UNITED STATES TAX COURT



FRIENDS OF THE BENEDICTINES IN THE HOLY LAND, INC., Petitioner v.
       COMMISSIONER OF INTERNAL REVENUE, Respondent



    Docket No. 22012-13X.                           Filed February 21, 2018.



           Following IRS inaction on P’s application for recognition of
    tax-exempt status, P filed a petition for a judgment declaring it to be
    an organization exempt from Federal income tax under I.R.C. sec.
    501(a). The IRS subsequently issued a favorable determination letter
    and, before even filing an answer, R conceded. P moved for an award
    of reasonable administrative and litigation costs under I.R.C. sec.
    7430.

          1. Held: The submission to the IRS of an application for
    recognition of exemption from tax under I.R.C. sec. 501(c)(3) begins
    an administrative proceeding for the purposes of I.R.C. sec. 7430.

          2. Held, further, P is not entitled to administrative costs.

            3. Held, further, P is not entitled to litigation costs because R’s
    litigation position was substantially justified.
                                        -2-

      Christopher S. Rizek and Matthew C. Hicks, for petitioner.

      Elizabeth S. Henn and Casey A. Lothamer, for respondent.



                                     OPINION


      WELLS, Judge: Before us is petitioner’s motion for reasonable litigation or

administrative costs. All section references are to the Internal Revenue Code

(Code) in effect at all relevant times, and all Rule references are to the Tax Court

Rules of Practice and Procedure, unless otherwise indicated. We round all

monetary amounts to the nearest dollar.

                                    Background

      On July 2, 2012, petitioner, Friends of the Benedictines in the Holy Land,

Inc. (Friends of the Benedictines), submitted to the Internal Revenue Service (IRS)

a Form 1023, Application for Recognition of Exemption Under Section 501(c)(3)

of the Internal Revenue Code. For more than one year, the only response from the

IRS to petitioner was a perfunctory form letter acknowledging receipt of the

application. On or around September 18, 2013, petitioner’s counsel contacted the

IRS to ask when it would issue a ruling or determination on the application. The

IRS representative informed counsel that the application for exemption was still
                                         -3-

being processed and that the IRS could not provide a date certain by which it

would issue a ruling or determination.

      On Friday, September 20, 2013, Friends of the Benedictines petitioned this

Court for a judgment declaring it to be an organization exempt from Federal

income tax under section 501(a). On Sunday, September 22, 2013, the Tax

Exempt & Government Entities Division of the IRS issued a determination letter

recognizing that Friends of the Benedictines is an organization described in

sections 501(c)(3) and 170(b)(1)(A)(vi), effective March 14, 2012. On October 1,

2013, counsel for respondent spoke with petitioner’s counsel and discussed the

recently issued determination letter. Respondent’s counsel intended to file a

motion to dismiss, but petitioner’s counsel instead proposed that they resolve the

case with a joint decision and stipulation. Respondent agreed, and over the next

month and a half worked with three separate attorneys for petitioner to file the

stipulation and decision documents. On December 31, 2013, this Court entered a

stipulated decision stating that Friends of the Benedictines is exempt from Federal

income tax under section 501(a) as an organization described in section 501(c)(3).

      On January 30, 2014, petitioner filed a motion for an award of reasonable

litigation or administrative costs pursuant to section 7430 and Rules 230 and 231.

Petitioner attached two invoices and an affidavit stating that the legal fees and
                                        -4-

expenses shown therein were “charged” and “incurred” by the law firm “for

services provided to Friends of the Benedictines in connection with this matter.”

The first invoice, No. 7862-1013, showed Dormition Abbey as the client and a

total due of $11,272. Dormition Abbey was the law firm’s previous client, which

at first engaged the attorneys to represent petitioner in this matter. The second

invoice, No. 7862-0114, showed Friends of the Benedictines as the client and a

subtotal of $19,851, prior balance due of $11,272, and a total due of $31,123. In

its motion petitioner seemed to claim only litigation costs. The invoices showed

work performed between September 9, 2013, and January 29, 2014. Although the

description of the work performed was completely redacted, the work product

generated over this five-month period included the petition, the stipulation, and

the motion for costs. This work product totaled 27 pages, including title pages and

exhibits.

