In Uncategorized on 10/19/2016 at 17:21

STJ Daniel A. (“Yuda”) Guy is walking the trail of Robbie Robertson, whose 1987 song was promoted (or butchered, depending upon your point of view) by Rod Stewart, as he hands a broken arrow to an attorney I’ll call AA, who finally gets three (count ‘em, three) 8332s accepted by IRS (who claims they were forged) and gets the whole batch of parental tax benefits for Michael J. St. Claire, 2016 T. C. Memo. 192, filed 10/19/16.

IRS doesn’t cover itself with glory. We all know that, no matter what the noncustodial does or pays, if no 8332 signed by custodial, custodial is the tax beneficiary.

Unlike the usual situation, Michael J gets the forms. Ex-Mrs Michael J defaulted, custody was never determined by the court, and AA got the 8332s.

As aforementioned, IRS claims forgery. AA asks do how they know, and wants to go to Appeals. IRS says no, this is a correspondence examination. AA says “hit me with a SNOD.” That much IRS gets right, and IRS’ counsel caves at the answer stage.

AA goes for legal and administratives (Section 7430).

I’ll spare you the nitpick over when IRS was “substantially justified.” Somebody apparently tried to claim the tax breaks to which Michael J was entitled (who the record does not state), so IRS gets a bye from STJ Yuda.

AA wants 15.7 hours at $325 per, and IRS offers 10.6 at $200.

AA has evidence from another local tax practitioner that his fee is reasonable (and I’d concur with that).

“Section 7430(a)(1) and (2) limits the prevailing party to an award of ‘reasonable’ litigation and administrative costs.  In this regard, section 7430(c)(1)(B)(iii) (and its flush language) generally limits the hourly rate for attorney’s fees to $125 per hour, plus an adjustment for cost of living, unless the Court determines that a special factor such as the limited availability of qualified attorneys for the proceeding, the difficulty of the issues presented, or the local availability of tax expertise justifies a higher rate.  For purposes of this case, the statutory rate for attorney’s fees incurred in 2015 and 2016 was $200 per hour. See Rev. Proc. 2015-53, 2015-44 I.R.B. 615; Rev. Proc. 2014-61, 2014-47 I.R.B. 860.  Petitioner bears the burden of proving that the amount of costs he claimed is reasonable.  See Rule 232(e).

“[AA] submitted to the Court a declaration stating that his $325 hourly rate is reasonable ‘based on the prevailing community rate’ and his expertise in tax matters.  Mr. Gibson stated that petitioner could not find an attorney to represent him at less than $325 per hour and that it made practical sense for him to provide legal representation given that he had prepared petitioner’s tax return for [the year at issue] and was already familiar with the underlying facts of the case.” 2016 T. C. Memo. 192, at p. 20.

Not good enough, AA.

“General expertise in tax law in itself is not a special factor warranting a fee award in excess of the statutory rate under section 7430.  See Huffman v. Commissioner, 978 F.2d at 1150; Powers v. Commissioner, 100 T.C. 457, 489 (1993), aff’d in part, rev’d in part and remanded on another issue, 43 F.3d 172 (5th Cir. 1995).  Moreover, there was nothing particularly unique or unusual about these proceedings (involving a simple question of substantiation) that presented extraordinary difficulty or required specialized expertise.  See Nguyen v. Commissioner, T.C. Memo. 2001-41.” 2016 T. C. Memo. 192, at p. 21.

So,  “(C)onsidering all the facts and circumstances, we conclude that petitioner has failed to establish any special factor that warrants attorney’s fees in excess of the statutory rate provided in section 7430(c)(1)(B)(iii).” 2016 T. C. Memo. 192, at p. 21.

AA gets $2,120. Don’t spend it all in one place, AA.

Thus the headline of this blogpost. Section 7430 is a broken arrow.

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