Hoyt W. and Barbara D. Young, et al. - Page 18

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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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