      Respondent filed a response to the motion on February 24, 2014, and

contended, in part, that petitioner’s thoroughly redacted billing statements failed to

meet its burden to prove the costs incurred. In response to this Court’s order,

petitioner filed on April 7, 2014, its first supplement to motion for reasonable
                                          -5-

litigation or administrative costs (supplement).1 Petitioner clarified that it is in

fact seeking both administrative and litigation costs: $8,478 in administrative

costs in connection with its Form 1023 and $60,512 in litigation costs related to

the stipulation documents, motion for costs, and ancillary protective order motion.

Petitioner’s new filings, which required reviewing respondent’s 18-page response,

totaled 28 pages.

      The first invoice petitioner attached to the supplement is once again #7862-

1013. The client name shown is still Dormition Abbey; the date range of the work

performed is September 9 to 20, 2013; and the billing rates for the three attorneys

whose work is listed range from $490 to $670 per hour. Despite the invoice’s date

range being more than one year after the Form 1023 was submitted, petitioner

contends its request for administrative costs includes work performed in

connection with its Form 1023.2 The work described in the invoice is that of



      1
       On this date, petitioner also filed a motion for a protective order pursuant to
Rule 103, requesting that the unredacted billing records be placed under seal. On
April 8, 2014, the Court temporarily placed the records under seal, but on January
4, 2016, petitioner withdrew its motion and consented to the removal of the
temporary protective order.
      2
       Petitioner’s counsel stated that the firm did not charge petitioner for the
time spent trying to obtain from the IRS a schedule for the determination of tax-
exempt status. Accordingly, petitioner is not requesting an award of costs for
those services.
                                        -6-

researching, drafting, and coordinating the petition. The entries include words

such as “litigation”, “petition”, and “court proceeding”, and the Code section

number for declaratory judgments. The total due shown in the invoice matches the

$8,478 that petitioner requests in administrative costs.

      Petitioner attached three additional invoices to its supplement. The first

invoice is labeled, once again, #7862-1013. The client’s name is Dormition

Abbey; the invoice includes entries for only September 27, 2013; and the total due

is $2,794. This invoice includes the petition filing fee. The invoice number on the

second invoice, #7862-0114, matches the one on the second invoice submitted

with the original motion. This invoice shows petitioner as the client; the same

three attorneys from the previous invoices but with increased billing rates of $500,

$655, and $685 per hour; and four additional individuals with billing rates ranging

from $215 to $475. Including fees, the subtotal is $19,851 for work performed

between October 1, 2013, and January 29, 2014. The third invoice is also #7862-

0114; identifies petitioner as the client; lists work performed by the three attorneys

and four additional individuals; and spans January 14 to April 7, 2014. The

subtotal is $37,866.

      The final invoice’s “Total Due” is $68,990, which combines the

administrative and litigation costs requested. Neither party requested a hearing,
                                         -7-

and we conclude one is not necessary. We will decide the motion on the basis of

the parties’ filings and exhibits. See Rule 232(a)(2).

                                     Discussion

      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, interest, or penalty, the prevailing party may be awarded reasonable

administrative and litigation costs incurred in connection with the proceeding.3

      3
        Sec. 7430 awards can be made only “in connection with the determination,
collection, or refund of any tax, interest, or penalty”. This phrase should be
construed to include declaratory judgment proceedings. Congress found it
necessary in the original version of sec. 7430 to clarify that “[n]o award for
reasonable litigation costs may be made * * * with respect to any declaratory
judgment proceeding.” Sec. 7430(b)(3)(A) (1988). In 1996, however, Congress
removed that restriction and in so doing evinced a clear intention to allow the
awarding of costs in declaratory judgment proceedings. “Award of litigation costs
permitted in declaratory judgment proceedings.” Taxpayer Bill of Rights 2
(TBOR 2), Pub. L. No. 104-168, sec. 704, 110 Stat. at 1464 (1996). Several
committee prints and reports discuss the provision with the understanding that
awards for costs will be allowed in declaratory judgment proceedings, such as by
stating that (1) “[t]he House bill eliminates the present-law restrictions on
awarding attorney’s fees in all declaratory judgment proceedings”, H.R. Rept. No.
104-350, at 1387 (1995); (2) “[i]t is appropriate to treat declaratory judgment
proceedings [as] similar to other tax proceedings, with respect to eligibility for
attorney’s fees”, H.R. Rept. No. 104-280 (Vol. II), at 276 (1995); H.R. Rept. No.
104-506, at 38 (1996), 1996-3 C.B. 49, 86; (3) “[t]he proposal would eliminate the
present-law restrictions on awarding attorney’s fees in all declaratory judgment
proceedings”, Staff of J. Comm. on Taxation, JCX-36-95 (J. Comm. Print 1995);
Staff of J. Comm. on Taxation, JCX-44-95 (J. Comm. Print 1995); Staff of J.
Comm. on Taxation, JCX-7-96 (J. Comm. Print 1996); and (4) “[a]ward of
                                                                         (continued...)
                                        -8-

