T.C. Mem o. 2 01 4- 17 2

UNITED STAT ES TAX COURT

MIC HAEL SW IGGART, Pet it io ne r v. COMM ISSI ONER OF INTERNAL REVENUE, Resp on de nt

Doc ke t No . 69 33 -1 2L. Fi le d Au gu st25 , 20 14
.
Eric W il li am

Jo hn so n, fo r pe ti ti on er. Ch ris ti naL. Coo k a ndJo hn Sch m it td ie l, fo r res po nd en t.

MEMORANDUM OPINION BUCH, Ju dg e: Thi s ca se is be fo re the Co urt o n M r. Swig ga rt’s m ot io n pu rs ua ntto Ru le 23 1 foranawardof r eas on ab le adm in is tra ti ve an d l it ig at io n 1

Unl es s o th erwi se in di cat ed , Rul e ref eren ces are t o the Tax C ou rt Rul es of 1 Prac ti ce an d P ro cedur e, an d a ll sec ti on refe ren ces are t o t he Int ern al Rev enue Co de in effe ctat a ll rel ev an t t im es . All a m ou nt s ar e ro un de d t o t he ne ares t d ol la r.- 2 -

[* 2] co st s u nd er s ect io n 7 43 0. Fo r th e rea so ns di sc us se d b el ow, we co nc lu de th at Mr. Swi gg artis en ti tl edto adm in is tra ti ve an d l it ig at io n c os ts of $ 3,2 56 .50
. Bac kg ro un d On M ay 19 , 20 11 , Mr. Swi gg artfil eda 20 10 Fo rm 10 40 , U.S. Ind iv idua l In co m e Tax Return. Mr . Swig ga rt c la im edhe adof h ou se ho ldfil in g s ta tu s, rep orte d t ax du e o f $1 5,7 66 , andrep orte d t ax withh el d o f $1 3,6 17 . Mr. Swig ga rt di d n otpa y

th e rem ai ni ng $2 ,14 9. Mo reo ve r, Mr. Swi gg artdi d n otrep ort the
na m e o f th e d ep en de ntwho qu al ifi edhi m forth e h eadof h ou se ho ldfil in g s ta tu s be cau se he ha d a gr eedto all ow t he ch il d’s m ot he r to cla im th e d ep en de nc y ex em pt io n d educ ti on forth e ch il d fo r 20 10
. On J un e 2 0, 2 01 1, t he IRS i ss ue d am ath e rro r no ti ce t o M r. Swig ga rt, st at in g t ha t the IRS h adch an ge d h is fil in g s ta tu s b ecau se th e n am e o f th e de pe nd en t wh o qua li fie d h im forhe adof h ou se ho ldfil in g s ta tu s was no t re po rte d
on hi s t ax return. As a res ul t, the IRS re cal cu la te d M r. Swig gart’s t ax us in g a fil in g s ta tu s o f si ng le an d d et erm in edth atMr. Swi gg artin st eadowed$4 ,35 4, an in crea se of $ 2,2 05 to th e am ou ntMr. Swi gg artha d re po rte d a s due on hi s re tu rn . 2

Of th e $ 2,2 05 , $2 ,14 2 i s at tri bu tabl e so le ly to the ch an ge infil in g s ta tu s; 2 th e rem ai nd er co ns is ts of asec ti on 66 51 (a)( 2) ad di ti on to tax an d i nt eres t.- 3 -

[* 3] Inth e n ot ic e, th e IRS st at ed : “ If y ouco nt actus in writ in g wi th in 60 da y s o f th e d at e o f th is no ti ce, we wi ll rev ers e th e ch an ge we m ad e to y ou r acc ou nt .” Si xt eenda y s l at er, o n J ul y 6, 2 01 1, t he IRS i ss ue d aFin al Not ic e o f In te ntto Lev y an d No ti ce o f You r Ri gh t t o aHeari ng , see ki ng to co ll ectth e am ou ntfro m th e m ath e rro r no ti ce p lu s p en al ti es an d i nt eres t. On Au gu st5, 2 01 1, 4 6 d ay s af te r th e IRS is su edth e m ath e rro r no ti ce, Mr . Swig ga rt’s c ou ns el , Mr. Jo hn so n, m ai le d areque stforab at em en t b y cert ifi edm ai l to th e ad dr es s l is te d o n t he m ath e rro r no ti ce. Als o o n Au gu st5, 2 01 1, M r. Jo hn so n m ai le d aFo rm

