[Federal Register Volume 74, Number 226 (Wednesday, November 25, 2009)]
[Proposed Rules]
[Pages 61589-61596]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-27948]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 301
[REG-111833-99]
RIN 1545-AX46
Regulations Under I.R.C. Section 7430 Relating to Awards of
Administrative Costs and Attorneys Fees
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking and notice of public hearing.
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SUMMARY: This document contains proposed regulations relating to awards
of administrative costs and attorneys fees under section 7430 to
conform to the amendments made in the Taxpayer Relief Act of 1997 and
the IRS Restructuring and Reform Act of 1998. The regulations affect
taxpayers seeking attorneys fees and costs. This document also provides
notice of a public hearing on these proposed regulations.
DATES: Written or electronic comments must be received by February 8,
2010. Outlines of topics to be discussed at the public hearing
scheduled for 10 a.m. on March 10, 2010 must be received by February
10, 2010.
ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-111833-99), room
5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station,
Washington, DC 20044. Submissions may be hand-delivered Monday through
Friday between the hours of 8 a.m. and 4 p.m. to: CC:PA:LPD:PR (REG-
111833-99), Courier's Desk, Internal Revenue Service, 1111 Constitution
Avenue, NW., Washington, DC. Alternatively, taxpayers may submit
comments electronically via the Federal eRulemaking Portal at http://www.regulations.gov (IRS REG-111833-99). The public hearing will be
held in the Internal Revenue Building, Room 2615, 1111 Constitution
Avenue, NW., Washington, DC.
FOR FURTHER INFORMATION CONTACT: Concerning the hearing, submission of
written comments, and to be placed on the building access list to
attend the hearing, contact Regina Johnson, (202) 622-7180; concerning
the proposed regulations, contact Ronald J. Goldstein (202) 622-4910
(not toll-free numbers).
Background and Explanation of Provisions
The proposed amendments to the Treasury Regulations incorporate the
1997 and 1998 amendments to section 7430 of the Internal Revenue Code
relating to awards of attorneys fees. These amendments were enacted as
part of the Taxpayer Relief Act of 1997, Public Law 105-34, 111 Stat.
788, and the IRS Restructuring and Reform Act of 1998, Public Law 105-
206, 112 Stat. 685.
The Taxpayer Relief Act of 1997 (TRA) contained several amendments
to section 7430 that are addressed in the proposed amendments to the
regulations. First, the TRA provided that a taxpayer has ninety days
after the date the IRS mails to the taxpayer a final decision
determining tax, interest or penalty, to file an application with the
IRS to recover administrative costs. Second, a taxpayer has ninety days
after the date the IRS mails to the taxpayer, by certified or
registered mail, a final adverse decision regarding an award of
administrative costs, to file a petition with the Tax Court. Third, the
TRA clarified the application of the net worth requirements by
providing that individuals filing joint returns should be treated as
separate taxpayers for purposes of determining net worth. The TRA added
trusts to the list of taxpayers subject to the net worth requirements
and also specified the date on which the net worth determination should
be made.
The TRA also added section 7436 to the Code, which gives the Tax
Court jurisdiction in certain employment tax cases. Under section 7436,
if the IRS determines in connection with an audit that (1) one or more
individuals performing services for the taxpayer are employees of the
taxpayer or (2) the taxpayer is not entitled to relief from employment
taxes under section 530 of the Revenue Act of 1978 with respect to the
individual(s), and the IRS sends a Notice of Determination of Worker
Classification (NDWC) to the taxpayer by certified or registered mail,
the taxpayer may petition the Tax Court to determine (1) whether the
IRS's determination, as set forth in the NDWC, is correct and (2) the
proper amount of employment tax under the determination. Various
restrictions on assessment and collection in section 6213 apply to a
section 7436 proceeding in the same manner as if the NDWC were a notice
of deficiency. Section 7436(d)(2) provides that section 7430 applies to
proceedings brought under section 7436.
The proposed amendments reflect the changes outlined in this
preamble. Additional clarifying changes address the calculation of net
worth. First, the regulation specifies that net worth will be
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. Second, the regulation specifies
which net worth and size limitations apply when a taxpayer is an owner
of an unincorporated business. Third, the regulation has been amended
to clarify the net worth requirement in cases involving partnerships
subject to the unified audit and litigation procedures of sections 6221
through 6234 of the Code (the TEFRA partnership procedures).
The IRS Restructuring and Reform Act of 1998 (RRA) also contained
several amendments affecting section 7430. First, the RRA increased the
hourly rate limitation from $110 per hour to $125 per hour. Second, two
special factors were added that may be considered to increase an
attorney's hourly rate: Difficulty of the issues presented and local
availability of tax experts. Third, the RRA added a provision that
requires a court to consider whether the IRS has lost cases with
substantially similar issues in other circuit courts of appeal in
deciding whether the IRS's position was substantially justified.
Fourth, the RRA created an exception to the requirement that to recover
attorneys fees, the taxpayer must have paid or incurred the fees. The
exception provides that if an individual who is authorized to practice
before the Tax Court or the IRS is representing the taxpayer on a pro
bono basis, then the taxpayer may petition for an award of reasonable
attorneys fees in excess of the amounts that the taxpayer paid or
incurred, as long as the fee award is ultimately paid to the individual
or the individual's employer. Fifth, the period for recovery of
reasonable administrative costs was extended to include costs incurred
after the date on which the first letter of proposed deficiency,
commonly known as a 30-day letter, is mailed to the taxpayer. The
regulations clarify, however, that a taxpayer may be eligible to
recover reasonable administrative costs from the date of the 30-day
letter only if at least one issue (other than recovery of
[[Page 61590]]
administrative costs) remains in dispute as of the date that the IRS
takes a position in the administrative proceeding.
Special Analyses
It has been determined that this notice of proposed rulemaking is
not a significant regulatory action as defined in Executive Order
12866. Therefore, a regulatory assessment is not required. It also has
been determined that section 553(b) of the Administrative Procedure Act
(5 U.S.C. chapter 5) does not apply to these regulations and, because
these regulations do not impose on small entities a collection of
information requirement, the Regulatory Flexibility Act (5 U.S.C.
chapter 6) does not apply. Therefore, a Regulatory Flexibility Analysis
is not required. Pursuant to section 7805(f) of the Internal Revenue
Code, this regulation has been submitted to the Chief Counsel for
Advocacy of the Small Business Administration for comment on its impact
on small business.
