T.C. Memo. 2002-212
UNITED STATES TAX COURT
SANDRA L. ANDARY-STERN, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 5460-01. Filed August 21, 2002.
Sandra L. Andary-Stern, pro se.
Paul K. Voelker, for respondent.
MEMORANDUM OPINION
BEGHE, Judge: This matter is before us on petitioner’s
motion for litigation and administrative costs under section
7430(a)1. The issues for decision are whether: (1) Respondent’s
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years at issue and
all Rule references are to the Tax Court Rules of Practice and
(continued...)
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position was substantially justified, and (2) whether petitioner
exhausted all administrative remedies available. We hold that
(1) respondent’s position was substantially justified, and (2)
petitioner failed to exhaust all administrative remedies
available. We therefore deny petitioner’s motion.
Background
On February 16, 1993, respondent mailed a notice of
deficiency to petitioner for the 1988 tax year; on October 19,
1993, respondent mailed notices of deficiency to petitioner for
the 1987 and 1991 tax years. The address used by respondent on
both these notices was 451 E. Nellis C2134, Las Vegas, NV 89110-
5340 (the 451 E. Nellis address). On November 6, 1996,
respondent mailed notices of deficiency for the 1992, 1993, and
1994 tax years to petitioner at 2850 Needles Highway #2913,
Laughlin, NV, 89029-9998 (the 2850 Needles Highway address).
The notices of deficiency were based on substitute returns
respondent prepared because petitioner, prior to the mailing of
the notices, had not filed Federal income tax returns for any of
the years at issue. The deficiencies were assessed between July
19, 1993 and April 28, 1997. On August 21, 1997, respondent
1
(...continued)
Procedure. All references to sec. 7430 are to that section as in
effect when the petition was filed.
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recorded a notice of a $34,950 Federal tax lien with the Clark
County recorder in Las Vegas, Nevada.
In November 2000, petitioner applied for a position as pit
floor supervisor with ETT Gaming. On November 19, 2000, as part
of the application process, ETT Gaming purchased a consumer
credit report on petitioner, which petitioner reviewed. The
report showed the $34,950 Federal tax lien. Prior to reviewing
the credit report, petitioner was unaware of the Federal tax
lien.
On December 4, 2000, petitioner asked for help from the
Taxpayer Advocate Service in removing the Federal tax lien. The
Taxpayer Advocate Service arranged for petitioner to prepare
returns for each of the years for which respondent had assessed a
deficiency. Petitioner prepared Forms 1040, Individual Income
Tax Return, for 1987, 1988, and 1991 and joint returns for 1992,
1993, and 1994. On March 29, 2001, petitioner submitted the
returns to the Taxpayer Advocate Service, which forwarded them to
the appropriate Internal Revenue Service center for processing.
Processing included abating the previous assessments and
assessing the amounts shown on the returns prepared by
petitioner. It does not appear that petitioner submitted any
payment for the taxes shown on the returns she prepared.2
2
The returns prepared by petitioner show much lower tax
(continued...)
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On April 19, 2001, petitioner filed a petition for the 1987
through 1994 tax years.3 The Court waived the filing fee. On
May 7, 2001, petitioner filed a motion to dismiss for lack of
jurisdiction for the tax years 1987 through 1994. Petitioner’s
motion alleged that the notices of deficiency were not mailed to
petitioner’s last known address, and that respondent had reason
to know petitioner changed her address because of Forms W-2, Wage
and Tax Statement, filed by petitioner’s former employers. The
petition went on to state that petitioner was unable to work
after her last job in 1996, until after approximately November
2000, when she applied for a position with ETT Gaming. According
to petitioner, she was not hired by ETT Gaming because of the
Federal tax lien, and the lien had prevented her from securing
employment with other employers.
The Court directed respondent to respond to petitioner’s
motion by June 4, 2001. On June 4, 2001, respondent filed a
motion for extension of time to respond, stating that more time
was needed for the investigation. The Court granted the
extension and ordered respondent to respond by August 4, 2001.
