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proceeding was not substantially justified. Sec. 7430(a),
(c)(1)(B)(iii), (c)(4)(A) and (B); see also Dixon v.
Commissioner, T.C. Memo. 2006-97 n.28. In its report
accompanying the bill in which section 7430 originated, the House
Committee on Ways and Means contemplated that such fee awards
“will enable individual taxpayers to vindicate their rights
regardless of their economic circumstances.” H. Rept. 97-404, at
11 (1981).
A taxpayer seeking litigation costs under section 7430 must
have exhausted all available administrative remedies prior to
litigation and, if an individual, must not have had a net worth
in excess of $2 million as of the filing date of the suit.14 Sec.
7430(b)(1), (c)(4)(A)(ii); see 28 U.S.C. sec. 2412(d)(2)(B)(i)
(1988) (individual net worth limitation contained in the Equal
Access to Justice Act (EAJA) and incorporated by reference in
sec. 7430(c)(4)(A)(ii)). Reasonable attorney’s fees may not
exceed the rate of $125 per hour (as adjusted for inflation)
unless “a special factor, such as the limited availability of
qualified attorneys for such proceeding, the difficulty of the
issues presented in the case, or the local availability of tax
14 We have applied the net worth requirement as of June 10,
1992 (the date on which the attorney misconduct phase of this
litigation effectively commenced). See app. note 14 and
accompanying text.
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