                                                                          F I L E D
                                                                   United States Court of Appeals
                                                                           Tenth Circuit
                     UNITED STATES COURT OF APPEALS
                                                                           APR 5 2000
                            FOR THE TENTH CIRCUIT
                                                                      PATRICK FISHER
                                                                               Clerk

    TERESA SALOPEK; MARK
    SALOPEK; MARCIE SALOPEK;
    BENJAMIN G. SALOPEK; MARY
    K. SALOPEK; JAMES A. SALOPEK;
    GEORGIA J. SALOPEK,

                Petitioners-Appellants,

    v.                                                   No. 99-9012
                                                  Appeal from U.S. Tax Court
    COMMISSIONER OF INTERNAL                    (T.C. Nos. 14160-97, 14161-97,
    REVENUE,                                        14162-97, & 14163-97)

                Respondent-Appellee.


                            ORDER AND JUDGMENT            *




Before KELLY , HENRY , and MURPHY , Circuit Judges.




         After examining the briefs and appellate record, this panel has determined

unanimously to grant the parties’ request for a decision on the briefs without oral




*
      This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore

ordered submitted without oral argument.

       Petitioners appeal from an award of costs and fees under 26 U.S.C. § 7430

that they assert is inadequate in several respects. “We review the Tax Court’s

decision concerning the award of litigation costs under I.R.C. § 7430 for an abuse

of discretion.”   Barford v. Commissioner , 194 F.3d 782, 786 (7th Cir. 1999);

see also Pate v. United States , 982 F.2d 457, 459 (10th Cir. 1993) (recognizing

same standard for review of district court order under § 7430). As explained

below, we hold that petitioners have waived most of their objections and that the

Tax Court did not abuse its discretion with respect to the matters properly

preserved for appeal. Accordingly, we affirm.

       Petitioners were audited in 1996, primarily on account of certain sizable

deductions claimed on their tax returns for 1993-1995. After efforts at informal

resolution failed for lack of requested documentary substantiation, respondent

sent petitioners notices of deficiency in April 1997 disallowing the deductions.

Petitioners challenged the deficiency in Tax Court in July 1997, later amending

their petitions in December 1997 to correct certain disadvantageous calculations

of their own. Throughout the proceedings, respondent continued to seek

supporting documentation for the disputed deductions. Petitioners provided the

last of the requested information by January 1998 and, within a month, the parties


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filed a “stipulation of settled issues,” though execution of a formal settlement of

the case was delayed for reasons not relevant to this appeal.

      In June 1998, petitioners moved for litigation costs under § 7430. They

noted respondent’s ultimate concessions on the merits of most matters, and

“[a]ttached . . . specific litigation and administrative costs for which [they]

claim[ed] an award, supported by an affidavit.” The affidavit, from petitioners’

counsel, summarily stated that he “performed the services and incurred the

expenses on the attached bills totaling $93,977.39.” While some bills reflected

hourly charges in excess of the statutory rate, neither petitioners nor counsel

noted this fact, much less advanced an argument “that a special factor, such as the

limited availability of qualified attorneys for such a proceeding, the difficulty of

the issues presented in the case, or the local availability of tax expertise,

justifie[d] a higher rate,” § 7430(c)(1)(B)(iii). No other costs were mentioned,

and petitioners did not request a hearing on the motion.

      Respondent sought an extension of time to respond, indicating a settlement

of the matter might be reached. However, on August 5, 1998, respondent filed a

lengthy formal objection to the costs sought, arguing   inter alia that it had been

justified in requiring additional substantiation before approving the claimed

deductions. Respondent also objected that most of the legal bills attached to the




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motion did not indicate the hourly rate charged and the few that did exceeded the

statutory rate without any stated justification.

       The Tax Court did not direct petitioners to file a reply or order a hearing,

both of which it had discretion, but no obligation, to do.   See Tax Court R.

232(a)(2). Nothing more was filed, and on October 26, 1998, the court issued

a memorandum opinion resolving the motion, pursuant to Tax Court R. 232(a)(1)

(“The Court may take action after the Commissioner’s written response to the

motion [for litigation costs] is filed.”). The court found that (1) respondent’s

position had been substantially justified as to all matters except certain cash

contribution deductions and depreciation deductions; and (2) compensation of

counsel’s time properly allocated to the latter issues, calculated at the applicable

statutory rates, totaled $11,490. The court also found $1,075 in reimbursable

litigation costs, similarly allocated to the issues on which respondent’s position

had not been substantially justified.