Comments and Public Hearing
Before these proposed regulations are adopted as final regulations,
consideration will be given to any written comments (a signed original
and eight (8) copies) or electronic comments that are submitted timely
to the IRS. The IRS and Treasury Department specifically request
comments on the clarity of the proposed rules and how it may be made
easier to understand. All public comments will be made available for
public inspection and copying.
A public hearing has been scheduled for 10 a.m. on March 10, 2010
in the Internal Revenue Building, Room 2615, 1111 Constitution Avenue,
NW., Washington, DC. Due to building security procedures, visitors must
enter at the Constitution Avenue entrance. In addition, all visitors
must present photo identification to enter the building. Because of
access restrictions, visitors will not be admitted beyond the immediate
entrance area more than 30 minutes before the hearing starts. For
information about having a visitor's name placed on the building access
list to attend the hearing, see the FOR FURTHER INFORMATION CONTACT
caption.
An outline of the topics to be discussed and the time to be devoted
to each topic (a signed original and eight (8) copies) must be
submitted by any person that wishes to present oral comments at the
hearing. Outlines must be received by February 10, 2010.
The rules of 26 CFR 601.601(a)(3) apply to the hearing. A period of
10 minutes will be allotted to each person for making comments.
An agenda showing the scheduling of the speakers will be prepared
after the deadline for receiving requests to speak has passed. Copies
of the agenda will be available free of charge at the hearing.
Drafting Information
The principal author of these regulations is Ronald J. Goldstein,
Office of Associate Chief Counsel (Procedure and Administration).
List of Subjects in 26 CFR Part 301
Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income
taxes, Penalties, Reporting and recordkeeping requirements.
Proposed Amendments to the Regulations
Accordingly, 26 CFR part 301 is proposed to be amended as follows:
PART 301--PROCEDURE AND ADMINISTRATION
Paragraph 1. The authority citation for part 301 continues to read
in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 301.7430-0 is amended by:
1. Adding a new entry for Sec. 301.7430-3(c)(4).
2. Adding new entries for Sec. 301.7430-4(b)(3)(iii)(A) through
(F) and (d).
3. Revising the entries for Sec. 301.7430-5.
4. Revising the section heading for Sec. 301.7430-6.
5. Adding new entries for Sec. Sec. 301.7430-7 and 301.7430-8.
The additions and revisions read as follows:
Sec. 301.7430-0 Table of contents.
* * * * *
Sec. 301.7430-3 Administrative proceeding and administrative
proceeding date.
* * * * *
(c) * * *
(4) First letter of proposed deficiency that allows the taxpayer an
opportunity for administrative review in the Office of Appeals.
* * * * *
Sec. 301.7430-4 Reasonable administrative costs.
* * * * *
(b) * * *
(3) * * *
(iii) * * *
(A) In general.
(B) Special factor.
(C) Limited availability.
(D) Local availability of tax expertise.
(E) Difficulty of the issues.
(F) Example.
(c) * * *
(d) Pro bono services.
(1) In general.
(2) Requirements.
(3) Nominal fee.
(4) Payment when services provided for a nominal fee.
(5) Requirements.
(6) Hourly rate.
(7) Examples.
Sec. 301.7430-5 Prevailing party.
(a) In general.
(b) Position of the Internal Revenue Service.
(c) Examples.
(d) Substantially justified.
(1) In general.
(2) Position in courts of appeal.
(3) Examples.
(4) Included costs.
(5) Examples.
(6) Exception.
(7) Presumption.
(e) Amount in controversy.
(f) Most significant issue or set of issues presented.
(1) In general.
(2) Example.
(g) Net worth and size limitations.
(1) Individuals.
(2) Estates and trusts.
(3) Others.
(4) Special rule for charitable organizations and certain
cooperatives.
(5) Special rule for TEFRA partnerships.
(h) Determination of prevailing party.
(i) Examples.
Sec. 301.7430-6 Effective/applicability dates.
Sec. 301.7430-7 Qualified offers.
(a) In general.
(b) Requirements for treatment as a prevailing party based upon
having made a qualified offer.
(1) In general.
(2) Liability under the last qualified offer.
(3) Liability pursuant to the judgment.
(c) Qualified offer.
(1) In general.
(2) To the United States.
(3) Specifies the offered amount.
(4) Designated at the time it is made as a qualified offer.
(5) Remains open.
(6) Last qualified offer.
(7) Qualified offer period.
(8) Interest as a contested issue.
(d) [Reserved].
(e) Examples.
(f) Effective date.
Sec. 301.7430-8 Administrative costs incurred in damage actions for
violations of section 362 or 524 of the Bankruptcy Code.
(a) In general.
[[Page 61591]]
(b) Prevailing party.
(c) Administrative proceeding.
(d) Costs incurred after filing of bankruptcy petition.
(e) Time for filing claim for administrative costs.
(f) Effective date.
Par. 3. Section 301.7430-1 is amended by:
1. Revising paragraphs (b)(1)(ii)(A), (d)(1)(i), (d)(1)(ii) and
(d)(2) introductory text.
2. Removing the language ``district director'' in paragraphs
(f)(2)(i), (f)(3)(ii), (f)(3)(iii), (f)(4)(i) and (g) Examples 6, 7 and
8 and adding the language ``Internal Revenue Service office'' in its
place in all locations.
3. Removing the language ``such'' in the second sentence of
paragraph (g) Example 9 and adding the language ``these'' in its place.
The revisions read as follows:
Sec. 301.7430-1 Exhaustion of administrative remedies.
* * * * *
(b) * * *
(1) * * *
(ii) * * *
(A) Requests an Appeals office conference in accordance with
Sec. Sec. 601.105 and 601.106 of this chapter or any successor
published guidance; and
* * * * *
(d) * * *
(1) * * *
(i) The party follows all applicable Internal Revenue Service
procedures for contesting the matter (including filing a written
protest or claim, requesting an administrative appeal, and
participating in an administrative hearing or conference); or
(ii) If there are no applicable Internal Revenue Service
procedures, the party submits to the area director of the area having
jurisdiction over the dispute a written claim for relief reciting facts
and circumstances sufficient to show the nature of the relief requested
and that the party is entitled to the requested relief; and the area
director has denied the claim for relief in writing or failed to act on
the claim within a reasonable period after the claim is received by the
area director.
