                         T.C. Memo. 2006-85



                       UNITED STATES TAX COURT



          CASPIAN CONSULTING GROUP, INC., Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 18124-03.              Filed April 25, 2006.



     William E. Taggart, Jr., for petitioner.

     Patricia Montero, for respondent.



                         MEMORANDUM OPINION

     VASQUEZ, Judge:    This case is before the Court on

petitioner’s motion for award of litigation costs and related

costs pursuant to section 7430 and Rule 231.1    We see no reason



     1
        All references to sec. 7430 are to that section of the
Internal Revenue Code as in effect at the time the petition was
filed, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
                               - 2 -

for an evidentiary hearing on this matter.    See Rule 232(a)(2).

Accordingly, we rule on petitioner’s motion on the basis of the

parties’ submissions and the existing record.   See Rule

232(a)(1).   The portions of our opinion on the merits in the

instant case, Caspian Consulting Group, Inc. v. Commissioner,

T.C. Memo. 2005-54 (Caspian I), that are relevant to our

disposition of this motion are incorporated herein by this

reference.

     After concessions,2 the issues for decision are whether

petitioner unreasonably protracted the proceedings and whether

the costs claimed are reasonable.

                             Background

     Respondent issued a notice of deficiency to petitioner on

July 24, 2003, determining the following deficiencies in and

accuracy-related penalty on petitioner’s Federal income taxes:

                                 Penalty
     Year       Deficiency     Sec. 6662(a)

     1999       $2,133                –
     2000       43,698              $8,740

     On October 22, 2003, petitioner timely petitioned this Court

conceding the deficiencies for both years and asking the Court to

redetermine only the accuracy-related penalty for the year 2000.



     2
        Respondent concedes that petitioner is the prevailing
party due to the qualified settlement offer, meets the net worth
requirements, and exhausted petitioner’s administrative remedies.
                                - 3 -

Therefore, the only issue for decision was whether petitioner was

liable for the penalty pursuant to section 6662(a).

       In a letter dated October 18, 2003, petitioner made a

qualified offer of settlement pursuant to section 7430(c)(4) and

(g).    In this offer, petitioner conceded the deficiencies for tax

years 1999 and 2000 and stated that no penalties shall be

imposed.    Respondent did not accept this qualified offer.

       On March 23, 2005, this Court filed an opinion finding that

petitioner had reasonable cause and acted in good faith as to any

underpayment and was therefore not liable for the accuracy-

related penalty.

       On April 27, 2005, petitioner filed a motion for award of

litigation costs and related costs.     Petitioner seeks to recover

costs incurred subsequent to the date petitioner made its

qualified offer of settlement and prior to the date this Court

filed its opinion in this case.    Petitioner further seeks costs

in connection with the preparation of the motion for award of

litigation costs and related costs.     Moreover, petitioner seeks

costs in connection with the preparation of petitioner’s reply to

respondent’s opposition to petitioner’s motion for award of

litigation costs and related costs.

                             Discussion

       Section 7430 provides for the award of litigation costs to a

taxpayer in a court proceeding brought against the United States
                               - 4 -

involving the determination of any tax, interest, or penalty

pursuant to the Internal Revenue Code.   An award of litigation

costs may be made where the taxpayer (1) is the “prevailing

party”, (2) exhausted available administrative remedies, (3) did

not unreasonably protract the judicial proceeding, and (4)

claimed reasonable litigation costs.    Sec. 7430(a), (b)(1), (3),

and (c).   These requirements are conjunctive, and failure to

satisfy any one will preclude an award of costs to petitioner.

See Minahan v. Commissioner, 88 T.C. 492, 497 (1987).

      Respondent contends that petitioner unreasonably protracted

the proceedings and that the costs claimed are not reasonable.

I.   Unreasonably Protracting the Proceedings

      Pursuant to section 7430(b)(3), “No award for reasonable

* * * costs may be made * * * with respect to any portion of the

* * * court proceeding during which the prevailing party has

unreasonably protracted such proceeding.”

      Respondent argues that petitioner unreasonably protracted

the proceedings by failing to fully participate in the Appeals

conference and provide evidence until the time of trial.

Petitioner contends that all the documents introduced in the

trial of this case were made available to respondent before the

issuance of the notice of deficiency.

      Petitioner’s attorney did participate and meet with Appeals.

Moreover, there is no evidence that petitioner protracted the
                                 - 5 -

proceedings.   Given the facts of this case, we find petitioner

did not unreasonably protract these proceedings within the

meaning of section 7430(b)(3).

