                        T.C. Memo. 2002-212



                      UNITED STATES TAX COURT



                SANDRA L. ANDARY-STERN, Petitioner v.
            COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 5460-01.                Filed August 21, 2002.


     Sandra L. Andary-Stern, pro se.

     Paul K. Voelker, for respondent.



                         MEMORANDUM OPINION


     BEGHE, Judge:   This matter is before us on petitioner’s

motion for litigation and administrative costs under section

7430(a)1.   The issues for decision are whether:   (1) Respondent’s


     1
       Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years at issue and
all Rule references are to the Tax Court Rules of Practice and
                                                   (continued...)
                               - 2 -

position was substantially justified, and (2) whether petitioner

exhausted all administrative remedies available.   We hold that

(1) respondent’s position was substantially justified, and (2)

petitioner failed to exhaust all administrative remedies

available.   We therefore deny petitioner’s motion.

Background

     On February 16, 1993, respondent mailed a notice of

deficiency to petitioner for the 1988 tax year; on October 19,

1993, respondent mailed notices of deficiency to petitioner for

the 1987 and 1991 tax years.   The address used by respondent on

both these notices was 451 E. Nellis C2134, Las Vegas, NV 89110-

5340 (the 451 E. Nellis address).   On November 6, 1996,

respondent mailed notices of deficiency for the 1992, 1993, and

1994 tax years to petitioner at 2850 Needles Highway #2913,

Laughlin, NV, 89029-9998 (the 2850 Needles Highway address).

     The notices of deficiency were based on substitute returns

respondent prepared because petitioner, prior to the mailing of

the notices, had not filed Federal income tax returns for any of

the years at issue.   The deficiencies were assessed between July

19, 1993 and April 28, 1997.   On August 21, 1997, respondent




     1
      (...continued)
Procedure. All references to sec. 7430 are to that section as in
effect when the petition was filed.
                                - 3 -

recorded a notice of a $34,950 Federal tax lien with the Clark

County recorder in Las Vegas, Nevada.

     In November 2000, petitioner applied for a position as pit

floor supervisor with ETT Gaming.    On November 19, 2000, as part

of the application process, ETT Gaming purchased a consumer

credit report on petitioner, which petitioner reviewed.     The

report showed the $34,950 Federal tax lien.    Prior to reviewing

the credit report, petitioner was unaware of the Federal tax

lien.

     On December 4, 2000, petitioner asked for help from the

Taxpayer Advocate Service in removing the Federal tax lien.       The

Taxpayer Advocate Service arranged for petitioner to prepare

returns for each of the years for which respondent had assessed a

deficiency.    Petitioner prepared Forms 1040, Individual Income

Tax Return, for 1987, 1988, and 1991 and joint returns for 1992,

1993, and 1994.    On March 29, 2001, petitioner submitted the

returns to the Taxpayer Advocate Service, which forwarded them to

the appropriate Internal Revenue Service center for processing.

Processing included abating the previous assessments and

assessing the amounts shown on the returns prepared by

petitioner.    It does not appear that petitioner submitted any

payment for the taxes shown on the returns she prepared.2


     2
        The returns prepared by petitioner show much lower tax
                                                     (continued...)
                                - 4 -

     On April 19, 2001, petitioner filed a petition for the 1987

through 1994 tax years.3   The Court waived the filing fee.   On

May 7, 2001, petitioner filed a motion to dismiss for lack of

jurisdiction for the tax years 1987 through 1994.    Petitioner’s

motion alleged that the notices of deficiency were not mailed to

petitioner’s last known address, and that respondent had reason

to know petitioner changed her address because of Forms W-2, Wage

and Tax Statement, filed by petitioner’s former employers.    The

petition went on to state that petitioner was unable to work

after her last job in 1996, until after approximately November

2000, when she applied for a position with ETT Gaming.    According

to petitioner, she was not hired by ETT Gaming because of the

Federal tax lien, and the lien had prevented her from securing

employment with other employers.

     The Court directed respondent to respond to petitioner’s

motion by June 4, 2001.    On June 4, 2001, respondent filed a

motion for extension of time to respond, stating that more time

was needed for the investigation.    The Court granted the

extension and ordered respondent to respond by August 4, 2001.


