Opinion ID: 75238
Heading Depth: 2
Heading Rank: 3

Heading: Award of Litigation Costs

Text: We also find that the district court incorrectly denied Foster litigation costs under 26 U.S.C. § 7430. The government argues that, because of the circuit split on the issues raised in Cotnam, the IRS was substantially justified in denying Foster’s refund claim. In its appeal brief, the government lists the circuits where it is litigating the Cotnam issue, and includes a list of circuits where it has won and 8 The jury verdict awarded Foster $250,000 in compensatory damages. 9 We note the government’s argument that the doctrine of variance precludes this decision as the district court allegedly had no jurisdiction to consider the issue of post-judgment interest. However, the government did not appeal the district court’s opinion, which rules on the postjudgment interest claim on the merits. Therefore, we will address the merits of the claim. 11 where it has lost. However, the IRS should not expect the individual taxpayer to fund its crusade to change the law. While other circuits may include contingency fees paid to attorneys in a taxpayer’s gross income, Cotnam is clearly the law of this circuit. While it was litigating Foster’s case in district court, the IRS had a similar case pending before us, where we upheld Cotnam against the protests of the IRS. See Davis v. Comm’r, 210 F.3d 1346, 1347 fn.4 (11th Cir. 2000) (“The IRS’s primary argument is that Cotnam was wrongly decided and should be overruled.”). According to the government’s appeal brief, we denied its request for initial hearing en banc in that case, and sent the appeal to a three-judge panel. Because an en banc panel is necessary to overrule a precedential case, United States v. Woodard, 938 F.2d 1255, 1258 (11th Cir. 1991), the IRS should have understood that we were not inclined to overrule Cotnam. Because the IRS was not substantially justified in denying Foster’s tax refund, as the law in this circuit was clear on the issue, she is entitled to a reimbursement of costs.