II.   Reasonableness of Litigation Costs

      Section 7430 limits the prevailing party to an award of

reasonable litigation costs.3    Section 7430(c)(1)(B)(iii)

generally limits the hourly rate for attorney’s fees.4     A

taxpayer may recover attorney’s fees above the statutory limit if

the court determines the existence of a special factor such as:

(1) Limited availability of qualified attorneys for the

proceeding; (2) the difficulty of the issues presented in the

case; or (3) the local availability of tax expertise.     Sec.

7430(c)(1)(B)(iii).

      Petitioner seeks to recover attorney’s fees in excess of the

statutory limit based on two reasons.      First, petitioner argues

that its counsel’s “knowledge of substantive and procedural

federal income tax law, and his experience in litigation of tax

controversies, is far more extensive than the knowledge and

experience of a tax attorney who is merely well-qualified to


      3
        Reasonable litigation costs include, inter alia,
reasonable court costs and fees paid or incurred for the services
of attorneys in connection with a court proceeding (attorney’s
fees). Sec. 7430(c)(1).
      4
        Rev. Proc. 2002-70, sec. 3.32, 2002-2 C.B. 845, 850; Rev.
Proc. 2003-85, sec. 3.33, 2003-2 C.B. 1184, 1190; and Rev. Proc.
2004-71, sec. 3.35, 2004-2 C.B. 970, 976, state that the hourly
rate for attorney’s fees during 2003-2005 is $150.
                               - 6 -

practice before the Tax Court.”   Second, petitioner argues that

the experience of its counsel, “and his detailed familiarity with

a number of provisions of the Internal Revenue Code, enables him

to handle litigation before the Tax Court with a far greater

efficiency based on time expended than all but a handful of tax

attorneys.”

     Respondent contends that petitioner is not entitled to an

enhanced fee beyond the statutory rate because the factual nature

of the issue in Caspian I does not justify the enhanced rate.    We

agree with respondent.

     General expertise in tax law in itself is not a special

factor warranting a fee award in excess of the statutory rate

under section 7430.   Huffman v. Commissioner, 978 F.2d 1139, 1150

(9th Cir. 1992), affg. in part and revg. in part T.C. Memo. 1991-

144; Powers v. Commissioner, 100 T.C. 457, 489 (1993), affd. in

part, revd. in part and remanded on another issue 43 F.3d 172

(5th Cir. 1995).   Depending on the facts and circumstances of the

case, however, we may find that a tax attorney had a special

skill and expertise needful for the litigation in question.

Powers v. Commissioner, supra.

     Although the issues presented in Caspian I may have required

petitioner to secure the services of a competent tax attorney,

this finding, standing alone, does not demonstrate the presence

of a special factor which would justify an increased award under
                                - 7 -

section 7430.    See Powers v. Commissioner, 43 F.3d 172, 183 (5th

Cir. 1995), affg. in part and revg. in part on another ground

T.C. Memo. 1993-125; Cozean v. Commissioner, 109 T.C. 227 (1997).

Petitioner has failed to establish that its attorney possessed

any nonlegal or technical abilities apart from his expertise in

tax law.    See Powers v. Commissioner, 43 F.3d at 183; Cozean v.

Commissioner, supra.    Petitioner, therefore, has failed to

establish that a special factor existed which justifies an

award in excess of the maximum rate provided in section

7430(c)(1)(B)(iii).

III.    Conclusion

       To summarize, we award petitioner litigation costs to the

extent described herein.    Based on the schedules submitted by

petitioner attached to the affidavits of William E. Taggart, Jr.

and using our best judgment, petitioner is entitled to attorney’s

fees for 79.05 hours at a rate of $150 per hour, totaling

$11,857.50.    See Rule 232(d). Additionally, petitioner is

entitled to the $196.95 of expenses it paid for costs and $730 in

clerk fees.

       Moreover, petitioner is entitled to attorney’s fees for 10

hours in connection with the preparation of the motion for award

of litigation costs and related costs in the amount of $1,500 and

for 8 hours in connection with the preparation of petitioner’s
                                 - 8 -

reply to respondent’s opposition to petitioner’s motion for award

of litigation costs and related costs in the amount of $1,200.

     In reaching all of our holdings herein, we have considered

all arguments made by the parties, and to the extent not

mentioned above, we find them to be irrelevant or without merit.

     To reflect the foregoing,


                                              An appropriate order and

                                         decision will be entered.