     2
      (...continued)
liabilities than those prepared by respondent. For example,
respondent’s 1988 return shows a tax of $3,627 while petitioner’s
return shows $195.
     3
      The petition was with respect to the years 1987-94
inclusive. Respondent’s assessments are with respect to 1987,
1988, 1991, 1992, 1993, and 1994 years.
                                 - 5 -

On July 27, 2001, respondent filed a motion to extend further the

time to respond to petitioner’s motion.   Respondent’s motion

stated that respondent’s records indicated that the last return

filed by petitioner prior to 1996 was for 1985, that petitioner

had several address changes, and that respondent was attempting

to retrieve documents that would show the addresses for

petitioner as of the dates the notices of deficiency were mailed.

The Court granted respondent’s motion and ordered respondent to

respond by September 14, 2001.

     On September 6, 2001, respondent sent petitioner a

certificate of release of Federal tax lien, which petitioner

recorded on September 27, 2001.

      On September 18, 2001, respondent filed a notice of no

objection to petitioner’s motion to dismiss for lack of

jurisdiction.   Respondent’s notice stated that respondent did not

object to petitioner’s motion to dismiss for lack of jurisdiction

with respect to 1987, 1988, 1991, 1992, 1993, and 1994 on the

ground that the notices of deficiency were not mailed to

petitioner’s last known address.    Respondent moved to dismiss as

to 1989 and 1990 on the ground that respondent had not made any

determination of a deficiency in petitioner’s income tax for

either of those years.   On September 19, 2001, we granted

petitioner’s motion as to 1987, 1988, 1991, 1992, 1993, and 1994

on the ground that the notices of deficiency for those years were
                               - 6 -

not mailed to petitioner’s last known address.    On October 15,

2001, we granted respondent’s motion to dismiss as to 1989 and

1990 on the ground that respondent had not issued a notice of

deficiency or made any other determination that would confer

jurisdiction on the Court.

     On January 14, 2002, petitioner filed a motion for

litigation and administrative costs.   The motion states that

petitioner’s cost of litigating her claim was $8,985.    Petitioner

states that she borrowed $8,800 from her parents to “maintain a

location and the ability to litigate”, and that she incurred $186

in postage, photocopying, and typewriter costs.

     On January 14, 2002, the Court vacated its order of

dismissal for lack of jurisdiction so that the disposition of

petitioner’s motion for litigation and administrative costs would

be included in the decision entered in the case pursuant to Rule

232(f).

     On March 4, 2002, the Court filed a letter from petitioner

as petitioner’s motion to restrain assessment and collection.

Petitioner’s motion states that she received notices of intent to

levy for 1993 and 1994 without having received notice that any

tax was due and owing.   On March 21, 2002, petitioner filed a

first supplement restating much of what was in her original

motion to restrain assessment and collection, and on March 25,

2002, she filed a second supplement.   The second supplement
                               - 7 -

states that petitioner received a notice of intent to levy for

1991 when her return showed she was entitled to a refund.    On

April 15, 2002, petitioner filed a third supplement, which states

that petitioner had not received responses to repeated phone

calls to respondent regarding the proposed levies.    On April 18,

2002, petitioner filed a fourth supplement in which petitioner

objects to the imposition of a penalty and interest on her 1992

tax liability.

     On April 1, 2002, respondent filed a response to

petitioner’s motion for litigation and administrative costs.

Respondent’s response states that respondent agrees that

petitioner substantially prevailed but contends that respondent’s

position was substantially justified and that petitioner failed

to exhaust all administrative remedies.

     On April 11, 2002, respondent filed a response to

petitioner’s motion to restrain assessment and collection.

Respondent stated that petitioner’s motion was with respect to

1993 and 1994.   Respondent informed the Court that the

deficiencies previously assessed for 1993 and 1994 were abated,

that respondent assessed the amounts shown on joint returns of

petitioner and her husband for 1993 and 1994, and that the notice

of intent to levy was with respect to the amount shown on

petitioner’s return, plus penalties and interest.    Respondent
                               - 8 -

stated that the Court does not have jurisdiction to enjoin

assessment and collection because no deficiency within the

meaning of section 6211(a) had been asserted.

