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v. Commissioner, T.C. Memo. 2003-136 n.7; sec. 301.7430-4(c)(4),
Example 2, Proced. & Admin. Regs.
In support of their view that respondent’s position was not
substantially justified, petitioners discuss at length the
Appeals officer’s actions and the erroneous legal conclusion that
she reached. We are not unsympathetic to the delay and
frustration caused by the Appeals officer’s misinterpretation of
the law. Furthermore, we agree with petitioners that it should
not be “[the taxpayer’s] job to help employees of the Internal
Revenue Service understand the tax code”, as petitioners
attempted to do in their July 11 letter. Nevertheless, the
Government’s litigating position is formed only after the
Government’s attorney becomes involved in the case. See Huffman
v. Commissioner, supra; Estate of Merchant v. Commissioner,
supra; Andary-Stern v. Commissioner, T.C. Memo. 2002-212.
Petitioners’ discussions with the Appeals officer occurred before
respondent’s counsel became involved in the case. The Appeals
officer’s conclusion does not represent respondent’s litigating
position and does not prevent that position from being
substantially justified. We therefore focus on the actions taken
by respondent’s counsel.
As discussed above, respondent did not initially file an
answer. See supra note 4. Respondent’s counsel was assigned
this case on December 5, 2006. Approximately 2 weeks later,
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