NY Tax L § 3030 (2021)
2021 New York Laws TAX - Tax Article 41 - Taxpayers' Bill of Rights Part 3 - Proceedings by Taxpayers 3030 - Awarding of Costs and Certain Fees.

§  3030.   Awarding of costs and certain fees. (a) In general.  In any administrative or court proceeding which is brought by  or  against  the commissioner in connection with the determination, collection, or refund of  any  tax,  the  prevailing  party  may  be  awarded  a judgment or a settlement for:  (1)  reasonable administrative costs incurred in connection with  such administrative proceeding within the department, and  (2)    reasonable  litigation  costs  incurred in connection with such court proceeding.  (b)    Limitations.  (1)  Exhaustion  of  administrative  remedies.  A judgment  for  reasonable  litigation  costs  shall not be awarded under subdivision (a) of this section in any court proceeding unless the court determines that the prevailing party has  exhausted  the  administrative remedies  available to such party within the department.  Any failure to agree to an extension of the time for the assessment of  any  tax  shall not  be  taken  into  account  for  purposes  of determining whether the prevailing party meets the requirements of the preceding sentence.  (2)  Only costs allocable to the state.   An award  under  subdivision (a)  of  this  section  shall be made only for reasonable litigation and administrative costs which are allocable to the state of  New  York  and not to any other party.  (3)    Costs  denied where prevailing party protracts proceedings.  No award for reasonable litigation and administrative costs may  be    made under  subdivision  (a)  of this section with respect to any  portion of the administrative or court proceeding during which the prevailing party has unreasonably protracted such proceeding.  (4) This section shall provide the exclusive means  for  a  prevailing party  to  be  awarded  administrative  and litigation costs incurred in connection with any administrative or court proceeding which is  brought by  or  against  the  commissioner in connection with the determination, collection, or refund of any tax.  (c) Definitions.  For purposes of this section:  (1)  Reasonable  litigation  costs.  The  term  "reasonable litigation costs" includes:  (A) reasonable court costs, and  (B) based upon prevailing market rates  for  the  kind  or quality  of services furnished:  (i) the reasonable expenses of expert witnesses in  connection with  a court proceeding,  (ii) the reasonable cost of any study,  analysis,  engineering report, test, or project which is found by the court to  be  necessary  for  the preparation of the party's case, and  (iii) reasonable fees paid or incurred for the  services  of attorneys in connection with the court proceeding, except that such fees shall not be  in  excess  of  seventy-five  dollars  per  hour  unless  the  court determines that an increase in the cost of living or a  special  factor, such  as  the  limited  availability  of  qualified  attorneys  for such proceeding, justifies a higher rate.  (2)  Reasonable  administrative  costs.     The  term      "reasonable administrative costs" means:  (A)  any  administrative  fees  or  similar  charges  imposed by   the department, and  (B) expenses, costs, and fees described  in  subparagraph  (B)    of paragraph one of this subdivision, except that any determination made by the  court under clause (ii) or (iii) of such subparagraph shall be made by the division of tax appeals in cases where  the  determination  under subparagraph  (C)  of paragraph five of this subdivision of the awarding of reasonable administrative costs  is  made  by  the  division  of  tax  appeals.    Such  term shall only include costs incurred on or after the date of the notice of  deficiency,  notice  of  determination  or  other document giving rise to the taxpayer's right to a hearing.  (3)   Attorney's fees.  For purposes of paragraphs one and two of this subdivision, fees for the services of an individual (whether or  not  an attorney)  who  is  authorized  to  practice  before the division of tax appeals shall be treated as fees for the services of an attorney.  (4) Burden of proof.  For purposes of this section, "burden of  proof" means  the  necessity  or  duty  of  proving,  by a preponderance of the evidence, a fact or facts in dispute on  an  issue  raised  between  the parties to a proceeding referred to in subdivision (a) of this section.  (5)    Prevailing  party. (A) In general.  