     On April 15, 2002, petitioner filed a response to

respondent’s response to petitioner’s motion for administrative

and litigation costs.   Petitioner’s response states that

respondent’s position was not substantially justified because

respondent sent the notices of deficiency to incorrect or

“fictitious” addresses.

     On April 22, 2002, petitioner filed an objection to

respondent’s response to petitioner’s motion to restrain

assessment and collection.   Petitioner said she never received a

notice of an amount owed for 1993 and 1994; petitioner asserted

respondent withheld the notices as a way to collect penalties and

interest.

     On May 17, 2002, the Court denied petitioner’s motion to

restrain assessment and collection, as supplemented.     In denying

petitioner’s motion, we stated that our jurisdiction to enjoin

assessment and collection is limited to matters over which we

have jurisdiction.   We concluded that because we lack

jurisdiction of the matters set forth in the petition filed in

this case, we have no authority to enjoin the assessments

pertaining to petitioner’s 1987, 1988, 1991, 1992, 1993, and 1994

taxable years.
                               - 9 -

Discussion

     The driving force of petitioner’s prayers for relief seems

to be the adverse effect of the tax lien on her ability to obtain

employment in the Nevada gaming industry.    It is common practice

in the Nevada gaming industry to run credit checks on prospective

employees who will be handling large amounts of cash and to hire

only those whose credit is unblemished.    ETT Gaming, among others

who checked petitioner’s credit, apparently regarded the Federal

tax lien disclosed by the report as a blemish.    Petitioner, who

has worked in the Nevada gaming industry since 1976, blames the

adverse credit report for her inability to find work, and we have

no reason to believe otherwise.    Although petitioner’s prayers

for relief are wrapped in a request for administrative and

litigation costs, petitioner’s motion papers suggest she is

actually complaining about consequential damages for which the

tax law provides no relief.

     Whatever the source of petitioner’s request, she cannot

prevail in this proceeding.   Before analyzing petitioner’s

request for costs under section 7430 and setting forth the

technical grounds for denying her motion, we explain petitioner’s

role in causing her predicament.
                              - 10 -

                                I.

     “The greatness of our nation is in no small part due to the

willingness of our citizens to honestly and fairly participate in

our tax collection system”.   Hatfield v. Commissioner, 68 T.C.

895, 899 (1977).   The method by which citizens complete the

initial step of their annual participation in our tax collection

system is, of course, to self-assess their income tax liabilities

by filing income tax returns, and by paying the liabilities shown

thereon.   See Reif v. Commissioner, 77 T.C. 1169, 1179 (1981).

     In the case at hand, the originating cause of petitioner’s

problems is her failure to file timely Federal income tax returns

for the years 1987, 1988, 1991, 1992, 1993, and 1994.   Even

though petitioner was delinquent in not filing returns and paying

her tax liabilities, her employers and other third parties filed

information returns indicating she had earned wages and received

unemployment compensation and gambling winnings.   From the

information returns, respondent concluded that petitioner was

required to file returns for the years at issue and undertook to

prepare substitute returns on her behalf.

     The Commissioner’s authority to prepare substitute returns

derives from section 6020(b)(1), which provides that if “any

person fails to make any return required by any internal revenue

law or regulation * * * the Secretary shall make such return from
                              - 11 -

his own knowledge and from such information he can obtain through

testimony or otherwise.”

     Petitioner points out that the tax liabilities on the

returns she belatedly prepared and filed are substantially less

than those prepared by respondent, and that some of her returns

even show refunds.   By focusing on what respondent did, or should

have done, petitioner has lost sight of her responsibility to

tell respondent what her tax liability was for 1987, 1988, 1991,

1992, 1993, and 1994 and to make payments to the extent her

liabilities had not been satisfied by withholding at the source.4

     In any event, the above-quoted language of section 6020(b)

makes clear that the Commissioner is not charged with preparing a

perfectly accurate return.   The Commissioner is required only to

do the best he can with the information available to him, in the

absence of a return prepared and filed by the taxpayer.

