[Code of Federal Regulations]
[Title 26, Volume 18]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR301.7430-8]

[Page 533-534]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 301_PROCEDURE AND ADMINISTRATION--Table of Contents
 
                          Judicial Proceedings
 
Sec. 301.7430-8  Administrative costs incurred in damage actions for 
violations of section 362 or 524 of the Bankruptcy Code.

    (a) In general. The Internal Revenue Service may grant a taxpayer's 
request for recovery of reasonable administrative costs incurred in 
connection with the administrative proceeding before the Internal 
Revenue Service relating to the willful violation of section 362 or 524 
of the Bankruptcy Code only if the taxpayer is a prevailing party.
    (b) Prevailing party. A taxpayer is a prevailing party for purposes 
of this section only if--
    (1) The taxpayer satisfies the net worth and size limitations in 
paragraph (f) of Sec. 301.7430-5;
    (2) The taxpayer establishes that in connection with the collection 
of his or her federal tax an officer or employee of the Internal Revenue 
Service has willfully violated a provision of section 362 or 524 of the 
Bankruptcy Code; and

    (3) The position of the Internal Revenue Service in the proceeding 
was not substantially justified.

    (c) Administrative proceeding. For purposes of this section, an 
administrative proceeding is a proceeding related to an administrative 
claim presented to the Internal Revenue Service seeking relief from a 
violation of section 362 or 524 of the Bankruptcy Code by the Internal 
Revenue Service or recovery of damages from the Internal Revenue Service 
under Sec. 301.7433-2(e).

    (d) Costs incurred after filing of bankruptcy petition. 
Administrative costs may be recovered only if incurred on or after the 
date of filing of the bankruptcy petition that formed the basis for the 
stay on collection under Bankruptcy Code section 362 or the discharge 
injunction under Bankruptcy Code section 524, as the case might be.

    (e) Time for filing claim for administrative costs. (1) For purposes 
of this section, the taxpayer must file a claim for administrative costs 
before the Internal Revenue Service not later than 90 days after the 
date the Internal Revenue Service mails to the taxpayer, or otherwise 
notifies the taxpayer of, the decision regarding the claim for relief 
from or damages relating to a violation of the collection stay or the 
discharge injunction.

    (2) If the Internal Revenue Service denies the claim for 
administrative costs in whole or in part, the taxpayer must file a 
petition with the Bankruptcy Court for administrative costs

[[Page 534]]

no later than 90 days after the date on which the denial of the claim 
for administrative costs is mailed, or otherwise furnished, to the 
taxpayer. If the Internal Revenue Service does not respond on the merits 
to a request by the taxpayer for an award of reasonable administrative 
costs within six months after such request is filed, the Internal 
Revenue Service's failure to respond may be considered by the taxpayer 
as a denial of an award of reasonable administrative costs.
    (3) For purposes of paragraphs (e)(1) and (2) of this section, if 
the 90th day falls on a Saturday, Sunday, or a legal holiday, the 90-day 
period shall end on the next succeeding day which is not a Saturday, 
Sunday, or a legal holiday. The term legal holiday means a legal holiday 
in the District of Columbia. If the request for costs is to be filed 
with the Internal Revenue Service at an office of the Internal Revenue 
Service located outside the District of Columbia, the term legal holiday 
also means a statewide legal holiday in the state where such office is 
located.
    (f) Effective date. This section is applicable with respect to 
actions taken by the Internal Revenue Service after July 22, 1998.

[T.D. 9050, 68 FR 14320, Mar. 25, 2003]