Sec. 7430(a). To recover costs, the taxpayer must establish that (1) it is the

prevailing party, (2) it did not unreasonably protract the proceedings, (3) the

amount of the costs requested is reasonable, and (4) it exhausted the administrative

remedies available. See sec. 7430(b) and (c). These requirements are conjunctive,

and the failure to satisfy any one of them will preclude an award of costs. See

Minahan v. Commissioner, 

, 497 (1987); Marten v. Commissioner,

T.C. Memo. 2000-186. Respondent does not dispute that petitioner has satisfied

the second and fourth requirements.

      As the moving party, petitioner has the burden of proving that it satisfies

each requirement of section 7430. See Rule 232(e); see also Swanson v.

Commissioner, 

, 85 (1996). This Court has taken a bifurcated

approach to deciding when costs may be awarded, meaning taxpayers must

separately establish that they meet the requirements for the administrative

proceeding and the court proceeding. See Maggie Mgmt. Co. v. Commissioner,




      3
        (...continued)
litigation costs permitted in declaratory judgment proceedings”, Staff of J. Comm.
on Taxation, JCS-22-95 (J. Comm. Print 1995). Congress’ clear objective was to
ensure that a sec. 7430 award could be made in declaratory judgment proceedings,
and we interpret the statute in a manner that is consistent with that objective.
Accordingly, we have the statutory authority to award costs in the instant
proceeding.
                                         -9-

, 442 (1997); Huffman v. Commissioner, T.C. Memo. 1991-144,

aff’d in part, rev’d in part, 

(9th Cir. 1992).

I.    Administrative Costs

      The administrative costs that can be awarded to a prevailing party are those

described in section 7430(c)(2) and incurred in connection with an IRS

administrative proceeding. Sec. 7430(a)(1). It is the taxpayer’s burden to prove

that such costs were incurred and that they are reasonable. Sec. 7430(c)(2); Rule

232(e); Cooley v. Commissioner, T.C. Memo. 2012-164.

      A. Administrative Proceeding

      Respondent’s first contention is that petitioner’s costs were not incurred in

connection with an administrative proceeding. Section 7430(c)(5) defines an

“administrative proceeding” quite broadly as “any procedure or other action before

the * * * [IRS].” The regulation interpreting the statute, however, carves out four

exceptions. Sec. 301.7430-3(a), Proced. & Admin. Regs. One of those exceptions

is requests for private letter rulings (PLR) “or similar determinations”. 

Respondent contends that recognition of tax-exempt status is a

determination similar to a PLR. Both types of proceeding were described in the
                                       - 10 -

same revenue procedure in effect at the filing of the motion,4 and, presumably,

respondent relies on the fact that both requests involve a taxpayer’s taking the

initiative to secure a certain treatment from the IRS. Consequently, respondent

contends petitioner is not entitled to administrative costs under section 7430

because its application for tax-exempt status was not an “administrative

proceeding”.

      We are not persuaded that applications for tax-exempt status are “similar

determinations” to PLRs so as to be excepted from the broad definition of

“administrative proceeding” in section 7430(c)(5). The fundamental difference

lies in that PLRs are discretionary, whereas denials of tax-exempt status may be

challenged in court. See secs. 7428, 7422. Section 508(a)(1) requires most tax-

exempt organizations to give notice so that they will be treated as an organization

described in section 501(c)(3). When the requesting organizations are not

required to provide such notice, see sec. 508(c), but submit a Form 1023

nonetheless, the IRS must provide a determination within 270 days or risk facing




      4
      Rev. Proc. 2014-4, 2014-1 I.R.B. 125 (superseded by Rev. Proc. 2015-4,
2015-1 I.R.B. 144; Rev. Proc. 2016-4, 2016-1 I.R.B. 142; and Rev. Proc. 2017-5,
2017-1 I.R.B. 230).
                                         - 11 -

taxpayers in court.5 Sec. 7428(a), (b)(2). In contrast, the IRS may refuse to

respond to requests for PLRs, and there is no review of such a decision. See sec.