     A substitute return prepared by the Commissioner gives rise

to a deficiency equal to the tax liability shown on the return,

and the deficiency procedures must be followed prior to

assessment.   Spurlock v. Commissioner, 118 T.C. 155 (2002).




     4
      When petitioner did file her tax returns on Mar. 29, 2001,
she did not include a payment for at least three of the years at
issue, 1992, 1993, and 1994. Consequently, respondent assessed
the amounts shown on petitioner’s returns plus penalties for late
filing and failure to pay, as well as interest. It is unclear
whether petitioner has paid her tax liabilities for any of the
years at issue.
                                - 12 -

Respondent therefore sent notices of deficiency to petitioner for

each of the years a substitute return was prepared.

     When a notice of deficiency is mailed, the taxpayer has 90

days to file a petition with the Court for redetermination of the

deficiency.   Sec. 6213(a).    During the 90-day period, the

Commissioner is precluded from assessing a deficiency or

instituting collection proceedings until the expiration of the

90-day period.   Id.   If a petition has been filed, the

restrictions on assessment and collection are in effect until the

decision of the Court has become final.       Id.   In the case at

hand, petitioner did not file a petition within the 90-day

period, and respondent proceeded with assessment and collection.5

     Respondent assessed the amounts shown on the substitute

returns after the 90-day period expired.       “Assessment” is

effected by the recording of the taxpayer’s liability in the

appropriate office of the Commissioner.       Sec. 6203.   After

recording the taxpayer’s liability, respondent may proceed with

collection by giving notice to the taxpayer liable for the unpaid

tax, stating the amount and demanding payment.       Such notice and

demand is to be given “as soon as practicable, and within 60

days,” of the assessment.     Sec. 6303(a).    The so-called notice



     5
      As discussed in connection with our analysis of
petitioner’s request for administrative and litigation costs,
infra, petitioner did not file a petition in response to any of
the notices of deficiency. Respondent concedes that he did not
mail the notices to petitioner’s last known address.
                                 - 13 -

and demand is required to be sent to the taxpayer’s last known

address.     Id.

     When a taxpayer fails to pay the amount assessed within 10

days of the notice and demand, a Federal tax lien arises, and a

notice of the lien may be filed to inform potential purchasers of

the taxpayer’s property or creditors of the taxpayer that the

Federal Government has an interest in the taxpayer’s property.

Secs. 6321, 6323(a), 6331(a).

         In her motion papers in this proceeding, petitioner has

repeatedly complained that she never received notice of any tax

liability and only discovered the tax lien when a prospective

employer ran a credit check.     The thrust of petitioner’s argument

is that if she did not receive notice and demand, a statutory

prerequisite to collection was missing and collection could not

go forward.     Sec. 6321.   Indeed, collection did not go forward.

After petitioner complained to respondent about the tax lien,

respondent abated the amounts assessed pursuant to the substitute

returns, assessed the amounts shown on the returns prepared by

petitioner, and removed the lien.

     Petitioner did not discover the Federal tax lien until 3

years after it was filed,6 and she blames it for her inability to


     6
      In the IRS Restructuring and Reform Act of 1998 (RRA 1998),
Pub. L. 105-206, sec. 6401, 112 Stat. 746, Congress enacted sec.
6320(a), which provides that respondent is required to give
notice within 5 business days of the filing of the notice of
lien. The notice is required to be left at the taxpayer’s
                                                   (continued...)
                              - 14 -

get a job in the Nevada gaming industry.     However the lien and

petitioner’s adverse credit report may have contributed to her

inability to secure employment, the originating cause of

petitioner’s problems was her failure to fulfill her obligations

to prepare and file returns for the years at issue and to pay her

tax liabilities.

                                II.

     To be entitled to an award of litigation costs under section

7430, a taxpayer must, among other things:     (1) Be the

“prevailing party”, (2) not have unreasonably protracted the

proceedings, and (3) have exhausted all administrative remedies

available in the Internal Revenue Service.     Sec. 7430(a) and (b).

Respondent contends that petitioner does not satisfy the first

and third requirements.   We agree with respondent.