12 15 3, Re qu es t fo r a Co ll ect io n Du e Pro ces s o r Equ iv al en t Hea rin g, b y

cert ifi edm ai l t o t he “pe rs onto co nt act ” li st edon th e n ot ic e of in te ntto lev y . Mr. Jo hn so n a tt ach eda supp orti ng st at em en t t o t he reque stfora he ari ng li st in g t he reas on s h e b el ie ve d M r. Swig ga rt wa s en ti tl edto he adof ho us eh ol d fi li ng st atus , st at in g wh y he be li ev edth e IRS ’ ch an ge in Mr. Swi gg art ’s fil in g s ta tu s was no t a p ro pe r m athe m at ic al or c le ric al erro r un de r se ct io n 62 13 (g )(2 ), an d s ta ti ng th athe ha d t im el y reque st edab at em en t u nd er s ect io n 62 13 (b )(2 )(A). On Se pt em

be r 15 , 20 11 , res po nd en t i ss ue d M r. Swig ga rt alet te r st at in g t ha t th e IRS was u nabl e to pro ces s h is cla im for ab at em en t b ecau se hi s s up po rti ng in fo rm at io n was no t co m pl et e an d the ad di ti on al in fo rm at io n M r. Swig gart- 4 -

[* 4] pr ov id eddi d n otgi ve th e IRS a ba si s t o c ha ng e th e as se ss m en t. On Oct ob er 3 24 , 20 11 , Mr. Jo hn so n c on ta ct edth e se tt le m en t o ffi cer a ss ig ne d t o t he CDP he ari ng by lett er i nf

orm in g h im

th atth e reque stforab at em en t h adbe ende ni ed de sp it e h is ti m el y

reque stan d a ga in reque st in g t ha t the ass es sm en t b e ab at edan d th atde fic ie nc y

pro cedur es be fol lo wed
. Dur in g t he CDP h eari ng Mr. Swi gg artpro vi de d asi gn edaffi davi t d at ed Sep te m be r 13 , 20 11 , id en ti fy in g h is ch il d b y nam e an d S oc ia l Se cu rity nu m be r an d st at in g t ha t h is ch il d s pe ntth e g reat er num be r of ni gh ts in 20 10 with h im

bu t tha t he ha d an a gr eem en t wi th th e ch il d’s m ot he r to waiv e th e d ep en de nc y ex em pt io n de du ct io n fo r certa in y ears , in cl ud in g 2 01 0. Th e se tt le m en t o ffi cer a gr eedth at cl ai m in g t he ch il d a s a d ep en de ntwas n otrequi redto qu al ify as a h eadof ho us eh ol d, b utth e se tt le m en t o ffi cer a ls o c on cl ud edth athe co ul d n otab at e th e ta x at tri bu tabl e to th e ch an ge in fil in g s ta tu s u nt il Mr. Swi gg artpro vi de d a dd it io na l do cu m en ts sh owi ng th atth e ch il d h adli ve d wi th hi m form or e th anha lf o f th e
The re ar e so m e in co ns is te nc ie s i n t hi s l ette r. The l et te r st at es th atMr. 3 Swig ga rt’s c la im

was re cei ve d o n M ay

19 , 20 11 (th e d at e o f th e return) , bu t al so st at es th atth ere was a cl ai m on Aug us t 1 6, 2 01 1. Th e le tt er al so st at es th atMr. Swig ga rt s ub m it te d a n a m en de d re tu rn , an a ll eg at io n t ha t n ei th er p arty m ad e to th is Co urt an d tha t i s n otsupp orte d b y th e rec or d. Fu rth er, the let te r st at es th atth e IRS h as no reco rdth atMr. J oh ns on was aut ho riz edto rep res en t M r. Swig gart i n hi s re qu es t fo r ab at em en t, b utth e le tt er was in factsen t i n c are o f Mr. J oh ns on at Mr. J oh ns on ’s add res s.- 5 -

