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Respondent was free to do so; however in the absence of any legal
or factual basis to make his position reasonable, he did so at
his peril. We find that respondent was not substantially
justified in denying petitioner’s claim for relief after
receiving CCISO’s recommendation for relief and filing his answer
to petitioner’s amended petitions.
B. Qualified Offer
Under section 7430(c)(4)(E) a party shall also be treated as
the prevailing party if “the liability of the taxpayer pursuant
to the judgment in the proceeding (determined without regard to
interest) is equal to or less than the liability of the taxpayer
which would have been so determined if the United States had
accepted a qualified offer of the party under subsection (g).”
The qualified offer provision of section 7430(c)(4)(E) applies
without regard to whether respondent’s position in the matter is
substantially justified.7 See Haas & Associates Accountancy
Corp. v. Commissioner, 117 T.C. 48, 59 (2001), affd. 55 Fed.
Appx. 476 (9th Cir. 2003); McGowan v. Commissioner, T.C. Memo.
2005-80.
7Sec. 7430(c)(4)(E)(iv) provides that the qualified offer
subparagraph “shall not apply to a party which is a prevailing
party under any other provision of this paragraph.” For the
period prior to respondent’s answer to the amended petitions,
petitioner was not a prevailing party with respect to any of the
docketed cases. Thus, it is necessary to determine whether
petitioner was a prevailing party based on having submitted a
qualified offer during the period prior to respondent’s answer.
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