2
(...continued)
liabilities than those prepared by respondent. For example,
respondent’s 1988 return shows a tax of $3,627 while petitioner’s
return shows $195.
3
The petition was with respect to the years 1987-94
inclusive. Respondent’s assessments are with respect to 1987,
1988, 1991, 1992, 1993, and 1994 years.
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On July 27, 2001, respondent filed a motion to extend further the
time to respond to petitioner’s motion. Respondent’s motion
stated that respondent’s records indicated that the last return
filed by petitioner prior to 1996 was for 1985, that petitioner
had several address changes, and that respondent was attempting
to retrieve documents that would show the addresses for
petitioner as of the dates the notices of deficiency were mailed.
The Court granted respondent’s motion and ordered respondent to
respond by September 14, 2001.
On September 6, 2001, respondent sent petitioner a
certificate of release of Federal tax lien, which petitioner
recorded on September 27, 2001.
On September 18, 2001, respondent filed a notice of no
objection to petitioner’s motion to dismiss for lack of
jurisdiction. Respondent’s notice stated that respondent did not
object to petitioner’s motion to dismiss for lack of jurisdiction
with respect to 1987, 1988, 1991, 1992, 1993, and 1994 on the
ground that the notices of deficiency were not mailed to
petitioner’s last known address. Respondent moved to dismiss as
to 1989 and 1990 on the ground that respondent had not made any
determination of a deficiency in petitioner’s income tax for
either of those years. On September 19, 2001, we granted
petitioner’s motion as to 1987, 1988, 1991, 1992, 1993, and 1994
on the ground that the notices of deficiency for those years were
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not mailed to petitioner’s last known address. On October 15,
2001, we granted respondent’s motion to dismiss as to 1989 and
1990 on the ground that respondent had not issued a notice of
deficiency or made any other determination that would confer
jurisdiction on the Court.
On January 14, 2002, petitioner filed a motion for
litigation and administrative costs. The motion states that
petitioner’s cost of litigating her claim was $8,985. Petitioner
states that she borrowed $8,800 from her parents to “maintain a
location and the ability to litigate”, and that she incurred $186
in postage, photocopying, and typewriter costs.
On January 14, 2002, the Court vacated its order of
dismissal for lack of jurisdiction so that the disposition of
petitioner’s motion for litigation and administrative costs would
be included in the decision entered in the case pursuant to Rule
232(f).
On March 4, 2002, the Court filed a letter from petitioner
as petitioner’s motion to restrain assessment and collection.
Petitioner’s motion states that she received notices of intent to
levy for 1993 and 1994 without having received notice that any
tax was due and owing. On March 21, 2002, petitioner filed a
first supplement restating much of what was in her original
motion to restrain assessment and collection, and on March 25,
2002, she filed a second supplement. The second supplement
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states that petitioner received a notice of intent to levy for
1991 when her return showed she was entitled to a refund. On
April 15, 2002, petitioner filed a third supplement, which states
that petitioner had not received responses to repeated phone
calls to respondent regarding the proposed levies. On April 18,
2002, petitioner filed a fourth supplement in which petitioner
objects to the imposition of a penalty and interest on her 1992
tax liability.
On April 1, 2002, respondent filed a response to
petitioner’s motion for litigation and administrative costs.
Respondent’s response states that respondent agrees that
petitioner substantially prevailed but contends that respondent’s
position was substantially justified and that petitioner failed
to exhaust all administrative remedies.
On April 11, 2002, respondent filed a response to
petitioner’s motion to restrain assessment and collection.
Respondent stated that petitioner’s motion was with respect to
1993 and 1994. Respondent informed the Court that the
deficiencies previously assessed for 1993 and 1994 were abated,
that respondent assessed the amounts shown on joint returns of
petitioner and her husband for 1993 and 1994, and that the notice
of intent to levy was with respect to the amount shown on
petitioner’s return, plus penalties and interest. Respondent
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stated that the Court does not have jurisdiction to enjoin
assessment and collection because no deficiency within the
meaning of section 6211(a) had been asserted.