[* 5] y ear. OnFeb ru ary 8, 2 01 2, IR S is su eda no ti ce o f de te rm in at io n s us ta in in g th e p ro po se d l ev y

be cau se Mr. Swi gg artha d n otpro ve n tha t h e was en ti tl edto he adof h ou se ho ldfil in g s ta tu s an d b ecau se he ha d n otpro po se d aco ll ect io n al te rn at iv e o r pr ov id edfin an ci al in fo rm at io n s ho win g wh ethe r he was e li gi bl e fo r a co ll ect io n a lt ern at iv e. 4 Mr. Swi gg art , res id in g i n M in ne so taat t he ti m e, ti m el y fil eda pe ti ti on di sp ut in g t he no ti ce o f de te rm in at io n andass ert in g t ha t the ass es sm en t re sp on de nt at te m pt edto co ll ectwas i nv al idas t o t he po rti onrel at in g t o h is fil in g s ta tu s. Mr . Swig ga rt a ss ert edth atth e ch an ge in fil in g s ta tu s was no t p ro pe rly subjec t t o a m ath e rro r no ti ce, tha t h e h adti m el y reque st edab at em en t, tha t the IRS h ad
erro ne ou sl y

co nc lu de d t ha t h e was requi redto pro ve hi s en ti tl em en t t o t he fil in g st atus be fo re ab at em en t, an d t ha t re sp on de ntha d e rro ne ou sl y de te rm in edth e

The re ar e al so in co ns is te nc ie s i n t hi s l et te r. The n ot ic e o f de te rm in at io n 4 st at es th atMr. Swi gg artrai se d a nddi sp ut edth e h eadof h ou se ho ldfil in g s ta tu s b ut al so st at es th athe m ad e n o c ha ll en ge s t o the ex is te nc e o r th e am ou ntof t he un de rlyin g l iabi li ty. The n ot ic e o f de te rm in at io n s ta te s b ot h t ha t the he ari ng oc cu rredon Jan uary

11 , 20 12 , with M r. Jo hn so n a ndth atitoc cu rredon Janua ry 17 , 20 12 , with arep res en ta ti ve na m edNico le McGu ire . It i s cl ear p orti on s o f th e no ti ce o f de te rm in at io n re la te to an ot he r ta xp ay er’s h eari ng with adi ffer en t rep res en ta ti ve .- 6 -

[* 6] as se ss m en t was va li d. Re sp on de nt ’s ans wer al le ge s t ha t “ th e se tt le m en t of fic er p ro vi de d t he op po rtu ni ty to co nt es t l iabi li ty whi ch wou ldcure an y pr oc edur al is su es ” Mr. Swi gg artrai se d. On No ve m

be r 19 , 20 12 , Mr. Swi gg artfil eda m ot io n fo r su m m ary jud gm en t, re qu es ti ng th e Co urt t o c on cl ud e th atth e p orti on of t he ass es sm en t at tri bu tabl e to th e ch an ge in fil in g s ta tu s i s v oi d a ndth atres po nd en t m ay no t l ev y to co ll ectth atpo rti on . Mr. Swi gg artdi d n otdi sp ut e th e p orti onof t he ass es sm en t 5 at tri bu tabl e to th e am ou ntrep orte d a s due bu t unp ai d wi th hi s re tu rn . On Decem be r 11 , 20 12 , res po nd en t fi le d an o bjec ti on to Mr. Swi gg art ’s m ot io n fo r su m m ary jud gm en t, s ta ti ng th athe di d n otob ject t o aba ti ng th e p orti on of t he
as se ss m en t at tri bu tabl e to th e ch an ge in fil in g s ta tu s b utdi d o bjec t t o aba ti ng th e po rti onMr. Swi gg artrep orte d a s due onhi s re tu rn , whi ch he ackno wled ge d M r. Swig ga rt wa s n otdi sp ut in g. OnMarc h 8 , 20 13 , res po nd en t fi le d asupp le m en t t o hi s n ot ic e o f ob

jecti on , in fo rm in g t he Co urt tha t h e ag reedth atMr. Swi gg art ’s
m ot io n fo r su m

m ary jud gm en t s ho ul d b e g ran te d o nl y in pa rt, a s t o t he po rti on of th e as se ss m en t at tri bu tabl e to th e ch an ge in fil in g s ta tu s. Re sp on de ntals o s ta te d in hi s s up pl em en t tha t the ab at em en t h adbe enap pr ov edbu t h adno t yet ap pe ared The reco rdis no t cl ear a s t o wh ethe r th ere wer e two sep arat e as se ss m en ts 5 oron e as se ss m en t co ns is ti ng of b ot h t he am ou ntrep orte d a s due bu t u np ai d wi th th e return andth e am ou ntatt rib ut ab le to th e ch an ge in fil in g s ta tu s.- 7 -

