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expertise, justifies a higher rate.” Sec. 7430(c)(1)(B)(iii).15
In addition, a court may not award fees with respect to any
portion of the proceedings unreasonably protracted by the
taxpayer. Sec. 7430(b)(3).
Respondent publishes the inflation-adjusted rate cap on an
annual basis. The hourly rate cap for fees incurred in 2000 and
2001 (the earliest years for which petitioners claim fees) is
$140. Rev. Proc. 99-42, sec. 3.26, 1999-2 C.B. 568, 572; Rev.
Proc. 2001-13, sec. 3.26, 2001-1 C.B. 337, 341. The hourly rate
cap for fees incurred in 2002 through 2005 is $150. Rev. Proc.
2001-59, sec. 3.28, 2001-2 C.B. 623, 628; Rev. Proc. 2002-70,
sec. 3.32, 2002-2 C.B. 845, 850; Rev. Proc. 2003-85, sec. 3.33,
2003-2 C.B. 1184, 1190; Rev. Proc. 2004-71, sec. 3.35, 2004-2
C.B. 970, 976. The hourly rate cap for fees incurred in 2006 is
$160. Rev. Proc. 2005-70, sec. 3.36, 2005-47 I.R.B. 979, 985.
B. Amplification of September 8, 2005 Order
Before turning to our analysis under section 7430, we
briefly revisit our September 8, 2005 order (app.) in the light
of our recent Dixon VII opinion.
15 The latter two examples of special factors were added by
the Internal Revenue Service Restructuring and Reform Act of
1998, Pub. L. 105-206, sec. 3101(a)(2), (g), 112 Stat. 727, 729,
effective for costs incurred after Jan. 18, 1999. All of the
costs sought by petitioners were incurred after Jan. 18, 1999.
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