(2) For purposes of paragraph (d)(1)(ii) of this section, a
reasonable period is--
* * * * *
Par. 4. Section 301.7430-2 is amended by:
1. Adding the language ``from the Internal Revenue Service'' at the
end of the last sentence of paragraph (a).
2. Removing the language ``such'' in the fourth and fifth sentences
of paragraph (b)(2) and adding the language ``these'' in its place in
both locations.
3. Removing the ``;'' at the end of paragraph (c)(3)(i)(B) and
adding a ``.'' in its place.
4. Adding a new sentence at the end of paragraphs (c)(3)(i)(B),
(c)(3)(i)(E) and (c)(7).
5. Revising paragraphs (c)(3)(ii)(C), (c)(5) and (e).
6. Adding new paragraph (c)(3)(iii)(C).
7. Removing the language ``which'' in the first sentence of
paragraph (c)(4) and adding the language ``that'' in its place.
8. Removing the language ``such'' in the second sentence of
paragraph (c)(6) and adding the language ``the'' in its place.
The additions and revisions read as follows:
Sec. 301.7430-2 Requirements and procedures for recovery of
reasonable administrative costs.
* * * * *
(c) * * *
(3) * * *
(i) * * *
(B) * * * For costs incurred after January 18, 1999, if the
taxpayer alleges that the United States has lost in courts of appeal
for other circuits on substantially similar issues, the taxpayer must
provide the full name of the case, volume and pages of the reporter in
which the opinion appears, the circuit in which the case was decided,
and the year of the opinion;
* * * * *
(E) * * * This statement must identify whether the representation
is on a pro bono basis as defined in Sec. 301.7430-4(d) and, if so, to
whom payment should be made. Specifically, the statement must direct
whether payment should be made to the taxpayer's representative or to
the representative's employer.
(ii) * * *
(C) For costs incurred after January 18, 1999, if more than $125
per hour as adjusted for increases in the cost of living pursuant to
Sec. 301.7430-4(b)(3) is claimed for the fees of a representative in
connection with the administrative proceeding, an affidavit stating
that a special factor described in Sec. 301.7430-4(b)(3) is
applicable, such as the difficulty of the issues presented in the case
or the lack of local availability of tax expertise. If a special factor
is claimed based on specialized skills and distinctive knowledge as
described in Sec. 301.7430-4(b)(2)(ii), the affidavit must state--
(1) Why the specialized skills and distinctive knowledge were
necessary in the representation;
(2) That there is a limited availability of representatives
possessing these specialized skills and distinctive knowledge; and
(3) How the education and experience qualifies the representative
as someone with the necessary specialized skills and distinctive
knowledge.
(iii) * * *
(C) In cases of pro bono representation, time records similar to
billing records, detailing the time spent and work completed must be
submitted for the requested fees.
* * * * *
(5) Period for requesting costs from the Internal Revenue Service.
To recover reasonable administrative costs pursuant to section 7430 and
this section, the taxpayer must file a written request for costs within
90 days after the date the final adverse decision of the Internal
Revenue Service with respect to all tax, additions to tax, interest,
and penalties at issue in the administrative proceeding is mailed or
otherwise furnished to the taxpayer. For purposes of this section,
interest means the interest that is specifically at issue in the
administrative proceeding independent of the taxpayer's objections to
the underlying tax imposed. The final decision of the Internal Revenue
Service for purposes of this section is the document that resolves the
tax liability of the taxpayer with regard to all tax, additions to tax,
interest, and penalties at issue in the administrative proceeding (such
as a Form 870 or closing agreement), or a notice of assessment for that
liability (such as the notice and demand under section 6303), whichever
is earlier mailed or otherwise furnished to the taxpayer. For purposes
of this section, if the 90th day falls on a Saturday, Sunday, or a
legal holiday, the 90-day period shall end on the next succeeding day
that is not a Saturday, Sunday, or a legal holiday as defined by
section 7503.
* * * * *
(7) * * * If the notice of decision denying (in whole or in part)
an award for reasonable administrative costs was mailed by the Internal
Revenue Service via certified mail or registered mail, a taxpayer may
obtain judicial review of that decision by filing a petition for review
with the Tax Court prior to the 91st day after the mailing of the
notice of decision.
* * * * *
(e) * * *
Example 1. Taxpayer A receives a notice of proposed deficiency
(30-day letter). A requests and is granted Appeals office
consideration. Appeals requests that A submit certain documents as
substantiation for the tax matters at issue. Appeals determines that
the information submitted is
[[Page 61592]]
insufficient. Appeals then issues a notice of deficiency. After
receiving the notice of deficiency but before the 90-day period for
filing a petition with the Tax Court has expired, A convinces
Appeals that the information submitted during the review by Appeals
is sufficient and, therefore, the notice of deficiency is incorrect
and A owes no additional tax. Appeals then closes the case showing a
zero deficiency and mails A a notice to this effect. Assuming that
all of the other requirements of section 7430 are satisfied, A may
recover reasonable administrative costs incurred after the date of
the 30-day letter (the administrative proceeding date). To recover
these costs, A must file a request for administrative costs with the
Appeals office personnel who settled A's tax matter, or if that
person is unknown to A, with the Area Director of the area that
considered the underlying matter, within 90 days after the date of
mailing of the Office of Appeals' final decision that A owes no
additional tax.
Example 2. Taxpayer B files a request for an abatement of
interest pursuant to section 6404 and the regulations thereunder.
The Area Director issues a notice of proposed disallowance of the
abatement request (akin to a 30-day letter). B requests and is
granted Appeals office consideration. No agreement is reached with
Appeals and the Office of Appeals issues a notice of disallowance of
the abatement request. B does not file suit in the Tax Court, but
instead contacts the Appeals office within 180 days after the
mailing date of the notice of disallowance of the abatement request
to attempt to reverse the decision. B convinces the Appeals office
that the notice of disallowance is in error. The Appeals office
agrees to abate the interest and mails the taxpayer a notification
of this decision. The mailing date of the notification from Appeals
of the decision to abate interest commences the 90-day period from
which the taxpayer may request administrative costs. Assuming that
all of the other requirements of section 7430 are satisfied, B may
recover reasonable administrative costs incurred after the date of
the notice of proposed disallowance of the abatement request (the
administrative proceeding date). To recover these costs, B must file
a request for costs with the Appeals office personnel who settled
B's tax matter, or if that person is unknown to B, with the Area
Director of the area that considered the underlying matter within 90
days after the date of mailing of the Office of Appeals' final
decision that B is entitled to abatement of interest.