601.201(d)(2), Statement of Procedural Rules; Rev. Proc. 2014-4, sec. 6, 2014-1

I.R.B. 125, 132. Accordingly, an application for tax-exempt status is an

administrative proceeding and may therefore give rise to awards of administrative

costs under section 7430.

      B. Prevailing Party and Reasonable Administrative Costs

      Respondent additionally contends that petitioner is not entitled to costs

because it was not the prevailing party in the administrative proceeding and did

not incur “reasonable administrative costs”, defined in section 7430(c)(2) as only

those costs incurred on or after the earliest of:

      (i) the date of the receipt by the taxpayer of the notice of the decision
      of the Internal Revenue Service Office of Appeals; (ii) the date of the
      notice of deficiency; or (iii) the date on which the 1st letter of
      proposed deficiency which allows the taxpayer an opportunity for
      administrative review in the Internal Revenue Service Office of
      Appeals is sent.




      5
        As stated above, previous versions of sec. 7430 explicitly precluded the
awarding of litigation costs in declaratory judgment proceedings. Sec.
7430(b)(3)(A) (1988).Even then, an exception to the exception permitted awarding
costs in sec. 501(c)(3) determination revocation proceedings. Sec. 7430(b)(3)(B)
(1988).
                                        - 12 -

      Petitioner contends that it is the prevailing party because it meets the net

worth requirement and prevailed with respect to the most significant issue, i.e.,

whether it qualifies as a tax-exempt organization. See sec. 7430(c)(4)(A).

However, section 7430(c)(4)(B)(i) provides that a party shall not be treated as the

prevailing party if the United States establishes that its position in the proceeding

was substantially justified. We held in Fla. Country Clubs, Inc. v. Commissioner,

(2004), aff’d, 

(11th Cir. 2005), that identifying the

Government’s position is a precondition for determining whether the taxpayer is a

prevailing party.6 See also Purciello v. Commissioner, T.C. Memo. 2014-50;

Kwestel v. Commissioner, T.C. Memo. 2007-135. When the Government fails to

take a position at all, therefore, a taxpayer cannot be the prevailing party.

Petitioner contends that the Fla. Country Clubs, Inc. rule does not apply when the

      6
         Previous versions of sec. 7430 required parties to “establish[] that the
position of the United States in the proceeding was not substantially justified”
before they could qualify as a “prevailing party”. Sec. 7430(c)(4)(A)(i) (1988).
The statute was amended in 1996 to shift the burden to the United States to show
that its position was substantially justified. See TBOR 2 sec. 701(b), 110 Stat. at
1463. Nonetheless, in Fla. Country Clubs, Inc., because the statute defines the
position of the United States taken in an administrative proceeding as the position
taken on the earlier of “(i) the date of the receipt by the taxpayer of the notice of
the decision of the Internal Revenue Service Office of Appeals, or (ii) the date of
the notice of deficiency”, sec. 7430(c)(7)(B), we held that a taxpayer may not
qualify as the prevailing party when neither of these notices has been issued, Fla.
Country Clubs, Inc. v. Commissioner, 

(2004), aff’d, 

(11th Cir. 2005).
                                        - 13 -

Government’s failure to respond is precisely the position we must review for

substantial justification, and that instead this Court should apply a similar analysis

to that in Reynoso v. United States, No. 10-00098 (SC), 

(N.D.

Cal. Aug. 9, 2011). In Reynoso, the Government failed to issue refunds of tax

overpayments and seized funds despite the taxpayer’s repeated refund requests.

When he filed suit and the Government conceded, the taxpayer moved to

recover costs. 

The Government contended that it never took a position

in the administrative proceeding and cited Fla. Country Clubs, Inc. as support

against the awarding of costs. Reynoso, 

, at *4-*5. The court

decided in favor of the taxpayer, finding that the failure to respond to the

taxpayer’s repeated refund requests was tantamount to a denial of those requests.

      For similar reasons, petitioner contends that it incurred “administrative

costs” under section 7430 even though it never received a notice or letter. See sec.

7430(c)(2). Petitioner urges us to find that administrative costs are not limited to

those incurred after the issuance or receipt of a notice or letter. To do so,

however, we would have to find an unwritten exception to the statute and hold that

the notice or letter requirement is inapposite when the claim for administrative
                                          - 14 -

costs rests on the fact that the IRS has failed to act. See Reynoso, 

.