[* 7] on th e certi fic at e o f as se ss m en t; res po nd en t i nc lu de d asep arat e d oc um en t sh owi ng th atth e ab at em en t o f $2 ,14 2 h adbe enap pr ov ed
. At tria l o n Ap ril 23 , 20 13 , th e p art ie s fi le d ast ip ul at io n o f se tt le d i ss ue s. In th e st ip ul at io n, t he pa rti es ag reedth atres po nd en t h adab at ed$2 ,14 2 o f th e as se ss m en t wi th ou t p reju di ce t o h is rig htto reas se ss th e am ou ntus in g d efi ci en cy pr oc edur es an d t ha t the co ll ect io n a ct io n i s s us ta in edas t o t he $2 ,14 9 t ha t M r. Swig ga rt r ep orte d a s due bu t u np ai d o n h is ori gi na l re tu rn , pl us pe na lt ie s an d in te res t. Aft er tria l M r. Swig ga rt f il eda m ot io n fo r anawardof c os ts an d a
m em or an du m

in supp ort o f hi s m ot io n. Re sp on de ntfil eda res po ns e as se rti ng th at Mr. Swi gg artwas n otth e p rev ai li ng pa rty andth athe is no t en ti tl edto att orne y ’s fees inex ces s o f th e st atut ory rat e. Dis cu ss io n Sect io n 7 43 0( a) al lo ws a t ax pa y er t o re co ve r rea so nabl e adm in is tra ti ve an d li ti ga ti on co st s i nc urredin anadm in is tra ti ve or c ou rt p ro ceed in g b ro ug htby or ag ai ns t the Uni te d S ta te s i n c on ne ct io n wi thth e d et erm in at io n, co ll ect io n, o r refu ndof a ny tax , in te res t, o r pe na lt y . Reas on ab le adm in is tra ti ve co st s ar e th e reas on ab le an d n eces sa ry co st s i nc urredby the tax pa y er i n c on ne ct io n wi th th e adm in is tra ti ve pro ceed in g. Th ey in cl ud e ad m in is tra ti ve fees im po se d b y th e Co m m is si on er, rea so nabl e fee s p ai d o r in cu rredto ret ai n t he servi ces of a- 8 -

[* 8] rep res en ta ti ve who is li cen se d t o p ract ic e b efo re the IRS, rea so nabl e ex pe ns es of ex pe rt wi tn es se s, an d re as on ab le co st s fo r an y stud y , ana lysis , or re po rt t ha t i s ne ces sa ry to th e ta xp ay er’s cas e. Sim il arl y , reas on ab le li ti ga ti on co st s i nc lu de 6
reas on ab le co urt co st s, re as on ab le att orne y ’s fees , reas on ab le ex pe ns es of e xp ert wit ne ss es , andreas on ab le co st s o f an y stud y , ana lysis , or re po rt n eces sa ry to th e ta xp ay er’s cas e. 7 To re co ve r adm in is tra ti ve an d l it ig at io n c os ts un de r se ct io n 7 43 0( a), the ta xp ay er m

us t s at is fy

each of t he fol lo win g re qu ire m en ts : (1 ) th e ta xp ay er m us t no t h av e u nr eas on ab ly pro tra ct edth e ad m in is tra ti ve or c ou rt p ro ceed in gs an d (2 ) th e ta xp ay er m

us t h av e b een th e “pr ev ai li ng party”. In a dd it io n, wi th res pe ctto a 8 reque stforli ti ga ti on co st s, the tax pa y er m us t al so pro ve th athe or s he ex haus te d al l ad m in is tra ti ve rem ed ie s av ai labl e wit hi n t he IRS. Mr. Swi gg artha s t he bu rd en 9 of est ab li sh in g t ha t h e sa ti sf ie d e ach requi rem en t o f se ct io n 7 43 0. 1 0

Sec. 7 43 0( c)(2 ); s ec. 3 01 .74 30 -4 (b )(1 ), Pro ced . & Adm in . Reg s. 6 Sec. 7 43 0( c)(1 ). 7 Sec. 7 43 0( b) (2 ) an d (3 ), (c)( 4) (A). 8 Sec. 7 43 0( b) (1 ). 9 See Rul e 2 32 (e). 1 0- 9 -