Example 3. Taxpayer C receives a notice of proposed adjustment
and employment tax 30-day letter. C requests and is granted Appeals
office consideration. Appeals requests that C submit certain
documents to support C's position in the tax matters at issue.
Appeals determines that the documents submitted are insufficient.
Appeals then issues a notice of determination of worker
classification. After receiving the notice of determination but
before the 90-day period for filing a petition with the Tax Court
has expired, C convinces Appeals that the documents submitted during
the review by Appeals adequately support its position and,
therefore, C owes no additional employment tax. Appeals then closes
the case showing a zero tax adjustment and mails C a no-change
letter. Assuming that all of the other requirements of section 7430
are satisfied, C may recover reasonable administrative costs
incurred after the date of the notice of proposed adjustment and 30-
day letter (the administrative proceeding date). To recover these
costs, C must file a request for administrative costs with the
Appeals office personnel who settled C's tax matter, or if that
person is unknown to C, with the Area Director of the area that
considered the underlying matter, within 90 days after the date of
mailing of the Office of Appeals' final decision that C owes no
additional tax.
Par. 5. Section 301.7430-3 is amended by:
1. Revising paragraphs (b), (c)(1), (c)(3) and (d).
2. Adding paragraph (c)(4).
The addition and revisions read as follows:
Sec. 301.7430-3 Administrative proceeding and administrative
proceeding dates.
* * * * *
(b) Collection action. A collection action generally includes any
action taken by the Internal Revenue Service to collect a tax (or any
interest, additional amount, addition to tax, or penalty, together with
any costs in addition to the tax) or any action taken by a taxpayer in
response to the Internal Revenue Service's act or failure to act in
connection with the collection of a tax (including any interest,
additional amount, addition to tax, or penalty, together with any costs
in addition to the tax). A collection action for purposes of section
7430 and this section includes any action taken by the Internal Revenue
Service under Chapter 64 of Subtitle F to collect a tax. Collection
actions also include collection due process hearings under sections
6320 and 6330 (unless the underlying tax liability is properly at
issue), and those actions taken by a taxpayer to remedy the Internal
Revenue Service's failure to release a lien under section 6325 or to
remedy any unauthorized collection action as defined by section 7433,
except those collection actions described by section 7433(e). An action
or procedure directly relating to a claim for refund after payment of
an assessed tax is not a collection action.
(c) Administrative proceeding date--(1) General rule. For purposes
of section 7430 and the regulations thereunder, the term administrative
proceeding date means 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;
(ii) The date of the notice of deficiency; or
(iii) The date on which the first letter of proposed deficiency
that allows the taxpayer an opportunity for administrative review in
the Internal Revenue Service Office of Appeals is sent.
(2) * * *
(3) Notice of deficiency. A notice of deficiency is a notice
described in section 6212(a), including a notice rescinded pursuant to
section 6212(d). For purposes of determining reasonable administrative
costs under section 7430 and the regulations thereunder, the following
will be treated as a notice of deficiency:
(i) A notice of final partnership administrative adjustment
described in section 6223(a)(2).
(ii) A notice of determination of worker classification issued
pursuant to section 7436.
(iii) A final notice of determination denying innocent spouse
relief issued pursuant to section 6015.
(4) First letter of proposed deficiency that allows the taxpayer an
opportunity for administrative review in the Office of Appeals.
Generally, the first letter of proposed deficiency that allows the
taxpayer an opportunity for administrative review in the Office of
Appeals is the first letter issued to the taxpayer that describes the
proposed adjustments and advises the taxpayer of the opportunity to
contact the Office of Appeals. It also may be a claim disallowance or
the first letter of determination that allows the taxpayer an
opportunity for administrative review in the Office of Appeals.
(d) Examples. The provisions of this section are illustrated by the
following examples:
Example 1. Taxpayer A receives a notice of proposed deficiency
(30-day letter). A files a request for and is granted an Appeals
office conference. At the Appeals conference no agreement is reached
on the tax matters at issue. The Office of Appeals then issues a
notice of deficiency. Upon receiving the notice of deficiency, A
does not file a petition with the Tax Court. Instead, A pays the
deficiency and files a claim for refund. The claim for refund is
considered by the Internal Revenue Service and the Area Director
issues a notice of proposed claim disallowance. A requests and is
granted Appeals office consideration. A convinces Appeals that A's
claim is correct and Appeals allows A's claim. A may recover
reasonable administrative costs incurred on or after the date of the
notice of proposed deficiency (30-day letter), but only if the other
requirements of section 7430 and the regulations thereunder are
satisfied. A cannot recover costs incurred prior to the date of the
30-day letter because these costs were incurred before the
administrative proceeding date.
[[Page 61593]]
Example 2. Taxpayer B files an individual income tax return
showing a balance due. No payment is made with the return and the
Internal Revenue Service assesses the amount shown on the return.
The Internal Revenue Service issues a notice of levy pursuant to
section 6330. B requests and is granted a Collection Due Process
(CDP) hearing. In connection with the CDP hearing, B enters into an
installment agreement as a collection alternative. The costs that B
incurred in connection with the CDP hearing were not incurred in an
administrative proceeding, but rather in a collection action.
Accordingly, B may not recover those costs as reasonable
administrative costs under section 7430 and the regulations
thereunder.
Par. 6. Section 301.7430-4 is amended by:
1. Removing the language ``such'' in the second and fifth sentences
of paragraph (b)(2)(ii) and adding the language ``that'' in its place
in both locations.
2. Revising paragraphs (b)(3)(i), (b)(3)(iii)(B), and (c)(4)
Examples 1 and 2.
3. Removing the language ``$110'' from the first and second
sentences in paragraph (b)(3)(ii) and adding the language ``$125'' in
its place in both locations.
4. Revising the first sentence in paragraph (b)(3)(iii)(C).
5. Redesignating paragraph (b)(3)(iii)(D) as paragraph
(b)(3)(iii)(F) and revising newly-designated paragraph (b)(3)(iii)(F).
6. Adding new paragraphs (b)(3)(iii)(D), (b)(3)(iii)(E) and (d).
7. Removing the language ``Such'' in the third sentence of
paragraph (c)(2)(i) and adding the language ``These'' in its place.