The term "prevailing party" means any party in any proceeding  to  which  subdivision  (a)  of  this section  applies  (other  than  the  commissioner or any creditor of the taxpayer involved):  (i)  who (I) has substantially prevailed with respect to the amount in controversy, or (II) has substantially prevailed  with  respect  to  the most significant issue or set of issues presented, and  (ii)    who  (I)  within  thirty days of final judgment in the action, submits to the court an application for fees and  other  expenses  which shows that the party is a prevailing party and is eligible to receive an award  under  this section, and the amount sought, including an itemized statement from an attorney or expert witness representing  or  appearing in  behalf of the party stating the actual time expended and the rate at which fees and other  expenses  were  computed  (except  to  the  extent differing  procedures  are established by rule of court), and (II) is an individual whose net worth did not exceed two  million  dollars  at  the time  the  civil  action  was filed, or is an owner of an unincorporated business, or any partnership, corporation, association,  unit  of  local government  or organization, the net worth of which did not exceed seven million dollars at the time the civil action was filed,  and  which  had not  more  than  five hundred employees at the time the civil action was filed; except that an organization described in section 501(c)(3) of the internal revenue code exempt from taxation under section 501(a) of  such code,  or  a  cooperative  association  as  defined  in  the cooperative corporations law, may be a party regardless of the  net  worth  of  such organization or cooperative association.  (B)  Exception if the commissioner establishes that the commissioner's position was substantially justified.  (i) General rule.   A party shall not be  treated  as  the  prevailing party  in  a proceeding to which subdivision (a) of this section applies if the commissioner establishes that the position of the commissioner in the proceeding was substantially justified.  (ii) Burden of proof.  The commissioner shall have the burden of proof of  establishing  that  the  commissioner's  position  in  a  proceeding referred  to  in  subdivision  (a)  of  this  section  was substantially justified, in which event, a party shall not be treated as a  prevailing party.  (iii)  Presumption.   For purposes of clause (i) of this subparagraph, the  position  of  the  commissioner  shall  be  presumed  not   to   be substantially  justified  if  the department, inter alia, did not follow its applicable published  guidance  in  the  administrative  proceeding. Such presumption may be rebutted.  (iv)  Applicable  published guidance.   For purposes of clause (ii) of this subparagraph, the term "applicable published  guidance"  means  (I) regulations,   declaratory   rulings,   information  releases,  notices, announcements, and technical services bureau memoranda, and  (II) any of the following which are issued to the taxpayer:   advisory opinions and opinions of counsel.  (C)    Determination  as to prevailing party.  Any determination under this paragraph as to whether a party is a prevailing party shall be made by agreement of  the  parties  or  (i)  in  the  case  where  the  final determination  with  respect to tax is made at the administrative level, by the division of tax appeals, or (ii) in the  case  where  such  final determination is made by a court, the court.  (6)  The term "administrative proceeding" means any procedure or other action   before  the  division  of  taxation  (such  as  the  bureau  of conciliation and mediation services) or division of tax appeals.  (7)  The term "court proceeding" means any civil action brought  in  a court  of  the  state  of  New  York  (including  proceedings before the surrogate's courts under  section  nine  hundred  ninety-eight  of  this chapter).  (8)  The term "position of the commissioner" means:  (A)    the position taken by the commissioner in a judicial proceeding to which subdivision (a) of this section applies, and  (B)   the position taken in  an  administrative  proceeding  to  which subdivision  (a) of this section applies as of the date of the notice of deficiency, notice of determination or other document giving rise to the taxpayer's right to a hearing.  (d) Multiple actions.  For purposes of this section, in the case of:  (1)  multiple actions which could have been joined or consolidated, or  (2)   a case or cases involving  a  return  or  returns  of  the  same taxpayer  (including  joint  returns of married individuals) which could have been joined in a single court proceeding in the  same  court,  such actions  or cases shall be treated as one court proceeding regardless of whether such joinder or consolidation actually occurs, unless the  court in  which  such action is brought determines, in its discretion, that it would be inappropriate to treat such  actions  or  cases  as  joined  or consolidated.  (e)    Right  of  appeal. (1) Court proceedings.  An order granting or denying (in whole or in part) an  award  for  reasonable  litigation  or administrative  costs  under  subdivision (a) of this section in a court proceeding, may be incorporated as a part of the decision or judgment in the court proceeding and shall be subject to appeal in the  same  manner as the decision or judgment.  (2)  Administrative proceedings.  A determination or decision granting or  denying (in whole or in part) an award for reasonable administrative costs under subdivision (a) of this  section  by  the  division  of  tax appeals  or  the  tax  appeals tribunal shall be subject to exception or review in the same manner as the determination or decision.