applicable published guidance
(4) Prevailing party (A) In general The term “prevailing party” means any party in any proceeding to which subsection (a) applies (other than the United States or any creditor of the taxpayer involved)— (i) which— (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) which meets the requirements of the 1st sentence of section 2412(d)(1)(B) of title 28 , United States Code (as in effect on October 22, 1986 ) except to the extent differing procedures are established by rule of court and meets the requirements of section 2412(d)(2)(B) of such title 28 (as so in effect). (B) Exception if United States establishes that its position was substantially justified (i) General rule A party shall not be treated as the prevailing party in a proceeding to which subsection (a) applies if the United States establishes that the position of the United States in the proceeding was substantially justified. (ii) Presumption of no justification if Internal Revenue Service did not follow certain published guidance For purposes of clause (i), the position of the United States shall be presumed not to be substantially justified if the Internal Revenue Service did not follow its applicable published guidance in the administrative proceeding. Such presumption may be rebutted. (iii) Effect of losing on substantially similar issues In determining for purposes of clause (i) whether the position of the United States was substantially justified, the court shall take into account whether the United States has lost in courts of appeal for other circuits on substantially similar issues. (iv) Applicable published guidance For purposes of clause (ii), the term “applicable published guidance” means— (I) regulations, revenue rulings, revenue procedures, information releases, notices, and announcements, and (II) any of the following which are issued to the taxpayer: private letter rulings, technical advice memoranda, and determination letters. (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 the tax, interest, or penalty is made at the administrative level, by the Internal Revenue Service, or (ii) in the case where such final determination is made by a court, the court. (D) Special rules for applying net worth requirement In applying the requirements of section 2412(d)(2)(B) of title 28 , United States Code, for purposes of subparagraph (A)(ii) of this paragraph— (i) the net worth limitation in clause (i) of such section shall apply to— (I) an estate but shall be determined as of the date of the decedent’s death, and (II) a trust but shall be determined as of the last day of the taxable year involved in the proceeding, and (ii) individuals filing a joint return shall be treated as separate individuals for purposes of clause (i) of such section. (E) Special rules where judgment less than taxpayer’s offer (i) In general A party to a court proceeding meeting the requirements of subparagraph (A)(ii) shall be treated as the prevailing party if the liability of the taxpayer pursuant to the judgment in the proceeding (determined without regard to interest) is equal to or less than the liability of the taxpayer which would have been so determined if the United States had accepted a qualified offer of the party under subsection (g). (ii) Exceptions This subparagraph shall not apply to— (I) any judgment issued pursuant to a settlement; or (II) any proceeding in which the amount of tax liability is not in issue, including any declaratory judgment proceeding, any proceeding to enforce or quash any summons issued pursuant to this title, and any action to restrain disclosure under section 6110(f). (iii) Special rules If this subparagraph applies to any court proceeding— (I) the determination under clause (i) shall be made by reference to the last qualified offer made with respect to the tax liability at issue in the proceeding; and (II) reasonable administrative and litigation costs shall only include costs incurred on and after the date of such offer. (iv) Coordination This subparagraph shall not apply to a party which is a prevailing party under any other provision of this paragraph.