8. Removing the language ``$110'' from the second and third
sentences in paragraph (c)(2)(ii) and adding the language ``$125'' in
its place in both locations.
9. Removing the language ``which'' in the fourth sentence of
paragraph (c)(2)(i) and adding the language ``that'' in its place.
The additions and revisions read as follows:
Sec. 301.7430-4 Reasonable administrative costs.
* * * * *
(b) * * *
(3) Limitation on fees for a representative--(i) In general. Except
as otherwise provided in this section, fees incurred after January 18,
1999, and described in paragraph (b)(1)(iv) of this section that are
recoverable under section 7430 and the regulations thereunder as
reasonable administrative costs may not exceed $125 per hour increased
by a cost of living adjustment (and if appropriate, a special factor
adjustment).
* * * * *
(iii) * * *
(B) Special factor. A special factor is a factor, other than an
increase in the cost of living, that justifies an increase in the $125
per hour limitation of section 7430(c)(1)(B)(iii). The undesirability
of the case, the work and the ability of counsel, the results obtained,
and customary fees and awards in other cases, are factors applicable to
a broad spectrum of litigation and do not constitute special factors
for the purpose of increasing the $125 per hour limitation. By
contrast, the limited availability of a specially qualified
representative for the proceeding, the difficulty of the issues, and
the limited local availability of tax expertise are special factors
justifying an increase in the $125 per hour limitation.
(C) Limited availability. Limited availability of a specially
qualified representative is established by demonstrating that a
specially qualified representative for the proceeding is not available
at the $125 per hour rate (as adjusted for an increase in the cost of
living). * * *
(D) Limited local availability of tax expertise. Limited local
availability of tax expertise is established by demonstrating that a
representative possessing tax expertise is not available in the
taxpayer's geographical area. Initially, this showing may be made by
submission of an affidavit signed by the taxpayer, or by the taxpayer's
counsel, that no representative possessing tax expertise practices
within a reasonable distance from the taxpayer's principal residence or
principal office. The hourly rate charged by representatives in the
geographical area is not relevant in determining whether tax expertise
is locally available. If the Internal Revenue Service challenges this
initial showing, the taxpayer may submit additional evidence to
establish the limited local availability of a representative possessing
tax expertise.
(E) Difficulty of the issues. In determining whether the difficulty
of the issues justifies an increase in the $125 per hour limitation on
the applicable hourly rate, the Internal Revenue Service will consider
the following factors:
(1) The number of different provisions of law involved in each
issue.
(2) The complexity of the particular provision or provisions of law
involved in each issue.
(3) The number of factual issues present in the proceeding.
(4) The complexity of the factual issues present in the proceeding.
(F) Example. The provisions of this section are illustrated by the
following example:
Example. Taxpayer A is represented by B, a CPA and attorney with
a LL.M. Degree in Taxation with Highest Honors and who regularly
handles cases dealing with TEFRA partnership issues. B represents A
in an administrative proceeding involving TEFRA partnership issues
that is subject to the provisions of this section. Assuming the
taxpayer qualifies for an award of reasonable administrative costs
by meeting the requirements of section 7430, the amount of the award
attributable to the fees of B may not exceed the $125 per hour
limitation (as adjusted for the cost of living), absent a special
factor. B is not a specially qualified representative because
extraordinary knowledge of the tax laws does not constitute
distinctive knowledge or a unique and specialized skill constituting
a special factor. A special factor must be comprised of nontax
expertise unless the taxpayer establishes the limited local
availability of tax expertise.
* * * * *
(c) * * *
(4) * * *
Example 1. After incurring fees for representation during the
Internal Revenue Service's examination of taxpayer A's income tax
return, A receives a notice of proposed deficiency (30-day letter).
A files a request for and is granted an Appeals office conference.
At the conference no agreement is reached on the tax matters at
issue. The Internal Revenue Service then issues a notice of
deficiency. Upon receiving the notice of deficiency, A discontinues
A's administrative efforts and files a petition with the Tax Court.
A's costs incurred before the date of the mailing of the 30-day
letter are not reasonable administrative costs because they were
incurred before the administrative proceeding date. Similarly, A's
costs incurred in connection with the preparation and filing of a
petition with the Tax Court are litigation costs and not reasonable
administrative costs.
Example 2. Assume the same facts as in Example 1 except that
after A receives the notice of deficiency, A recontacts Appeals and
Appeals agrees with A. If A seeks administrative costs, A may
recover costs incurred after the date of the mailing of the 30-day
letter, costs incurred in recontacting Appeals after the issuance of
the notice of deficiency, and costs incurred up to the time the Tax
Court petition was filed, as reasonable administrative costs, but
only if the other requirements of section 7430 and the regulations
thereunder are satisfied. The costs incurred before the date of the
mailing of the 30-day letter are not reasonable administrative costs
because they were incurred before the administrative proceeding
date, as set forth in Sec. 301.7430-3(c)(1)(iii). A's costs
incurred in connection with the filing of a petition with the Tax
Court are not reasonable administrative costs because those costs
are litigation costs. Similarly, A's costs incurred after the filing
of the petition are not reasonable administrative costs, as they are
litigation costs.
[[Page 61594]]
(d) Pro bono services--(1) In general. Fees recoverable under
section 7430 and the regulations thereunder as reasonable
administrative costs may exceed the attorneys' fees paid or incurred by
the prevailing party if these fees are less than the reasonable
attorneys' fees because an individual is representing the prevailing
party on a pro bono basis. In addition to attorneys' fees, reasonable
costs incurred or paid by the individual providing the pro bono
services that are normally billed separately also may be recovered
under this section.
(2) Requirements. Pro bono representation is established by
demonstrating--
(i) Legal services were provided for no fee or for a fee that
(taking into account all the facts and circumstances) constitutes a
nominal fee;
(ii) The legal services were provided to or on behalf of either--
(A) Persons of limited financial means who meet the eligibility
requirements for programs funded by the Legal Services Corporation as
set forth in 45 CFR 1611; or
(B) Organizations operating primarily to address the needs of
persons with limited means if payment of a standard legal fee would
significantly deplete the person's financial resources; and
(iii) The service provider intended to perform services for no fee
or for a nominal fee from the commencement of the representation.