On April 15, 2002, petitioner filed a response to
respondent’s response to petitioner’s motion for administrative
and litigation costs. Petitioner’s response states that
respondent’s position was not substantially justified because
respondent sent the notices of deficiency to incorrect or
“fictitious” addresses.
On April 22, 2002, petitioner filed an objection to
respondent’s response to petitioner’s motion to restrain
assessment and collection. Petitioner said she never received a
notice of an amount owed for 1993 and 1994; petitioner asserted
respondent withheld the notices as a way to collect penalties and
interest.
On May 17, 2002, the Court denied petitioner’s motion to
restrain assessment and collection, as supplemented. In denying
petitioner’s motion, we stated that our jurisdiction to enjoin
assessment and collection is limited to matters over which we
have jurisdiction. We concluded that because we lack
jurisdiction of the matters set forth in the petition filed in
this case, we have no authority to enjoin the assessments
pertaining to petitioner’s 1987, 1988, 1991, 1992, 1993, and 1994
taxable years.
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Discussion
The driving force of petitioner’s prayers for relief seems
to be the adverse effect of the tax lien on her ability to obtain
employment in the Nevada gaming industry. It is common practice
in the Nevada gaming industry to run credit checks on prospective
employees who will be handling large amounts of cash and to hire
only those whose credit is unblemished. ETT Gaming, among others
who checked petitioner’s credit, apparently regarded the Federal
tax lien disclosed by the report as a blemish. Petitioner, who
has worked in the Nevada gaming industry since 1976, blames the
adverse credit report for her inability to find work, and we have
no reason to believe otherwise. Although petitioner’s prayers
for relief are wrapped in a request for administrative and
litigation costs, petitioner’s motion papers suggest she is
actually complaining about consequential damages for which the
tax law provides no relief.
Whatever the source of petitioner’s request, she cannot
prevail in this proceeding. Before analyzing petitioner’s
request for costs under section 7430 and setting forth the
technical grounds for denying her motion, we explain petitioner’s
role in causing her predicament.
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I.
“The greatness of our nation is in no small part due to the
willingness of our citizens to honestly and fairly participate in
our tax collection system”. Hatfield v. Commissioner, 68 T.C.
895, 899 (1977). The method by which citizens complete the
initial step of their annual participation in our tax collection
system is, of course, to self-assess their income tax liabilities
by filing income tax returns, and by paying the liabilities shown
thereon. See Reif v. Commissioner, 77 T.C. 1169, 1179 (1981).
In the case at hand, the originating cause of petitioner’s
problems is her failure to file timely Federal income tax returns
for the years 1987, 1988, 1991, 1992, 1993, and 1994. Even
though petitioner was delinquent in not filing returns and paying
her tax liabilities, her employers and other third parties filed
information returns indicating she had earned wages and received
unemployment compensation and gambling winnings. From the
information returns, respondent concluded that petitioner was
required to file returns for the years at issue and undertook to
prepare substitute returns on her behalf.
The Commissioner’s authority to prepare substitute returns
derives from section 6020(b)(1), which provides that if “any
person fails to make any return required by any internal revenue
law or regulation * * * the Secretary shall make such return from
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his own knowledge and from such information he can obtain through
testimony or otherwise.”
Petitioner points out that the tax liabilities on the
returns she belatedly prepared and filed are substantially less
than those prepared by respondent, and that some of her returns
even show refunds. By focusing on what respondent did, or should
have done, petitioner has lost sight of her responsibility to
tell respondent what her tax liability was for 1987, 1988, 1991,
1992, 1993, and 1994 and to make payments to the extent her
liabilities had not been satisfied by withholding at the source.4
In any event, the above-quoted language of section 6020(b)
makes clear that the Commissioner is not charged with preparing a
perfectly accurate return. The Commissioner is required only to
do the best he can with the information available to him, in the
absence of a return prepared and filed by the taxpayer.