     To be a prevailing party, the taxpayer must substantially

prevail with respect to either the amount in controversy or the

most significant issue or issues presented, and satisfy the

applicable net worth requirement.     Sec. 7430(c)(4)(A).   However,

the taxpayer is not considered the prevailing party if the

Commissioner can establish that his position in the proceedings



     6
      (...continued)
dwelling or place of business, or sent to the taxpayer’s last
known address. Sec. 6320(a). Because notice of the tax lien in
the case at hand was filed prior to the effective date of RRA
1998, petitioner is not entitled to its protections.
                               - 15 -

was substantially justified.   Sec. 7430(c)(4)(B).   Respondent

concedes that petitioner prevailed with respect to the issues

presented and meets the applicable net worth requirement but

contends that his position was substantially justified.

     Whether respondent’s position was substantially justified is

to be resolved by applying a reasonableness standard.     Pierce v.

Underwood, 487 U.S. 552, 564 (1988); Sher v. Commissioner, 89

T.C. 79, 84 (1987), affd. 861 F.2d 131 (5th Cir. 1988).

Respondent’s position is reasonable if the position had a

reasonable basis in both fact and law.     Norgaard v. Commissioner,

939 F.2d 874, 881 (9th Cir. 1991), affg. in part and revg. in

part T.C. Memo. 1989-390.   The fact that respondent concedes a

case does not automatically mean that his position was not

substantially justified.    Sokol v. Commissioner, 92 T.C. 760, 767

(1989).   In determining the reasonableness of respondent’s

position, the Court may consider all relevant factors.    Rutana v.

Commissioner, 88 T.C. 1329, 1333 (1987).

     To decide whether respondent’s position was substantially

justified, the Court must first identify when respondent is

considered to have taken a position and then decide whether the

position taken from that day forward was substantially justified.

In general, we bifurcate our analysis and consider separately the

positions taken in the administrative proceeding and the judicial

proceeding.   Huffman v. Commissioner, 978 F.2d 1139, 1148 (9th
                               - 16 -

Cir. 1992), affg. in part, revg. in part, and remanding T.C.

Memo. 1991-144.   Respondent ordinarily takes a position in an

administrative proceeding when he issues a statutory notice of

deficiency, see sec. 7430(c)(7)(B); in a Court proceeding,

respondent takes a position when he files an answer to a

petition, Huffman v. Commissioner, supra.

     In the case at hand, the position we scrutinize against the

substantial justification standard, in both the administrative

and Court proceedings, is whether the notices of deficiency were

mailed to petitioner’s last known address.

     Respondent first took the position that the notices of

deficiency were sent to petitioner’s last known address when he

mailed the notices.   Sec. 7430(c)(7)(B).   Petitioner contends in

her motion papers that the notices of deficiency were sent to

incorrect or fictitious addresses.

     Petitioner states that the 451 E. Nellis address, to which

respondent mailed notices of deficiency for 1987, 1988, and 1991,

was incorrect on two counts.   First, according to petitioner,

there is no E. Nellis in Las Vegas, the street petitioner lived

on was 451 N. Nellis.   Second, the unit on the address used by

respondent, C2134, was incorrect; petitioner lived in unit 01094.

     Petitioner also points out that the 2850 Needles Highway

address, to which respondent mailed the 1992, 1993, and 1994

notices, was incorrect.   According to petitioner, respondent used
                                - 17 -

mailbox number 2913, when the correct number was 29136.     In the

notice of no objection to petitioner’s motion to dismiss,

respondent conceded that the notices of deficiency were not

mailed to petitioner’s last known address.

     Petitioner contends that mailing the notices of deficiency

to the wrong addresses was unreasonable because respondent should

have been able to glean her correct addresses from various Forms

W-2 filed by her former employers.7

     In determining a taxpayer’s “last known address” we have

repeatedly held that the burden is on the taxpayer to provide the

Commissioner with clear and concise notification of her new

address.     Pyo v. Commissioner, 83 T.C. 626, 636 (1984); Mollet v.

Commissioner, 82 T.C. 618, 623 (1984).     While the Commissioner

must exercise reasonable diligence in ascertaining the taxpayer’s

correct address, administrative realities demand that the burden

necessarily falls upon the taxpayer to keep respondent informed

of his or her correct address or “accept the consequences”.     Alta

Sierra Vista, Inc. v. Commissioner, 62 T.C. 367, 374 (1974).

