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Abstract

The Tax Court in Phillips (referred to as Phillips II) has set helpful guidelines for making a determination of when the IRS has taken a position which is not substantially justified. This is one of the tests that must be satisfied before a court of proper jurisdiction can grant a motion for litigation costs pursuant to Section 7430. Phillips I also addresses the issue of settlement attempts, and whether they are needed to exhaust administrative remedies, which is a further requirement for Section 7430 treatment. The following discussion describes the legislative purpose of Section 7430 and its effectiveness in promoting fee-shifting. Attention will be focused upon Phillips and other cases in analyzing the tests of Section 7430.

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