A substitute return prepared by the Commissioner gives rise
to a deficiency equal to the tax liability shown on the return,
and the deficiency procedures must be followed prior to
assessment. Spurlock v. Commissioner, 118 T.C. 155 (2002).
4
When petitioner did file her tax returns on Mar. 29, 2001,
she did not include a payment for at least three of the years at
issue, 1992, 1993, and 1994. Consequently, respondent assessed
the amounts shown on petitioner’s returns plus penalties for late
filing and failure to pay, as well as interest. It is unclear
whether petitioner has paid her tax liabilities for any of the
years at issue.
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Respondent therefore sent notices of deficiency to petitioner for
each of the years a substitute return was prepared.
When a notice of deficiency is mailed, the taxpayer has 90
days to file a petition with the Court for redetermination of the
deficiency. Sec. 6213(a). During the 90-day period, the
Commissioner is precluded from assessing a deficiency or
instituting collection proceedings until the expiration of the
90-day period. Id. If a petition has been filed, the
restrictions on assessment and collection are in effect until the
decision of the Court has become final. Id. In the case at
hand, petitioner did not file a petition within the 90-day
period, and respondent proceeded with assessment and collection.5
Respondent assessed the amounts shown on the substitute
returns after the 90-day period expired. “Assessment” is
effected by the recording of the taxpayer’s liability in the
appropriate office of the Commissioner. Sec. 6203. After
recording the taxpayer’s liability, respondent may proceed with
collection by giving notice to the taxpayer liable for the unpaid
tax, stating the amount and demanding payment. Such notice and
demand is to be given “as soon as practicable, and within 60
days,” of the assessment. Sec. 6303(a). The so-called notice
5
As discussed in connection with our analysis of
petitioner’s request for administrative and litigation costs,
infra, petitioner did not file a petition in response to any of
the notices of deficiency. Respondent concedes that he did not
mail the notices to petitioner’s last known address.
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and demand is required to be sent to the taxpayer’s last known
address. Id.
When a taxpayer fails to pay the amount assessed within 10
days of the notice and demand, a Federal tax lien arises, and a
notice of the lien may be filed to inform potential purchasers of
the taxpayer’s property or creditors of the taxpayer that the
Federal Government has an interest in the taxpayer’s property.
Secs. 6321, 6323(a), 6331(a).
In her motion papers in this proceeding, petitioner has
repeatedly complained that she never received notice of any tax
liability and only discovered the tax lien when a prospective
employer ran a credit check. The thrust of petitioner’s argument
is that if she did not receive notice and demand, a statutory
prerequisite to collection was missing and collection could not
go forward. Sec. 6321. Indeed, collection did not go forward.
After petitioner complained to respondent about the tax lien,
respondent abated the amounts assessed pursuant to the substitute
returns, assessed the amounts shown on the returns prepared by
petitioner, and removed the lien.
Petitioner did not discover the Federal tax lien until 3
years after it was filed,6 and she blames it for her inability to
6
In the IRS Restructuring and Reform Act of 1998 (RRA 1998),
Pub. L. 105-206, sec. 6401, 112 Stat. 746, Congress enacted sec.
6320(a), which provides that respondent is required to give
notice within 5 business days of the filing of the notice of
lien. The notice is required to be left at the taxpayer’s
(continued...)
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get a job in the Nevada gaming industry. However the lien and
petitioner’s adverse credit report may have contributed to her
inability to secure employment, the originating cause of
petitioner’s problems was her failure to fulfill her obligations
to prepare and file returns for the years at issue and to pay her
tax liabilities.
II.
To be entitled to an award of litigation costs under section
7430, a taxpayer must, among other things: (1) Be the
“prevailing party”, (2) not have unreasonably protracted the
proceedings, and (3) have exhausted all administrative remedies
available in the Internal Revenue Service. Sec. 7430(a) and (b).