Intent to perform services for no fee or for a nominal fee may be
demonstrated through documentation such as a retainer agreement. An
individual will not be considered to have represented a client on a pro
bono basis if the facts demonstrate that the individual anticipated a
fee or provided services on a contingency fee basis. The fact that the
service provider intended to seek recovery of fees under section 7430
will not prevent the service provider from satisfying this requirement.
(3) Nominal fee. A nominal fee is defined as one that is slight,
inconsiderable or trifling (taking into account all the facts and
circumstances).
(4) Payment when services provided at no charge or for a nominal
fee. A prevailing party who receives legal services at no charge or for
a nominal fee and who satisfies the requirements under this section is
eligible to receive reasonable fees in excess of the fees actually paid
or incurred and those otherwise meeting the requirements of this
paragraph. Payment will be made to the representative or the
representative's employer.
(5) Recordkeeping. Contemporaneous records must be maintained,
demonstrating the work performed and the time allocated to each task.
These records should contain similar information to billing records.
(6) Hourly rate. For purposes of this section, the hourly rate may
not exceed the lesser of--
(i) The rate prescribed under section 7430(c)(1)(B); or
(ii) The hourly rate customarily charged by the representative in
cases that are not handled on a pro bono basis.
(7) Examples. The provisions of this section are illustrated by the
following examples:
Example 1. Taxpayer A, an attorney, files a petition with the
Tax Court and pays a $60 filing fee. A appears pro se in the court
proceeding. If A prevails, he will not be entitled to an award of
reasonable litigation costs for his services. A is rendering
services on his own behalf, not providing pro bono representation.
His lost opportunity costs are not compensable under section 7430. A
may recover the filing fee as a litigation cost, but only if the
other requirements of section 7430 and the regulations thereunder
are satisfied.
Example 2. Taxpayer retains attorney B with regard to the audit
of taxpayer's individual income tax return. B agrees to represent
taxpayer on a pro bono basis. Under this arrangement, taxpayer pays
to attorney B a nominal fee. The customary hourly rate charged by B
in cases not handled on a pro bono basis is less than the rate
prescribed under section 7430(c)(1)(B). Any award paid to attorney
B, or attorney B's employer, would be limited to attorney B's
customary hourly rate. Thus, attorney B, or attorney B's employer,
would receive the customary hourly rate charged in cases not handled
by attorney B on a pro bono basis rather than the nominal fee
actually paid or incurred by the taxpayer.
Example 3. Assume the same facts in Example 2 except that
attorney B's customary hourly rate exceeds the rate prescribed under
section 7430(c)(1)(B). Any award paid to attorney B, or attorney B's
employer, would be made at the rate prescribed under section
7430(c)(1)(B).
Example 4. Organization C, a low income taxpayer clinic within
the meaning of section 7526, agrees to represent taxpayer on a pro
bono basis. Attorneys employed by C do not have a customary hourly
rate and work exclusively for C. Any award paid to C, for
representation by its attorneys, would be limited to the rate
prescribed under section 7430(c)(1)(B).
Sec. 301.7430-5 [Amended]
Par. 7. For each entry in the table, redesignate the paragraph
designated in the ``Old Paragraph'' column as the new paragraph
designation in the ``New Paragraph'' column to read as follows:
------------------------------------------------------------------------
Old paragraph New paragraph
------------------------------------------------------------------------
301.7430-5(a)(1) 301.7430-5(a)(2)
301.7430-5(a)(2) 301.7430-5(a)(3)
301.7430-5(a)(3) 301.7430-5(a)(4)
301.7430-5(c) 301.7430-5(d)(1)
301.7430-5(c)(2) 301.7430-5(d)(6)
301.7430-5(c)(3) 301.7430-5(d)(7)
301.7430-5(d) 301.7430-5(e)
301.7430-5(e) 301.7430-5(f)(1)
301.7430-5(f)(1) 301.7430-5(g)(1)
301.7430-5(f)(2) 301.7430-5(g)(3)
301.7430-5(f)(3) 301.7430-5(g)(4)
301.7430-5(g) 301.7430-5(h)
------------------------------------------------------------------------
Par. 8. Section 301.7430-5 is amended by:
1. Removing the language ``only if--'' at the end of the
introductory text in paragraph (a) and adding the language ``(other
than by reason of section 7430(c)(4)(E)) only if--'' in its place.
2. Adding new paragraphs (a)(1), (c), (d)(2), (d)(3), (d)(4),
(d)(5), (g)(2) and (g)(5).
3. Revising paragraph (b).
4. Revising the third sentence and removing the language ``(c)(3)''
from the fourth sentence in newly-designated paragraph (d)(7) and
adding the language ``(d)(7)'' in its place.
5. Revising the paragraph heading for newly-designated paragraph
(f)(1) and adding new paragraph (f)(2).
6. Revising newly-designated paragraphs (g)(1) and (g)(3).
7. Removing the language ``Internal Revenue Code'' in the first
sentence of newly-designated paragraph (g)(4) in both places.
8. Removing the language ``such'' in the first sentence of newly-
designated paragraph (h) and adding the language ``an'' in its place.
9. Removing paragraph (h).
The additions and revisions read as follows:
Sec. 301.7430-5 Prevailing party.
(a) * * *
(1) At least one issue (other than recovery of administrative
costs) remains in dispute as of the date that the Internal Revenue
Service takes a position in the administrative proceeding, as described
in paragraph (b) of this section;
* * * * *
(b) Position of the Internal Revenue Service. The position of the
Internal Revenue Service in an administrative proceeding is the
position taken by the Internal Revenue Service as of the earlier of--
(1) The date of the receipt by the taxpayer of the notice of the
decision of the Internal Revenue Service Office of Appeals; or
(2) The date of the notice of deficiency or any date thereafter.
* * * * *
(c) Examples. The provisions of this section may be illustrated by
the following examples:
[[Page 61595]]
Example 1. Taxpayer A receives a notice of proposed deficiency
(30-day letter). A pays the amount of the proposed deficiency and
files a claim for refund. A's claim is considered and a notice of
proposed claim disallowance is issued by the Area Director. A does
not request an Appeals office conference and the Area Director
issues a notice of claim disallowance. A then files suit in a United
States District Court. A cannot recover reasonable administrative
costs because the notice of claim disallowance is not a notice of
the decision of the Internal Revenue Service Office of Appeals or a
notice of deficiency. Accordingly, the Internal Revenue Service has
not taken a position in the administrative proceeding pursuant to
section 7430(c)(7)(B).
