Decision rendered October 23, 1996. This matter is before the court on plaintiff's (taxpayer) statement of attorney fees and costs and the Department of Revenue's (department) objections thereto. The court has considered the written memoranda and oral arguments of counsel.
The department objects to taxpayer's claimed attorney fees on the ground they are inflated due to unnecessary discovery. The department asserts that inaccuracies in taxpayer's complaint required the department to engage in substantial discovery to ascertain the accurate facts. The department argues that taxpayer's attorney fees should be reduced to the extent they are attributable to such unnecessary discovery. Taxpayer responds that the department's discovery and concern with the facts was unreasonable in view of the clear legal issue before the court. Taxpayer acknowledges there were some differences in the facts alleged and the facts *Page 22 the parties eventually stipulated to, but asserts that the differences were not great or significant.
1. ORS 305.490 (2)(a) provides that this court may award reasonable attorney fees to a prevailing taxpayer in an income tax case. In Romani v. Dept. of Rev., 10 OTR 64 (1985), this court indicated that taxpayers who withhold information or in other ways are responsible for unnecessary proceedings will be denied attorney fees. The court stated:
"Generally the court will not award attorney fees and expenses where: (a) the taxpayer fails to furnish complete and adequate information to the department as requested or required by law, (b) the taxpayer is uncooperative or lacking in candor in attempting to bring all relevant facts to light and resolve the dispute according to law, or (c) where the taxpayer has failed to maintain adequate records. Likewise, the court will decline to award attorney fees or other expenses where it appears that the taxpayer has been unreasonable, acted unlawfully or in any other circumstance which appears to justify the denial of such awards. Id. at 74.
The court is not persuaded that taxpayer comes within any of theRomani tests. Taxpayer focused on the legal issue, and the department appears to have focused on the facts. There is no indication that either of the parties acted in bad faith or withheld information. The court recognizes that in the normal course of litigation there will be some slippage and loss of efficiency.
In addition, the department's objections are general and not specific with regard to the amount of attorney fees it deems reasonable. While the department's counsel expressed an opinion of reasonableness, it was based on comparing this matter to a similar case involving a similar issue. However, the facts in this case are more complex and more likely to require clarification.
The court will deny the amount of $1,172.50 claimed for attorney fees incurred in responding to the department's objections. The inaccuracies in taxpayer's complaint were the primary reason for the department's objections. It is appropriate that taxpayer not recover attorney fees where they were caused by taxpayer's own inaccuracies. *Page 23
2. The department also objected to amounts specified for computerized legal research, photocopies, travel, and telephone. Those items are not "costs" in the technical sense but are billed separately and considered part of taxpayer's attorney fees. The court finds that where such amounts have been itemized and billed to the client separately, they are recoverable as part of a taxpayer's attorney fees. See, e.g., Robinowitz v. Pozzi, 127 Or. App. 464,872 P.2d 993 (1994).
3. Finally, the department objected to the recovery of accountant fees. ORS 305.490 (2)(b) specifically provides that, in an income tax case, the court may award the prevailing taxpayer expenses incurred for accounting fees and other expert assistance. Although the accountant did not testify or directly participate in the legal proceedings, there is no question that his services were deemed necessary by taxpayer. The legislature appears to have contemplated that a taxpayer would need the assistance of accountants and other experts because of the complexity of income tax laws. The court finds that the accountant fees are recoverable by taxpayer.
Taxpayer has requested statutory prevailing party fees under ORS 20.190. That statute provides for recovery of specified amounts by a prevailing party in the Oregon Supreme Court, Court of Appeals, circuit court and district court. The statute does not expressly mention the Oregon Tax Court. Nevertheless, for many years the Tax Court awarded prevailing party fees under this statute as a matter of policy. The apparent rationale for such practice was the fact that the Tax Court has the same powers as a circuit court. See ORS 305.405.
4. The 1995 legislature made two changes that indicate prevailing party fees are not appropriate for the Tax Court. First, the legislature substantially increased the amounts awarded as a prevailing party fee. The maximum amount in circuit court was increased from $75 to in excess of $5,000. In a case involving the recovery of money, a prevailing party fee of $500 is automatically awarded if the case went to trial. ORS 20.190 (2)(a)(B). Also, the court may make an additional award of up to $5,000 after considering, among other things: *Page 24
"The conduct of the parties in the transactions or occurrences that gave rise to the litigation, including any conduct of a party that was reckless, willful, malicious, in bad faith or illegal." ORS 20.190 (3)(a).
This language does not fit comfortably with the circumstances under which taxpayers contest their taxes. Moreover, the legislature has specifically addressed tax appeal which are instituted primarily for delay or are frivolous or groundless.See ORS 305.437.
Second, the legislature created a Magistrate Division in the Tax Court to replace administrative hearings at the department. These lower level appeal proceedings are informal, unrecorded and are not subject to the formal rules of evidence. Any rationale for applying the prevailing party statute to Tax Court proceedings seems significantly weakened with regard to the Magistrate Division.
Finally, there are a number or reasons that make ORS 20.190 inappropriate for the Tax Court. The legislature may deem it important that taxpayers be able to contest their taxes without feeling coerced or threatened with penalties. There are significant differences between private civil litigation and tax litigation. The ordinary citizen must struggle to understand the complex tax laws. The amount of tax in controversy may be substantially less than the prevailing party fees provided for under ORS 20.190. For these and other reasons, the court has determined that its long standing policy of awarding prevailing party fees was in error. The court will only award such costs and fees as are expressly provided for by the statutes applicable to the Oregon Tax Court. Now, therefore,
IT IS ORDERED that judgment be entered awarding taxpayer a money judgment for attorney fees, expenses and costs as set forth above. *Page 25