[* 9] Res po nd en t co nc ed edth atMr. Swi gg artex haus te d the adm in is tra ti ve rem ed ie s av ai labl e to hi m withi n t he IRS an d t ha t h e d idno t u nr eas on ab ly pro tra ct th e p ro ceed in gs . Res po nd en t d is pu te s t ha t M r. Swig ga rt wa s t he pre va il in g p arty . Prev ai li ng Party To b e a p rev ai li ng pa rty, a tax pa y er m us t (1 ) subs tant ia ll y

pre va il with
res pe ctto th e am ou ntin co nt ro ve rs y or t he m os t s ig ni fic an t i ss ue or s etof i ss ue s pr es en te d a nd(2) m eetth e ti m in g a ndne t wo rth requi rem en ts of 2 8 U.S.C. 24 12 (d )(1 )(B) an d (2 )(B)
. Res po nd en t co nc ed es Mr. Swi gg artm eet s t he ne t 1 1
worthrequi rem en t, an d we c on cl ud e h e h as m etth e ti m in g a ndne t wo rth requi rem en ts . Res po nd en t as se rts th atMr. Swi gg artha s n otsubs tant ia ll y pr ev ai le d wi thres pe ctto th e am ou ntin co nt ro ve rs y be cau se he rep orte d atax du e of $7 m or e th anth e p orti on of t he ass es sm en t at tri bu tabl e to th e ch an ge in fil in g st atus . Furt he r, res po nd en t as se rts th atMr. Swi gg artha s n otsubs ta nt ia ll y pr ev ai le d a s t o t he m os t i m po rta ntis su e o r se t o f is su es be cau se “ [t]he m os t im po rta ntis su e inan y

CDP cas e is th e v al id it y

of t he Serv ic e’s co ll ect io n a ct io n.” Mr. Swi gg artha s co ns is te nt ly dis pu te d t he ass es sm en t o f th e am ou nt at tri bu tabl e to th e u ni la te ral ch an ge infil in g s ta tu s, an d t he on ly iss ue s p res en te d to us were the va li di ty of th atpo rti on of t he ass es sm en t an d t he att em pt s t o c ol le ct Sec. 7 43 0( c)(4 )(A). 1 1- 10 -

[* 10 ] ba se d o n tha t as se ss m en t. Res po nd en t h as co nc ed edth atth e p orti on of t he
as se ss m en t at tri bu tabl e to th e ch an ge in fil in g s ta tu s was in va li d a ndth atth e co ll ect io n a ct io n s ho ul d n otbe su st ai ne d a s t o t ha t p orti on of t he ass es sm en t. Mr . Swig ga rt i s t he pre va il in g p arty . Subs tant ia ll y

Ju st ifi ed A tax pa y er wi ll no t b e tr eat edas t he pre va il in g p arty if t he Co m

m is si on er es tabl is he s t ha t the po si ti onof t he Uni te d S ta te s was subs ta nt ia ll y jus ti fie d. In

1 2 hi s re sp on se to Mr. Swi gg art ’s m ot io n fo r awardof c os ts , res po nd en t d idno t as se rt t ha t the po si ti on of t he Uni te d S ta te s was subs ta nt ia ll y jus ti fie d, an d wi th go odreas on . A po si ti on is subs ta nt ia ll y jus ti fie d i f itha s a r eas on ab le ba si s i n bo th factan d l aw an d i s ju st ifi edto a de gr ee tha t co ul d s at is fy a reas on ab le pe rs on . A sig ni fic an t fa ct orin de te rm in in g wh ethe r th e Co m m is si on er’s p os it io n 1 3 is subs ta nt ia ll y

jus ti fie d a s o f a g iv enda te is whet he r on or b efo re tha t d at e th e ta xp ay er h as pre se nt edall of t he rel ev an t i nf orm at io n t ha t i s u nd er the tax pa y er’s

Sec. 7 43 0( c)(4 )(B) (i) ; Ru le 23 2( e). 1 2 See P ie rce v . Und erwo od , 48 7 U.S. 5 52 , 56 5 (1 98 8) ; s ee al so Sh er v . 1 3 Co m m is si on er, 8 9 T.C. 7 9, 8 4 (1 98 7) , aff’d, 8 61 F.2d13 1 (5 th Cir . 19 88 ).- 11 -