      We need not reach a decision regarding either of petitioner’s contentions,

however, because petitioner has provided evidence only of litigation costs. The

invoice matching the amount requested in administrative costs shows a first entry

dated well after the filing of the Form 1023. Petitioner’s counsel explicitly stated

that petitioner was not charged for the time spent trying to obtain a schedule for

the determination of tax-exempt status. The work described in the invoice relates

to “litigation”, the “petition”, the “court proceeding”, and declaratory judgments.

Under section 301.7430-4(c)(3)(i), Proced. & Admin. Regs., costs “incurred in

connection with the preparation and filing of a petition with the United States Tax

Court” are litigation costs, not administrative costs.7 The work described in the

relevant invoice was performed in connection with the preparation and filing of

the petition. Thus, petitioner has presented evidence only of litigation costs, not

administrative costs.

      For the reasons described above, petitioner has failed to meet its burden of

proving it paid or incurred reasonable administrative costs and is therefore not

entitled to an award of administrative costs under section 7430(a)(1).

      7
          Petitioner has not challenged the validity of the regulation.
                                        - 15 -

II.   Litigation Costs

      Respondent contends petitioner is not entitled to litigation costs because the

Government’s position in the judicial proceeding was substantially justified. As

stated above, this Court uses a bifurcated approach to section 7430 awards.

Accordingly, we evaluate respondent’s position in the instant judicial proceeding

separately from respondent’s position in the administrative proceeding. See

Huffman v. Commissioner, T.C. Memo. 1991-144.

      The Government’s litigation position is defined broadly in section

7430(c)(7)(A) as “the position taken by the United States in a judicial

proceeding”. Unlike with administrative proceedings, section 7430 does not

specify when the United States takes a “position” in a judicial proceeding. Sec.

7430(c)(7). We have held that the Government’s position in a judicial proceeding

is generally established at the filing of its answer. Maggie Mgmt. Co. v.

Commissioner, 

. However, the Government’s position may be

established earlier if the facts so require. See, e.g., Elder v. Commissioner, T.C.

Memo. 2007-281 (finding that counsel established the Government’s position in

correspondence with the taxpayer); Estate of White v. Commissioner, T.C. Memo.

2007-54 (finding that the Government established its position in its second motion

to extend the time in which to file an answer). We also may review the
                                        - 16 -

Government’s position against the backdrop of the administrative actions that

have gone before. See, e.g., Trzeciak v. Commissioner, T.C. Memo. 2012-83,

, at *14 (analyzing whether the Government’s position in the

judicial proceeding was substantially justified given the information exchanged in

the administrative proceeding); Dodson v. United States, No. 3:12-CV-1164-J-34-

JRK, 

, at *7 (M.D. Fla. Dec. 9, 2013) (stating that the

Government’s “contention that its inaction cannot be used against it for purposes

of determining whether it was substantially justified is simply unavailing”).

      In the instant case, days after the petition was filed and before filing an

answer, respondent’s counsel informed petitioner’s counsel that respondent would

concede the case. Respondent has shown that his position in the litigation was

substantially justified, and therefore petitioner cannot be treated as the prevailing

party. See Huffman v. 

(noting that the

Government’s conduct is reasonable if the Government concedes in its initial

response to the litigation); Donlon I Dev. Corp. v. United States, 

(C.D. Cal. 1993).

      Petitioner contends respondent’s concession is insufficient to establish that

his position was substantially justified because it followed Government inaction or

arbitrary positions taken during the administrative phase. See Reynoso, 2011 WL
                                        - 17 -

3473366; Grisanti v. United States, No. 3:05CV12-D-A, 

(N.D.

Miss. Oct. 10, 2006). In Grisanti, 

, at *3, the taxpayers filed

suit after the IRS failed to either issue a refund or deny the refund request. Three

weeks after the suit was filed, the Government issued the refund. 

then denied the taxpayers’ claim for administrative costs but awarded litigation

costs. 

In assessing whether the Government was substantially

justified, the court considered how the Government’s position, or lack thereof, in

essence forced the taxpayers to file a court claim in order to secure their refund.

The court explained that the Government could not protect itself by

failing to issue an official administrative ruling and then conceding in the first

three weeks of the court proceeding. Id; see also Powell v. Commissioner, 

, 391-392 (5th Cir. 1986) (“If the IRS takes an arbitrary position and

forces a taxpayer to file a suit, then, after the papers have been filed, becomes

sweet reason, the taxpayer should be permitted to recover the cost of suing.”

(interpreting the previous, nonbifurcated version of section 7430)).

