Award of Administrative Costs
The rules were expanded for awarding reasonable administrative
costs and certain fees incurred after January 18, 1999.
Qualified offer rule.
You can receive reasonable costs and fees as a prevailing party in
a civil action or proceeding when all the following occur.
- You make a qualified offer to the IRS to settle the case.
- The IRS rejects the offer.
- The tax liability (not including interest) later determined by the Court is not more than the amount of the qualified offer.
Note.
The Court can consider the IRS not to be the prevailing party in a
civil action or proceeding based on the fact that the IRS has lost in
other courts of appeal on substantially similar issues.
Qualified offer.
This is a written offer made by you during the qualified offer
period. It must specify both of the following.
- The amount of your liability (not including
interest).
- That it is a qualified offer when made.
It must also remain open until the earliest of the following dates.
- The date the offer is rejected.
- The date the trial begins.
- 90 days from the date of the offer.
Qualified offer period.
This is the period beginning with the date that the 30-day letter
is mailed by the IRS to you and ending on the date that is 30 days
before the date the case is first set for trial.
Time for awarding costs.
Administrative costs can be awarded for costs incurred after the
earliest of the following dates.
- The date of the notice of deficiency.
- The date the first letter of proposed deficiency is sent that allows you an opportunity to request administrative review in the Appeals Office of IRS.
- The date you receive the Appeals Office of IRS decision.
Attorney fees.
The basic rate of an award for attorney fees has increased from
$110 to $125 ($140 for 2000) per hour and it can be higher in certain
circumstances. Those circumstances now include the difficulty level of
the issues in the case and the availability of tax expertise locally.
The basic rate is subject to adjustment each year.
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Attorney fees now include the fees you paid for the services of
anyone who is authorized to practice before the Tax Court or before
the IRS. In addition, attorney fees can be awarded in civil actions
taken for unauthorized inspection or disclosure of your tax return or
return information. |
Fees can be awarded in excess of the actual amount charged if all
the following apply.
- The fees are charged at less than the $125 ($140 for 2000) basic rate.
- You are represented for no fee, or for a nominal fee, as a pro bono service.
- The award is paid to your representative or to the representative's employer.
Notice of IRS Contact
of Third Parties
The IRS must notify you before they can contact third
parties when examining or collecting your tax liability. Third parties
may include your neighbors, banks, employees, or employers. The IRS
must periodically, and upon your request, provide you with notice of
specific contacts. This is effective for contacts made after January
18, 1999.
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This provision does not apply in the following circumstances.
- When there is a pending criminal investigation.
- When providing notice would jeopardize collection of any tax liability.
- Where providing notice may result in reprisal against any person.
- When you authorized the contact.
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Last Date for Filing Tax Court Petition
Beginning in 1999, each notice that the IRS mails to you must
specify the last date on which you can timely file a petition with the
Tax Court. This date is the 90th day (150th day if the address is
outside of the United States) after the date that the notice of
deficiency is mailed by the IRS.
For more information, see Tax Court under Appeal
Rights in Publication 556,
Examination of Returns, Appeal Rights, and Claims for Refund.
Explanation of Claim for
Refund Disallowance
Beginning January 19, 1999, the IRS must explain to you the
specific reasons why your claim for refund is disallowed or partially
disallowed. This puts into law an existing practice of the IRS.
Claims for refund can be disallowed based on a preliminary review
or an examination by a revenue agent. This means you must receive one
of the following.
- A form explaining that the claim is disallowed for one of the following reasons.
- It was filed late.
- It was based solely on the unconstitutionality of the revenue acts.
- It was waived as part of a settlement.
- It covered a tax year or issues that were part of a closing agreement or an offer in compromise.
- It was related to a return closed by a final court order.
- A revenue agent's report explaining the reasons that the claim is disallowed.
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