[* 11 ] co ntro l an d h as pre se nt edrel ev an t l eg al arg um en ts supp orti ng th e ta xp ay er’s po si ti on . 1 4 Whe re a t ax pay er s eek s b ot h a dm in is tra ti ve an d l it ig at io n c os ts , we app ly th e “ subs ta nt ia ll y

jus ti fie d” st an da rdas o f th e two sep arat e d at es onwhi ch th e Co m m is si on er t oo k apo si ti on , firs t i n t he adm in is tra ti ve pro ceed in g a ndlat er i n th e co urt p ro ceed in g. Forpu rp os es of t he adm in is tra ti ve pro ceed in g, t he 1 5 Co m m is si on er’s p os it io n i s t ha t t ak enon th e d at e o f th e n ot ic e o f de ci si onof t he IRS Off ic e o f App eal s. Forpu rp os es of t he co urt p ro ceed in g, t he 1 6 Co m m is si on er’s p os it io n i s t he po si ti on setforth in th e an swe r. W he re the 1 7 Co m m is si on er m ai nt ai ns th e sa m e p os it io n i n b ot h t he adm in is tra ti ve an d c ou rt pr oc eed in gs , we canco ns id er h is adm in is tra ti ve an d l it ig at io n p os it io ns to ge th er. 1 8

Co rs on v. Co m

m is si on er, 1 23 T.C. 20 2, 2 06 -2 07 (20 04 ); s ec. 3 01 .74 30
- 1 4 5( c)(1 ), Pro ced . & Adm in . Reg s. Sec. 7 43 0( c)(7 )(A) an d (B ); M ag gi e Mg m t. Co . v. Co m

m is si on er, 1 08 1 5 T.C. 43 0, 4 42 (19 97 ). Sec. 3 01 .74 30 -3 (c)( 2) , Pro ced . & Adm in . Reg s. 1 6 Mag gi e Mg m

t. Co . v. Co m

m is si on er, 1 08 T.C. at 4 42
. 1 7 Mag gi e Mg m

t. Co . v. Co m

m is si on er, 1 08 T.C. at 4 42 -4 43 ; s ee al so Co ol ey 1 8 v. Co m m is si on er, T.C. Mem o. 2 01 2- 16 4, s li p o p. at*1 8- *1 9.- 12 -

[* 12 ] Und er s ect io n 6 21 3( b) (2 )(A), i f a t ax pay er fi le d areque stforab at em en t wit hi n 6 0 d ay s o f th e is su an ce o f th e m ath e rro r no ti ce, “ th e Sec ret ary sh al l ab at e th e as se ss m en t.” (Em

ph as is supp li ed .) Furth er, an y reas se ss m en t “ sh al l b e subjec t to th e d efi ci en cy

pro cedur es ”. The p art ie s ag ree a ndwe fin d t ha t M r. Swig ga rt

1 9 reque st edab at em en t wi th in 60 da y s o f th e m ath e rro r no ti ce wh enhe m ai le d h is reque stto th e Atl an ta , Geor gi a, IRS a dd res s o n t he no ti ce; th eref or e, res po nd en t was requi redby statut e to ab at e th e as se ss m en t. Furth er, Mr . Swig ga rt p ro vi de d 2 0
a co py of th e reque stan d re le va ntleg al au th or it y to th e Offi ce o f App eal s dur in g th e CDP h eari ng . Mr. Swig ga rt’s re qu es t fo r ab at em en t was reject edby lett er da te d S ep te m

be r 15 , 20 11 , fro m

anIRS o ffi ce i n M em

ph is , Tenn es se e. That 2 1 le tt er s ta te d t ha t the IRS wo ul d n otab at e th e as se ss m en t b ecau se Mr. Swi gg artha d fai le d t o p ro ve he was e nt it le d t o h eadof h ou se ho ldfil in g s ta tu s. Fu rth er, the

Sec. 6 21 3( b) (2 )(A) (e m

ph as is supp li ed ). 1 9 Mr. Swi gg artals o a ss ert edth atres po nd en t’s i ss ua nc e o f th e n ot ic e o f le vy 2 0 was invi ol at io n o f se ct io n 6 21 3( b) (2 )(B) . Thatsec ti on pro vi de s t ha t n o l ev y or pr oc eed in g i n c ou rt f

or th e co ll ect io n o f anass es sm en t ar is in g o utof am ath e rro r no ti ce s ha ll be m ad e, be gu n, o r pr os ecu te d dur in g the 60 da y s wi th in whi ch th e as se ss m en t m ay

be ab at ed . Howev er, a “ no ti ce o f in te ntto lev y is anact io n o th er th ana le vy”. See Eich le r v. C omm is si on er, 1 43 T.C. __ , __(sl ip op . at 1 4) (Ju ly 23 , 20 14 ). It i s n otcle ar wh ethe r th e Sep te m be r 15 , 20 11 , let te r was fro m anOffic e o f 2 1 App eal s.- 13 -

