prevailing party; (2) has exhausted
the available administrative remedies; (3) has not unreasonably
protracted the court proceedings; and (4) has claimed litigation
costs that are reasonable. Sec. 7430(a) and (b)(1), (3). The
taxpayer bears the burden of proving that these requirements are
met. Rule 232(e). A taxpayer is generally the prevailing party
if the taxpayer substantially prevailed with respect to either
the amount in controversy or the most significant issue or set of
issues. Sec. 7430(c)(4)(A). Under section 7430(c)(4)(B), even
if the taxpayer meets the requirements of a prevailing party
under section 7430(c)(4)(A), the taxpayer will not be treated as
a prevailing party if respondent’s position in the proceeding was
substantially justified.
Under section 7430(c)(4)(E), a party shall also be treated
as the prevailing party if “the liability of the taxpayer
pursuant to the judgment in the proceeding (determined without
regard to interest) is equal to or less than the liability of the
taxpayer which would have been so determined if the United States
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Last modified: May 25, 2011