Example 2. Taxpayer B receives a notice of proposed deficiency
(30-day letter). B disputes the proposed adjustments and requests an
Appeals office conference. The Appeals office determines that B has
no additional tax liability. B requests administrative costs from
the date of the 30-day letter. B is not the prevailing party and may
not recover administrative costs because all of the proposed
adjustments in the case were resolved as of the date that the
Internal Revenue Service took a position in the administrative
proceeding.
(d) * * *
(2) Position in courts of appeal. Whether the United States has won
or lost an issue substantially similar to the one in the taxpayer's
case in courts of appeal for circuits other than the one to which the
taxpayer's case would be appealable should be taken into consideration
in determining whether the Internal Revenue Service's position was
substantially justified.
(3) Example. The provisions of this section are illustrated by the
following example:
Example. The Internal Revenue Service, in the conduct of a
correspondence examination of taxpayer A's individual income tax
return, requests substantiation from A of claimed medical expenses.
A does not respond to the request and the Service issues a notice of
deficiency. After receiving the notice of deficiency, A presents
sufficient information and arguments to convince a revenue agent
that the notice of deficiency is incorrect and that A owes no tax.
The revenue agent then closes the case showing no deficiency.
Although A incurred costs after the issuance of the notice of
deficiency, A is unable to recover these costs because, as of the
date these costs were incurred, A had not presented relevant
information under A's control and relevant legal arguments
supporting A's position to the appropriate Internal Revenue Service
personnel. Accordingly, the position of the Internal Revenue Service
was substantially justified at the time the costs were incurred.
(4) Included costs. (i) An award of reasonable administrative costs
shall only include costs incurred on or after the earliest of--
(A) The date of the receipt by the taxpayer of the notice of
decision from Appeals;
(B) The date of the notice of deficiency; or
(C) The date on which the first letter of proposed deficiency that
allows the taxpayer an opportunity for administrative review in the
Office of Appeals is sent.
(ii) If the Internal Revenue Service takes a position in an
administrative proceeding, as defined in paragraph (b) of this section,
and the position is not substantially justified, the taxpayer may be
permitted to recover costs incurred before the position was taken, but
not before the dates set forth in this paragraph (d)(4).
(5) Examples. The provisions of this section may be illustrated by
the following examples:
Example 1. Pursuant to section 6672, taxpayer D receives from
the Area Director Collection Operations (Collection) a proposed
assessment of trust fund taxes (Trust Fund Recovery Penalty). D
requests and is granted Appeals office consideration. Appeals
considers the issues and decides to uphold Collection's recommended
assessment. Appeals notifies D of this decision in writing.
Collection then assesses the tax and notice and demand is made. D
timely pays the minimum amount required to commence a court
proceeding, files a claim for refund, and furnishes the required
bond. Collection disallows the claim, but Appeals, on
reconsideration, reverses its original position, thus upholding D's
position. If Appeals concedes its initial determination was not
substantially justified, D may recover administrative costs incurred
on or after the mailing of the proposed assessment of trust fund
taxes, because the proposed assessment is the first determination
letter that allows the taxpayer an opportunity for administrative
review in the Internal Revenue Service Office of Appeals.
Example 2. Taxpayer E receives a notice of proposed deficiency
(30-day letter). E pays the amount of the proposed deficiency and
files a claim for refund. E's claim is considered and a notice of
proposed disallowance is issued by the Area Director. E requests and
is granted Appeals office consideration. No agreement is reached
with Appeals and the Office of Appeals issues a notice of claim
disallowance. E does not file suit in a United States District Court
but instead contacts the Appeals office to attempt to reverse the
decision. E convinces the Appeals officer that the notice of claim
disallowance is in error. The Appeals officer then abates the
assessment. E may recover reasonable administrative costs if the
position taken in the notice of claim disallowance issued by the
Office of Appeals was not substantially justified and the other
requirements of section 7430 and the regulations thereunder are
satisfied. If so, E may recover administrative costs incurred from
the mailing date of the 30-day letter because the requirements of
paragraph (c)(2) of this section are met. E cannot recover the costs
incurred prior to the mailing of the 30-day letter because they were
incurred before the administrative proceeding date.
* * * * *
(7) Presumption. * * * For purposes of this paragraph (d)(7), the
term applicable published guidance means final or temporary
regulations, revenue rulings, revenue procedures, information releases,
notices and announcements published in the Internal Revenue Bulletin
and, if issued to the taxpayer, private letter rulings, technical
advice memoranda, and determination letters (Sec. 601.601(d)(2) of
this chapter). * * *
* * * * *
(f) Most significant issue or set of issues presented--(1) In
general. * * *
(2) Example. The provisions of this section may be illustrated by
the following example:
Example. In the purchase of an ongoing business, Taxpayer F
obtains from the previous owner of the business a covenant not to
compete for a period of five years. On audit of F's individual
income tax return for the year in which the business is acquired,
the Internal Revenue Service challenges the basis assigned to the
covenant not to compete and a deduction taken as a business expense
for a seminar attended by F. Both parties agree that the covenant
not to compete is amortizable over a period of five years; however,
the Internal Revenue Service asserts that the proper basis of the
covenant is $2X while F asserts the basis is $4X. The deduction for
the seminar attended by F was reported on the return in question in
the amount of $7X. The Internal Revenue Service determines that the
deduction for the seminar should be disallowed entirely. In the
notice of deficiency, the Internal Revenue Service adjusts the
amortization deduction to reflect the change to the basis of the
covenant not to compete, and disallows the seminar expense. Thus, of
the two adjustments determined for the year under audit, the
adjustment attributable to the disallowance of the seminar is larger
than that attributable to the covenant not to compete. Due to the
impact on the next succeeding four years, however, the covenant not
to compete adjustment is objectively the most significant issue to
both F and the Internal Revenue Service.
* * * * *
(g) Net worth and size limitations--(1) Individuals. A taxpayer who
is a natural person meets the net worth and size limitations of this
paragraph if the taxpayer's net worth does not exceed two million
dollars. The net worth limitation shall be determined for individuals
using the fair market value of the individual's assets as of the
administrative proceeding date. For purposes of determining net worth,
individuals filing a joint return shall be treated as separate
individuals. Thus,
[[Page 61596]]
individuals filing a joint return will each be subject to a separate
net worth limitation of two million dollars.