[* 13 ] set tl em en t o ffi cer a ls o c on cl ud edth atMr. Swi gg artwas re qu ire d t o p ro ve hi s en ti tl em en t t o t ha t s ta tu s, d es pi te Mr. Swi gg art ’s cit at io n o f th e st atut e requi rin g the ass es sm en t t o b e ab at ed . The s et tl em en t o ffi cer c on cl ud edth atth e erro ne ou s as se ss m en t was va li d a ndth atMr. Swi gg art ’s affi da vi t was in su ffi ci en t to pro ve en ti tl em en t t o h eadof h ou se ho ldst atus an d s us ta in edth e le vy. By st atut e, th e IRS was re qu ire d t o aba te th e as se ss m en t, an d re qu iri ng Mr. Swi gg art to pro ve en ti tl em en t t o h eadof h ou se ho ldst atus be fo re ab at in g the ass es sm en t was no t s ub st an ti al ly j us ti fie d. Inth e an swe r, res po nd en t co nt in ue d t o m ai nt ai n t ha t the ass es sm en t was va li d a ndth at“ th e se tt le m en t o ffi cer p ro vi de d the op po rtu ni ty to co nt es t l iabi li ty whi chwou ldcu re an y

pro cedur al is su es ”. InFrei jie v . Comm is si on er, 1 25 T.C. 14 , 32 -3 6 (2 00 5) , th e Co urt h el d t ha t a t ax pa y er’s o pp ortu ni ty in a s ect io n 6 33 0 pr oc eed in g t o d is pu te th e u nd erl y in g t ax li ab il it y do es no t cu re an ass es sm en t
m ad e in de ro ga ti on of h is rig htto a de fic ie nc y pro ceed in g. Re sp on de nt ’s po si ti on in th e an swe r is no t s ub st an ti al ly j us ti fie d. Mr. Swi gg artis th e p rev ai li ng pa rty; th eref or e, we m us t d et erm in e whe th er th e at to rn ey ’s fees an d o th er co st s t ha t h e se ek s t o re co ve r are reas on ab le
.- 14 -

[* 14 ] Rea so nabl e Co st s Mr. Swi gg artsee ks anawardforth e $ 60 Tax C ou rt f il in g fe e an d l eg al fees fo r 22 .6 h ou rs at a$2 50 ho ur ly rate. Tho se leg al fees in cl ud e fee s re la te d t o b ot h li ti ga ti on an d t he adm in is tra ti ve pro ceed in g. We addres s t he two sep arat el y . Lit ig at io n c os ts in cl ud e th os e “ in cu rredin co nn ect io n wi thth e p rep arat io n a nd fil in g o f a p et it io n”
. Mr. Swi gg artis en ti tl edto th e $ 60 fil in g fe e. 2 2 2 3 Mr. Swi gg artcla im ed16 .85 ho ur s o f le ga l fe es att rib ut ab le to li ti ga ti on : 9 .5 ho ur s i n 2 01 2 a nd7.3 5 h ou rs in 20 13 . W e fi ndth e am ou ntof t im e to be
reas on ab le . Reas on ab le att orne y ’s fees m ay no t ex ceedth e rat e o f $1 25 pe r ho ur (as ad jus te d fo r in fla ti on ) un le ss “ a sp eci al fact or , su ch as the li m it edav ai labi li ty of qu al ifi edatt orne y s fo r su ch pro ceed in g, t he di ffi cu lt y of t he is su es pre se nt edin th e cas e, orth e lo cal av ai labi li ty of ta x e xp ert is e, jus ti fie s a h ig he r rat e.” Mr. 2 4 Jo hn so n h as no t d em on st rat edth atan y sp eci al fact or

is ap pl ic ab le , andth us Mr. Swig ga rt m ay

reco ve r at to rn ey ’s fees on ly at th e in fla ti on -ad jus te d h ou rly rate. The IRS p ub li sh es th e in fla ti on -ad jus te d ra te cap on anan nu al ba si s. Th e h ou rly