       A month later, petitioners requested an extension until December 12, 1998,

to file a motion for reconsideration of the opinion under Tax Court R. 161. The

court granted the request. On December 15, 1998, petitioners submitted four

separate Rule 161 motions which, after an oral conference, the court returned for

consolidation in a single motion. On January 11, 1999, with no such motion on

file, the court entered four formal “Order and Decisions,” awarding petitioners


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their various shares of the litigation costs as determined in the court’s previous

opinion. Two weeks later, petitioners requested another extension and, in

conjunction therewith, submitted their consolidated motion for reconsideration.

The motion sought previously unclaimed accounting fees and additional attorney

fees dating back to April 15, 1998 for services rendered in connection with the

motion for costs, and argued for the first time that counsel was entitled to fees in

excess of the hourly rate prescribed by § 7430(c)(1)(B)(iii). On February 4, 1999,

the court simultaneously granted the extension and summarily denied the Rule

161 motion. This appeal followed.

      Petitioners contend the Tax Court erred in failing to award (1) accounting

fees, (2) litigation costs associated with the § 7430 motion, (3) attorney fees in

excess of the statutory rate, and (4) litigation costs related to issues on which the

court found respondent’s position substantially justified. As discussed above, the

first three matters were not raised in petitioners’ § 7430 motion for costs, but

were interjected by their Rule 161 motion for reconsideration.

      “[D]ecisions interpreting Rules 59 and 60 of the Federal Rules of Civil

Procedure apply to motions for reconsideration and further trial under Rule 161

of the Rules of the United States Tax Court.”     Estate of Kraus v. Commissioner    ,

875 F.2d 597, 602 (7th Cir. 1989) (citing    Wheeler v. Commissioner , 46 T.C.M.

(CCH) 642 (1983)). The Rule 59/60 case law makes it clear that a motion for


                                            -5-
reconsideration is an inappropriate vehicle for advancing new arguments or facts

which could have been raised in prior briefing.      See, e.g. , Servants of Paraclete v.

Does , ___ F.3d ___, 2000 WL 194185, at *6 (10th Cir. Feb. 3, 2000);        Webber v.

Mefford , 43 F.3d 1340, 1345 (10th Cir. 1994);      Steele v. Young , 11 F.3d 1518,

1520 n.1 (10th Cir. 1993). Petitioners’ motion for reconsideration provided no

explanation why the facts and claims advanced therein could not have been raised

earlier. Under the circumstances, “we cannot say it was an abuse of the Tax

Court’s discretion to refuse to consider the additional evidence [and associated

cost claims]” submitted after it had issued its opinion on the matter.     Powers v.

Commissioner , 43 F.3d 172, 182 (5th Cir. 1995).

       The only question remaining is whether the Tax Court abused its discretion

in holding that respondent’s position with respect to certain depreciation and

charitable contribution deductions had been substantially justified. These matters

were ultimately settled on terms favorable to petitioners, though not entirely as

represented on their tax returns. In any event, respondent’s initial refusal to

accept the deductions was based on a lack of supporting documentation, and the

record reflects respondent’s repeated pre-settlement efforts to obtain reasonable

substantiation for the existence, amount, and timing of the deductions claimed.

See generally United States v. Yochum (In re Yochum)        , 89 F.3d 661, 671-72

(9th Cir. 1996) (holding government substantially justified in challenging


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deductions for lack of documentation, although taxpayers ultimately provided

evidence to support their claims). Petitioners cite a revenue agent’s statements

early in the proceedings indicating that the matters in dispute were simple and

would require little documentation to settle quickly. However, such initial

prognostications are clearly undercut by later averments from the same agent that

petitioners’ lack of cooperation, as well as the appearance of additional questions

raised by further investigation, necessarily extended the inquiry. We conclude the

Tax Court acted within its discretion in holding that respondent’s position on the

matters in question was substantially justified.

      The judgment is of the Tax Court is AFFIRMED.



                                                    Entered for the Court



                                                    Paul J. Kelly, Jr.
                                                    Circuit Judge




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