Respondent contends that petitioner does not satisfy the first
and third requirements. We agree with respondent.
To be a prevailing party, the taxpayer must substantially
prevail with respect to either the amount in controversy or the
most significant issue or issues presented, and satisfy the
applicable net worth requirement. Sec. 7430(c)(4)(A). However,
the taxpayer is not considered the prevailing party if the
Commissioner can establish that his position in the proceedings
6
(...continued)
dwelling or place of business, or sent to the taxpayer’s last
known address. Sec. 6320(a). Because notice of the tax lien in
the case at hand was filed prior to the effective date of RRA
1998, petitioner is not entitled to its protections.
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was substantially justified. Sec. 7430(c)(4)(B). Respondent
concedes that petitioner prevailed with respect to the issues
presented and meets the applicable net worth requirement but
contends that his position was substantially justified.
Whether respondent’s position was substantially justified is
to be resolved by applying a reasonableness standard. Pierce v.
Underwood, 487 U.S. 552, 564 (1988); Sher v. Commissioner, 89
T.C. 79, 84 (1987), affd. 861 F.2d 131 (5th Cir. 1988).
Respondent’s position is reasonable if the position had a
reasonable basis in both fact and law. Norgaard v. Commissioner,
939 F.2d 874, 881 (9th Cir. 1991), affg. in part and revg. in
part T.C. Memo. 1989-390. The fact that respondent concedes a
case does not automatically mean that his position was not
substantially justified. Sokol v. Commissioner, 92 T.C. 760, 767
(1989). In determining the reasonableness of respondent’s
position, the Court may consider all relevant factors. Rutana v.
Commissioner, 88 T.C. 1329, 1333 (1987).
To decide whether respondent’s position was substantially
justified, the Court must first identify when respondent is
considered to have taken a position and then decide whether the
position taken from that day forward was substantially justified.
In general, we bifurcate our analysis and consider separately the
positions taken in the administrative proceeding and the judicial
proceeding. Huffman v. Commissioner, 978 F.2d 1139, 1148 (9th
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Cir. 1992), affg. in part, revg. in part, and remanding T.C.
Memo. 1991-144. Respondent ordinarily takes a position in an
administrative proceeding when he issues a statutory notice of
deficiency, see sec. 7430(c)(7)(B); in a Court proceeding,
respondent takes a position when he files an answer to a
petition, Huffman v. Commissioner, supra.
In the case at hand, the position we scrutinize against the
substantial justification standard, in both the administrative
and Court proceedings, is whether the notices of deficiency were
mailed to petitioner’s last known address.
Respondent first took the position that the notices of
deficiency were sent to petitioner’s last known address when he
mailed the notices. Sec. 7430(c)(7)(B). Petitioner contends in
her motion papers that the notices of deficiency were sent to
incorrect or fictitious addresses.
Petitioner states that the 451 E. Nellis address, to which
respondent mailed notices of deficiency for 1987, 1988, and 1991,
was incorrect on two counts. First, according to petitioner,
there is no E. Nellis in Las Vegas, the street petitioner lived
on was 451 N. Nellis. Second, the unit on the address used by
respondent, C2134, was incorrect; petitioner lived in unit 01094.
Petitioner also points out that the 2850 Needles Highway
address, to which respondent mailed the 1992, 1993, and 1994
notices, was incorrect. According to petitioner, respondent used
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mailbox number 2913, when the correct number was 29136. In the
notice of no objection to petitioner’s motion to dismiss,
respondent conceded that the notices of deficiency were not
mailed to petitioner’s last known address.
Petitioner contends that mailing the notices of deficiency
to the wrong addresses was unreasonable because respondent should
have been able to glean her correct addresses from various Forms
W-2 filed by her former employers.7
In determining a taxpayer’s “last known address” we have
repeatedly held that the burden is on the taxpayer to provide the
Commissioner with clear and concise notification of her new
address. Pyo v. Commissioner, 83 T.C. 626, 636 (1984); Mollet v.