See s ec. 3 01 .74 30 -4 (c)( 3) (i) , Pro ced . & Adm in . Reg s. 2 2 See s ec. 7 43 0( c)(1 )(A); see als o M as on v. Co m m is si on er, T.C. Mem o. 2 3 19 98 -4 00
. Sec. 7 43 0( c)(1 )(B) (ii i). 2 4- 15 -

[* 15 ] rat e cap for

fees in cu rredin 20 11 an d 2 01 2 was $1 80 pe r ho ur . The h ou rly 2 5 rat e cap forfees in cu rredin 20 13 was $ 19 0 p er h ou r. App lying th es e rat es to th e 2 6
reas on ab le ho ur s s etforth ab ov e, Mr. Swi gg artis en ti tl edto att orne y ’s fees of $3 ,10 6.5 0 a s a p artof h is li ti ga ti on co st s. Mr. Swi gg artcla im ed5.7 5 h ou rs of l eg al fees attrib ut ab le to adm in is tra ti ve co st s: 4.2 5 h ou rs in 20 11 an d 1 .5 h ou rs in 20 12 . Reas on ab le adm in is tra ti ve co st s in cl ud e o nl y

th os e in curredonor a fte r th e ear li es t o f: (1 ) th e d at e o f th e rec ei ptby th e ta xp ay er o f th e n ot ic e o f th e d eci si on of t he IRS Offi ce o f App eal s; (2) th e d at e of th e n ot ic e o f de fic ie nc y ; o r (3 ) th e d at e o n wh ic h t he IRS s en ds th e fi rs t l et te r of pr op os edde fic ie nc y

th atall ows th e ta xp ay er an op po rtu ni ty for ad m in is tra ti ve rev ie w inth e IRS Offic e o f App eal s. The m ath e rro r no ti ce M r. Swig gart 2 7
rece iv eddi d n otpro vi de th e o pp ortu ni ty for ad m in is tra ti ve rev ie w with the Offic e of App eal s. Be cau se th e IRS di d n otab at e th e as se ss m en t as requi redby statut e, it di d n otis su e Mr. Swi gg arta le tt er o f pr op os edde fic ie nc y or ano ti ce o f de fic ie nc y . Thu s, al th ou gh th e IRS ’ act io ns were n otsubs ta nt ia ll y jus ti fie d, t he ir

See R ev . Pro c. 20 11 -5 2, 2 01 1- 45 I.R.B. 7 01 ; Re v. Pr oc . 20 10 -4 0, 2 01 0- 46 2 5 I.R.B. 6 63
. See R ev . Pro c. 20 12 -4 1, 2 01 2- 45 I.R.B. 5 39
. 2 6 See s ec. 7 43 0( c)(2 ). 2 7- 16 -

[* 16 ] act io ns pre ve nt edth e is su an ce o f th e v ery ki ndof n ot ic e th atwou ldha ve gi ve n ri se to a cl ai m

rel at in g t o a dm in is tra ti ve co st s ea rli er i n the adm in is tra ti ve pr oc eed in g. The earl ie stlet te r in th e rec or d fr om th e Offi ce o f App eal s i s the no ti ce o f de te rm in at io n d at edFeb ru ary 8, 2 01 2; ho wev er, Mr . Swig ga rt c la im edon ly one
ha lf h ou r of

att orne y ’s fees as a dm in is tra ti ve co st s af te r th atda te . Mr. Swig ga rt, th eref or e, is en ti tl edto $9 0 o f at to rn ey ’s fees as a dm in is tra ti ve co st s. Co nc lu si on Mr. Swi gg artwas t he pre va il in g p arty in th is cas e, an d t he IRS was no t subs ta nt ia ll y

jus ti fie d i n fa il in g t o aba te th e as se ss m en t at tri bu tabl e to th e ch an ge in fil in g s ta tu s. As a res ul t, we wi ll gra ntMr. Swi gg art ’s m ot io n fo r anawardof
reas on ab le li ti ga ti on an d a dm in is tra ti ve co st s und er s ect io n 7 43 0 i n t ha t h e is award ed$3 ,25 6.5 0. To re fle ctth e fo reg oi ng , An ap pr op ria te ord er an d d eci si on wil l b e en te red
.