(2) Estates and trusts. An estate or a trust meets the net worth
and size limitations of this paragraph if the taxpayer's net worth does
not exceed two million dollars. The net worth of an estate shall be
determined using the fair market value of the assets of the estate as
of the date of the decedent's death provided the date of death is prior
to the date the court proceeding is commenced. The net worth of a trust
shall be determined using the fair market value of the assets of the
trust as of the last day of the last taxable year involved in the
proceeding.
(3) Others. (i) A taxpayer that is a partnership, corporation,
association, unit of local government, or organization (other than an
organization described in paragraph (g)(4) of this section) meets the
net worth and size limitations of this paragraph if, as of the
administrative proceeding date:
(A) The taxpayer's net worth does not exceed seven million
dollars.; and
(B) The taxpayer does not have more than 500 employees.
(ii) A taxpayer who is a natural person and owns an unincorporated
business is subject to the net worth and size limitations contained in
paragraph (g)(3)(i) of this section if the tax at issue (or any
interest, additional amount, addition to tax, or penalty, together with
any costs in addition to the tax) relates directly to the business
activities of the unincorporated business.
(4) * * *
(5) Special rule for TEFRA partnership proceedings. (i) In cases
involving partnerships subject to the unified audit and litigation
procedures of subchapter C of chapter 63 of the Internal Revenue Code
(TEFRA partnership cases), the TEFRA partnership meets the net worth
and size limitations requirements of this paragraph (g) if, on the
administrative proceeding date--
(A) The partnership's net worth does not exceed seven million
dollars; and
(B) The partnership does not have more than 500 employees.
(ii) In addition, each partner requesting fees pursuant to section
7430 must meet the appropriate net worth and size limitations set forth
in paragraph (g)(1), (g)(2) or (g)(3) of this section. For example, if
a partner is an individual, his or her net worth must not exceed two
million dollars as of the administrative proceeding date. If the
partner is a corporation, its net worth must not exceed seven million
dollars and it must not have more than 500 employees.
Par. 9. Section 301.7430-6 is amended by revising the section
heading and adding a new sentence at the end of the paragraph to read
as follows:
Sec. 301.7430-6 Effective/applicability dates.
* * *Sections 301.7430-2(c)(3)(i)(B), (c)(3)(i)(E), (c)(3)(ii)(C),
(c)(3)(iii)(C), (c)(5), (c)(7), (e); 301.7430-3(c)(1), (c)(4), (d);
301.7430-4(b)(3)(i), (b)(3)(iii)(B), (b)(3)(iii)(D), (b)(3)(iii)(E),
(c)(4), (d); and 301.7430-5(a), (b), (c), (d)(2), (d)(3), (d)(4),
(d)(5), (f)(2), (g)(1), (g)(2) and (g)(5), as proposed, apply to costs
incurred and services performed as of the date of publication of a
Treasury decision adopting these rules as final regulations in the
Federal Register.
Par. 10. Section 301.7430-7 is amended by adding new paragraph
(c)(8) and new Examples 16 and 17 to paragraph (e) to read as follows:
Sec. 301.7430-7 Qualified offers.
* * * * *
(c) * * *
(8) Interest as a contested issue. To constitute a qualified offer,
an offer must specify the offered amount of the taxpayer's liability
(determined without regard to interest, unless interest is a contested
issue in the proceeding), as provided in paragraphs (c)(1)(ii) and
(c)(3) of this section. Therefore, a qualified offer generally may only
include an offer to compromise tax, penalties, additions to the tax and
additional amounts. Interest may only be included in a qualified offer
if interest is a contested issue in the proceeding. For purposes of
this section, interest is a contested issue in the proceeding only if
the court in which the proceeding could be brought would have
jurisdiction to determine the amount of interest due on the underlying
tax, penalties, additions to the tax and additional amounts. Examples
of proceedings in which interest might be a contested issue include
proceedings in which the increased interest rate for large corporate
underpayments under section 6621(c) is imposed by the Internal Revenue
Service and interest abatement proceedings brought under section 6404.
Interest is not a contested issue in the proceeding if the court that
would have jurisdiction over the proceeding would not have jurisdiction
to determine the amount or rate of interest, regardless of whether the
taxpayer attempts to raise interest as an issue in the proceeding.
Consequently, interest will not be a contested issue in the vast
majority of tax cases because they merely involve the straight forward
application of statutory interest under section 6601. Accordingly, in
those cases, interest may not be included in the offer.
* * * * *
(e) * * *
Example 16. Qualified offer may not compromise interest unless
it is a contested issue. Taxpayer J receives a notice of deficiency
making an adjustment resulting in a deficiency in tax of $6,500 plus
a penalty of $500. Interest is not a contested issue in the
proceeding. Within the qualified offer period, J submits a written
offer to settle the case for a deficiency of $1,000, including all
taxes, penalties, and interest. The offer states that it is a
qualified offer for purposes of section 7430(g) and that it will
remain open for acceptance by the IRS for a period of 90 days.
Section 7430(g)(2)(B) and paragraph (c)(3) of this section state
that the amount of a qualified offer must be without regard to
interest unless interest is at issue in the proceeding. Since J's
offer attempts to compromise interest, which is not a contested
issue in the proceeding, it is not a qualified offer.
Example 17. Qualified offer based on new defense or legal
theory. Taxpayers K and L received a statutory notice of deficiency
for tax year 2005, a tax year when they were married and filed a
joint income tax return. Taxpayer K files a sole petition claiming
innocent spouse relief and simultaneously submits an offer
purporting to be a qualified offer. The offer states that K is
entitled to innocent spouse relief and offers to settle the 2005
deficiency as to K in the amount of $1,000. K's innocent spouse
claim was not raised during K and L's audit, nor was it raised
during their appeals conference. Additionally, at no time prior to
or contemporaneously with submitting the offer did K file with the
IRS a Form 8857, Request for Innocent Spouse Relief, or otherwise
provide the information specified in Sec. 1.6015-5(a) of this
chapter. K's offer is not a qualified offer because K did not file a
Form 8857 or otherwise provide substantiation or legal and factual
arguments necessary to allow for informed consideration of the
merits of the innocent spouse claim as required by paragraph (c)(4)
of this section, contemporaneously with the offer or prior to making
the offer.
Linda E. Stiff,
Deputy Commissioner for Services and Enforcement.
[FR Doc. E9-27948 Filed 11-24-09; 8:45 am]
BILLING CODE 4830-01-P