Opinion ID: 566860
Heading Depth: 2
Heading Rank: 1

Heading: Cost and Fee Awards

Text: 11 The parties agree that the applicable statutes are those that were in effect as of December 9, 1988, when appellant filed her suit for refund in the district court. This means that the 1988 amendments to code § 7430 that re-define the proceedings for which fees and costs may be awarded are applicable. Nothing in the amendments suggests that our standard of review or appellant's burden of proof was changed, though appellant argues that congressional amendments were intended to harmonize § 7430 with the Equal Access to Justice Act (EAJA) provisions, 28 U.S.C. § 2412 (1985), placing the burden of proof on the government. 12 We disagree. The plain language of amended § 7430(c)(4) clearly places the burden of proof on the taxpayer, as in the past. Keasler v. United States, 766 F.2d 1227, 1236 (8th Cir.1985). We review the district court's findings of fact under a clearly erroneous standard, and we review its decision not to award fees and costs based on the facts under an abuse of discretion standard. In re Arthur Andersen & Co., 832 F.2d 1057, 1060 (8th Cir.1987). 13 A taxpayer is eligible for an award of reasonable fees and costs incurred in certain administrative and court proceedings where s/he is the prevailing party and has exhausted all administrative remedies. I.R.C. § 7430(a)-(b). The fees and costs are limited to those incurred in proceedings beginning with the earlier of the date of receiving a final determination from the Internal Revenue Service Office of Appeals or a notice of deficiency, I.R.C. § 7430(c), and ending with the final determination by the appellate courts. Commissioner, Immigration & Naturalization Servs. v. Jean, --- U.S. ----, 110 S.Ct. 2316, 110 L.Ed.2d 134 (1990); Bode v. United States, 919 F.2d 1044, 1052 (5th Cir.1990); Powell v. Commissioner, 891 F.2d 1167, 1169 (5th Cir.1990). 14 A prevailing party is one that: (1) proves that the position taken by the United States in the administrative and court proceedings was not substantially justified, (2) substantially prevails as to the amount or most significant issue in controversy, and (3) meets certain procedural requirements listed in 28 U.S.C. § 2412(d)(1)(B), sentence one. I.R.C. § 7430(c)(4). The district court concluded, and we agree, that taxpayer met the latter two of the three requirements. 15 The key issue in this case, therefore, is whether the district court properly concluded that appellant failed to prove that the government's position was not substantially justified. The position of the United States is the legal and factual position asserted by it during the administrative and court proceedings, regardless of whether the position originated before or after the proceedings began. Powell, 891 F.2d at 1169, and Powell v. Commissioner, 791 F.2d 385, 391 (5th Cir.1986) (position taken prior to period for which fee award is available but carried over to fee award period is position of the United States for purposes of fee award). 16 The not substantially justified standard was copied by Congress from the EAJA provisions. Thus, where the wording is consistent, courts read the EAJA and § 7430 in harmony. Arthur Andersen, 832 F.2d at 1060; Powell, 791 F.2d at 391; United States v. Balanced Fin. Management, Inc., 769 F.2d 1440, 1451 n. 12 (10th Cir.1985). Based on our EAJA decisions, the government's position is not substantially justified where it is unreasonable. Arthur Andersen, 832 F.2d at 1060. Stated another way, the government's position is not substantially justified where its position is not clearly reasonable, well founded in law and fact, [or] solid though not necessarily correct. United States v. Estridge, 797 F.2d 1454, 1459 (8th Cir.1986). The government's position may not be reasonable if it failed to adequately investigate its case or placed unwarranted reliance on biased witnesses. Id. at 1457-58. Whether the government's position is not substantially justified is necessarily a case-by-case, facts and circumstances determination. Arthur Andersen, 832 F.2d at 1060; Keasler, 766 F.2d at 1237 n. 22.