Commissioner, 82 T.C. 618, 623 (1984). While the Commissioner
must exercise reasonable diligence in ascertaining the taxpayer’s
correct address, administrative realities demand that the burden
necessarily falls upon the taxpayer to keep respondent informed
of his or her correct address or “accept the consequences”. Alta
Sierra Vista, Inc. v. Commissioner, 62 T.C. 367, 374 (1974).
Two relevant factors that influence our decision are
7
Petitioner’s motion papers reveal that she frequently
changed addresses and employers. Two Forms W-2 filed by former
employers for 1993 have different addresses: 1832 Merchant
# 103, Sparks, NV, and 3702 S. Virginia G12-243, Reno, NV. A
Form W-2 filed in 1994 by another employer shows petitioner’s
address as 2850 Needles # 29136, Laughlin, NV. Finally, a 1995
Form W-2, also filed by a different employer, shows petitioner’s
address as 6200 Meadowood, Reno, NV.
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petitioner’s own unreasonable conduct, the failure to file
returns or to otherwise notify respondent of any address changes,
and respondent’s conduct throughout the course of the
administrative proceeding, which we find was reasonable.
Petitioner states that she “had no knowledge of any taxes
owed and IRS did nothing to inform [her] of any taxes owed.” It
bears repeating that our scheme of taxation is premised on “self-
assessment” through the filing of returns, Sloan v. Commissioner,
102 T.C. 137, 146 (1994), affd. 53 F.3d 799 (7th Cir. 1995), and
it is the taxpayer’s obligation to inform the Commissioner of
taxes owed. Petitioner emphasizes that the Forms W-2 filed by
her former employers had the correct addresses. It therefore
follows that petitioner received the Forms W-2 and that
petitioner knew or should have known she was required to file
returns. By failing to file returns, as the law requires her to
do, or to otherwise notify respondent of her address changes,
petitioner bears much of the responsibility for not having
received the notices of deficiency.
Respondent acted reasonably when petitioner brought to his
attention that she had not received the notices of deficiency.
When petitioner contacted the Taxpayer Advocate Service in
December 2000, the period of limitations on assessment had not
started to run because petitioner had not filed returns. Sec.
6501(c)(3). Accordingly, respondent could have reissued the
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notices of deficiency to petitioner and forced her to litigate
her tax liabilities. Instead, respondent helped petitioner to
prepare the returns she belatedly filed on March 29, 2001, abated
the amounts previously assessed, and assessed the amounts
petitioner showed on the returns she prepared. At no point in
the administrative process did respondent maintain that the
notices of deficiency were sent to petitioner’s last known
address.
In the proceedings before the Court, respondent was
substantially justified. Respondent formally took a position in
the proceedings before the Court when he filed the notice of no
objection to petitioner’s motion to dismiss for lack of
jurisdiction. See Bertolino v. Commissioner, 930 F.2d 759, 761
(9th Cir. 1991). For purposes of section 7430 and the question
whether respondent’s position was substantially justified,
respondent is given a reasonable period of time to resolve
factual issues after receiving all relevant information. Sokol
v. Commissioner, 92 T.C. at 765 n.10; Johnson v. Commissioner,
T.C. Memo. 1990-542. In the matter before us, respondent never
took the position that the notices of deficiency were mailed to
petitioner’s last known address. Respondent did not file an
answer disputing petitioner’s contention or otherwise contend
that the notices of deficiency were mailed to petitioner’s last
known address. Respondent investigated the matter and
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subsequently conceded that he could not establish that the
notices of deficiency were mailed to petitioner’s last known
address. Respondent’s concession took the form of a notice of no
objection to petitioner’s motion to dismiss with respect to all
of the years for which a notice of deficiency was issued.
