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On April 13, 2005, respondent’s Appeals Office notified
petitioners of respondent’s disallowance of petitioners’ $7,253
claim for administrative costs.
In the notice, respondent explained that, among other
reasons, because respondent had not issued an Appeals Office
notice of decision or a notice of deficiency for 2001 relating to
petitioners’ $13,769 tax refund claim, petitioners could not be
treated as a prevailing party under section 7430 and therefore
that petitioners were not entitled to administrative costs.
OPINION
Generally, under section 7430 Congress has provided that
taxpayers may recover from respondent costs relating to
administrative proceedings in which the taxpayers substantially
prevail. Section 7430(a) provides as follows:
SEC. 7430(a). In General.-–In any administrative or
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 this title, the prevailing party may be awarded a
judgment or a settlement for--
(1) reasonable administrative costs incurred
in connection with such administrative proceeding
within the Internal Revenue Service
* * *
In section 7430(c)(2), administrative costs are defined to
include costs incurred on or after the earliest of the following:
(1) The date on which the taxpayer receives from respondent’s
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Last modified: November 10, 2007