Awarding of Costs and Attorneys' Fees

§ 7430. Awarding of costs and certain fees(a) In generalIn any administrative or court proceeding which is brought by or against the United States in connection with the determination, collection, or refund of any tax, interest, or penalty under this title, 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 Internal Revenue Service, and (2) reasonable litigation costs incurred in connection with such court proceeding. (b) Limitations(1) Requirement that administrative remedies be exhaustedA judgment for reasonable litigation costs shall not be awarded under subsection (a) in any court proceeding unless the court determines that the prevailing party has exhausted the administrative remedies available to such party within the Internal Revenue Service. 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 United StatesAn award under subsection (a) shall be made only for reasonable litigation and administrative costs which are allocable to the United States and not to any other party. (3) Costs denied where party prevailing protracts proceedingsNo award for reasonable litigation and administrative costs may be made under subsection (a) with respect to any portion of the administrative or court proceeding during which the prevailing party has unreasonably protracted such proceeding. (4) Period for applying to IRS for administrative costsAn award may be made under subsection (a) by the Internal Revenue Service for reasonable administrative costs only if the prevailing party files an application with the Internal Revenue Service for such costs before the 91st day after the date on which the final decision of the Internal Revenue Service as to the determination of the tax, interest, or penalty is mailed to such party. (c) DefinitionsFor purposes of this section—(1) Reasonable litigation costsThe 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, except that no expert witness shall be compensated at a rate in excess of the highest rate of compensation for expert witnesses paid by the United States, (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