Tax News

CCH (cch.taxgroup.com) reports:

  Proposed regulations relating to awards of administrative costs and attorney's fees under Code Sec. 7430 have been issued. The proposed regulations reflect the amendments to Code Sec. 7430 made by the Taxpayer Relief Act of 1997 (P.L. 105-34) and the IRS Restructuring and Reform Act of 1998 (P.L. 105-206).

  CCH Comment.
Code Sec. 7430 provides that a prevailing party in any administrative or court proceeding that is brought by or against the United States in connection with the determination, collection, or refund of any tax may be awarded a judgment or settlement for reasonable administrative or litigation costs incurred in connection with the proceeding. To recover attorney's fees and costs, an individual taxpayer cannot have a net worth in excess of $2 million at the time of the filing of the civil action. Pursuant to Code Sec. 7430(c)(4)(D)(ii), joint filers are treated as two separate individuals for purposes of computing the net worth limitation.

  Under the proposed regulations, net worth is calculated using the fair market value of assets to provide a more accurate assessment of a taxpayer's actual and current net worth as of the administrative proceeding date. The proposed regulations also specify which net worth and size limitations apply when a taxpayer is an owner of an unincorporated business, and clarify the net worth requirement in cases involving partnerships subject to the unified audit and litigation procedures of Code Secs. 6221 through 6234 (the TEFRA partnership procedures).

  The proposed regulations address the period for recovery of administrative costs, which generally entitles the taxpayer to recover costs incurred after a notice of proposed deficiency (a "30-day letter") is mailed to the taxpayer. They clarify that such costs are recoverable only if at least one issue (other than recovery of costs) remains in dispute. The proposed regulations also address procedural requirements with respect to presenting an application with the IRS or, upon receiving an adverse decision from the IRS with respect to such application, filing a petition with the Tax Court to recover administrative costs.

  Comments on the proposed regulations have been requested. A public hearing on the proposals is scheduled for March 10, 2010.

Proposed Regulations, NPRM REG-111833-99, 2009FED ¶49,438

Proposed Regulations, NPRM REG-111833-99, FINH ¶41,144

Other References:

 
Code Sec. 7430

  CCH Reference - 2009FED ¶41,741C

  CCH Reference - 2009FED ¶41,742AC

  CCH Reference - 2009FED ¶41,742BC

  CCH Reference - 2009FED ¶41,742CC

  CCH Reference - 2009FED ¶41,742DC

  CCH Reference - 2009FED ¶41,742EC

  CCH Reference - 2009FED ¶41,742FC

  CCH Reference - 2009FED ¶41,742HC

  CCH Reference - FINH ¶22,392

  CCH Reference - FINH ¶22,397

  CCH Reference - FINH ¶22,405

  CCH Reference - FINH ¶22,412

  CCH Reference - FINH ¶22,417

  CCH Reference - FINH ¶22,422

  CCH Reference - FINH ¶22,427

  CCH Reference - FINH ¶22,432

  Tax Research Consultant

  CCH Reference - TRC LITIG: 3,154
CCH Reference - TRC LITIG: 3,154.20