      The District Court’s analysis in Grisanti, however, is inconsistent with the

bifurcated approach adopted and repeatedly applied by this Court, which evaluates

the Government’s litigating position on the basis of its actions after the filing of

the petition. See St. Claire v. Commissioner, T.C. Memo. 2016-192; Elder v.
                                        - 18 -

Commissioner, T.C. Memo. 2007-281; Estate of White v. Commissioner, T.C.

Memo. 2007-54. Evaluated on that basis, the Government’s litigation position

here, prompt concession, cannot be criticized and was “substantially justified”.

      We do sympathize with petitioner. Section 7428 was enacted because

Congress recognized that “[m]ost organizations hoping to qualify for exempt

status find it imperative to obtain a favorable ruling letter” from the IRS; doing so

“assure[s] potential donors in advance that contributions to the organization will

qualify as charitable deductions”. H.R. Rept. No. 94-658, at 283 (1975), 1976-3

C.B. (Vol. 2) 695, 975; see also Bob Jones Univ. v. Simon, 

, 749-750

(1974). Congress intended section 7428 “to facilitate relatively prompt judicial

review”, H.R. Rept. No. 94-658, supra at 286, 1976-3 C.B. (Vol. 2) at 978, and the

statute expressly provides that an organization applying for tax exempt status may

file suit if the IRS has not ruled after 270 days, sec. 7428(b)(2). Petitioner waited

well over 14 months after it applied, and even then the IRS declined to give

petitioner any assurance that a ruling would be forthcoming. We cannot criticize

petitioner for then filing a petition; and the IRS’ almost immediate issuance of a

determination and concession indicates that petitioner should not have been put to

the trouble and expense of doing so.
                                          - 19 -

      Congress amended section 7430 to allow for the awarding of costs in

declaratory judgment proceedings, see supra note 3, but only where the

Government’s position is not “substantially justified”. While we recognize that

section 7430 leaves a gap in coverage in circumstances such as this one, it is not

our place to provide a remedy. See, e.g., Pac. Fisheries, Inc. v. United States, 

, 1111 (9th Cir. 2007) (“Although the IRS’s issuance of the

administrative summonses forced the taxpayers into litigation, we see no fees

remedy for them in the judicial proceeding. We conclude that their case falls into

a gap in the statute, but it is not our role to bridge that gap.”). In the instant

judicial proceeding, because respondent’s counsel promptly conceded the case, the

Government’s position was substantially justified, and petitioner is not a

prevailing party entitled to recover litigation costs.8

      8
       Respondent additionally contends that even if we were to find that his
position was not substantially justified, petitioner has failed to prove that it
incurred reasonable litigation costs. See sec. 7430(a)(2); Cooley v. Commissioner,
T.C. Memo. 2012-164; Vasquez v. Commissioner, T.C. Memo. 2007-6, 

, at *20, aff’d, 284 F. App’x 381 (9th Cir. 2008). Two of the invoices
submitted do not list petitioner as the client to be billed; the multiple invoices with
repeating invoice numbers and varying contents suggest a level of informality
inconsistent with a legal obligation for payment; and the “Total Due” in the final
invoice shows that at the time the motion was filed, petitioner had not paid any of
the fees and costs requested. Furthermore, petitioner’s attorneys’ billing rates are
higher than the hourly rate cap in sec. 7430(c)(1)(B)(iii), see also O’Bryon v.
Commissioner, T.C. Memo. 2000-379, although the statutory cap may be waived
                                                                           (continued...)
                                         - 20 -

III.   Conclusion

       Petitioner failed to provide evidence of any reasonable administrative costs

incurred in the administrative proceeding and cannot be treated as the prevailing

party in the judicial proceeding. The Government’s concession within days of the

filing of the petition was a substantially justified position in the judicial

proceeding, irrespective of its previous actions. Accordingly, petitioner is entitled

to neither administrative nor litigation costs.


                                                        An appropriate order and

                                                  decision will be entered.




       8
        (...continued)
if “the court determines that * * * a special factor, such as the limited availability
of qualified attorneys for such proceeding, the difficulty of the issues presented in
the case, or the local availability of tax expertise, justifies a higher rate”, sec.
7430(c)(1)(B)(iii); United States v. Guess, 

, 990 (2005).
Because we find that petitioner is not entitled to litigation costs, we need not
decide whether petitioner paid or incurred litigation costs or whether the claimed
fees are reasonable.