Respondent’s position was not unreasonable.
Respondent also contends that petitioner did not exhaust
all administrative remedies available. Section 7430(b)(1)
provides that a judgment for reasonable litigation costs shall
not be awarded unless the Court determines the party has
exhausted all administrative remedies available to her within the
Internal Revenue Service. According to respondent, at the time
petitioner filed her petition, she had been granted
administrative reconsideration, making the filing of a petition
entirely unnecessary. We agree with respondent.
In the case at hand, petitioner initiated the administrative
proceeding when she contacted the Taxpayer Advocate Service on
December 4, 2000, requesting relief from assessments. The
Taxpayer’s Advocate arranged for petitioner to be given audit
reconsideration which included processing the late-filed returns
petitioner filed on March 29, 2001, abating the amounts
previously assessed, and assessing the amounts shown on
petitioner’s returns.
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Petitioner filed her petition in the case at hand on April
19, 2001, only 21 days after she filed her returns for
processing. Twenty-one days is not a reasonable time for
respondent to have completed the administrative proceeding
initiated by petitioner. Respondent was required to process
petitioner’s returns, abate the amounts previously assessed,
assess the amounts shown by petitioner, and credit petitioner’s
accounts for the amounts that were assessed pursuant to the
returns prepared by respondent. By failing to allow a reasonable
time for respondent to process her returns and adjust her
accounts before filing a petition, petitioner failed to let the
administrative proceeding run its course. Therefore, we hold
that petitioner failed to exhaust an administrative remedy that
was available.
III.
For completeness, we address the reasonableness of the
litigation costs claimed by petitioner. Section 7430(c)(1)
provides that the term “reasonable litigation costs” includes
reasonable court costs, and, based on prevailing market rates for
the kind or quality of services furnished, the reasonable
expenses for expert witnesses, and reasonable fees paid for the
services of attorneys.
Petitioner states that she borrowed the $8,800 from her
parents to “maintain a location and the ability to litigate.” It
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is not clear from that vague statement what costs petitioner
incurred and is seeking to recover. Petitioner has been pro se
throughout the proceedings and has not paid for the services of
any attorneys. It is well settled that a taxpayer cannot recover
attorney’s fees for representing herself, even if she happens to
be an attorney, which petitioner is not. Frisch v. Commissioner,
87 T.C. 838 (1986).
If it is living expenses for which petitioner seeks
reimbursement, living expenses are not costs for which section
7430(c) allows recovery. Section 7430 does not provide for the
recovery of a taxpayer’s living expenses; she would have incurred
those expenses whether she was contesting her tax liability or
not. Petitioner’s lack of income from a job to pay living
expenses and the resulting need to borrow from her parents, the
possible adverse effect of the tax lien on her credit and ability
to obtain employment, identify the so-called consequential
damages for which neither section 7430 nor any other relevant
statutory provision allows relief. See Weiner v. IRS, 986 F.2d
12, 13 (2d Cir. 1993).
Petitioner has also requested $186 for long-distance calls
to respondent’s Ogden, Utah, and Phoenix, Arizona, offices,
postage, photocopying, and typewriter rental costs. However,
petitioner provided no receipts or other substantiation and no
allocation of the total cost among the various items. Had
petitioner prevailed on the “substantially justified” and
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“administrative remedies” issues, we might well have allowed a
recovery of some portion of the $186, bearing heavily upon
petitioner for her failure to itemize and substantiate her costs.
See O’Bryon v. Commissioner, T.C. Memo. 2000-379 (applying the
doctrine of Cohan v. Commissioner, 39 F.2d 540, 544 (2d Cir.
1930) to an award of costs under section 7430); see also Malamed
v. Commissioner, T.C. Memo. 1993-1. In any event, petitioner has
not prevailed, and she is not entitled to recover any costs under
section 7430.
In light of the foregoing,
An Appropriate Order and
Order of Dismissal for Lack of
Jurisdiction will be entered.