         Two relevant factors that influence our decision are



     7
      Petitioner’s motion papers reveal that she frequently
changed addresses and employers. Two Forms W-2 filed by former
employers for 1993 have different addresses: 1832 Merchant
# 103, Sparks, NV, and 3702 S. Virginia G12-243, Reno, NV. A
Form W-2 filed in 1994 by another employer shows petitioner’s
address as 2850 Needles # 29136, Laughlin, NV. Finally, a 1995
Form W-2, also filed by a different employer, shows petitioner’s
address as 6200 Meadowood, Reno, NV.
                              - 18 -

petitioner’s own unreasonable conduct, the failure to file

returns or to otherwise notify respondent of any address changes,

and respondent’s conduct throughout the course of the

administrative proceeding, which we find was reasonable.

     Petitioner states that she “had no knowledge of any taxes

owed and IRS did nothing to inform [her] of any taxes owed.”     It

bears repeating that our scheme of taxation is premised on “self-

assessment” through the filing of returns, Sloan v. Commissioner,

102 T.C. 137, 146 (1994), affd. 53 F.3d 799 (7th Cir. 1995), and

it is the taxpayer’s obligation to inform the Commissioner of

taxes owed.   Petitioner emphasizes that the Forms W-2 filed by

her former employers had the correct addresses.   It therefore

follows that petitioner received the Forms W-2 and that

petitioner knew or should have known she was required to file

returns.   By failing to file returns, as the law requires her to

do, or to otherwise notify respondent of her address changes,

petitioner bears much of the responsibility for not having

received the notices of deficiency.

     Respondent acted reasonably when petitioner brought to his

attention that she had not received the notices of deficiency.

When petitioner contacted the Taxpayer Advocate Service in

December 2000, the period of limitations on assessment had not

started to run because petitioner had not filed returns.   Sec.

6501(c)(3).   Accordingly, respondent could have reissued the
                               - 19 -

notices of deficiency to petitioner and forced her to litigate

her tax liabilities.   Instead, respondent helped petitioner to

prepare the returns she belatedly filed on March 29, 2001, abated

the amounts previously assessed, and assessed the amounts

petitioner showed on the returns she prepared.    At no point in

the administrative process did respondent maintain that the

notices of deficiency were sent to petitioner’s last known

address.

     In the proceedings before the Court, respondent was

substantially justified.    Respondent formally took a position in

the proceedings before the Court when he filed the notice of no

objection to petitioner’s motion to dismiss for lack of

jurisdiction.    See Bertolino v. Commissioner, 930 F.2d 759, 761

(9th Cir. 1991).    For purposes of section 7430 and the question

whether respondent’s position was substantially justified,

respondent is given a reasonable period of time to resolve

factual issues after receiving all relevant information.     Sokol

v. Commissioner, 92 T.C. at 765 n.10; Johnson v. Commissioner,

T.C. Memo. 1990-542.    In the matter before us, respondent never

took the position that the notices of deficiency were mailed to

petitioner’s last known address.    Respondent did not file an

answer disputing petitioner’s contention or otherwise contend

that the notices of deficiency were mailed to petitioner’s last

known address.    Respondent investigated the matter and
                              - 20 -

subsequently conceded that he could not establish that the

notices of deficiency were mailed to petitioner’s last known

address.   Respondent’s concession took the form of a notice of no

objection to petitioner’s motion to dismiss with respect to all

of the years for which a notice of deficiency was issued.

Respondent’s position was not unreasonable.

      Respondent also contends that petitioner did not exhaust

all administrative remedies available.   Section 7430(b)(1)

provides that a judgment for reasonable litigation costs shall

not be awarded unless the Court determines the party has

exhausted all administrative remedies available to her within the

Internal Revenue Service.   According to respondent, at the time

petitioner filed her petition, she had been granted

administrative reconsideration, making the filing of a petition

entirely unnecessary.   We agree with respondent.

     In the case at hand, petitioner initiated the administrative

proceeding when she contacted the Taxpayer Advocate Service on

December 4, 2000, requesting relief from assessments.   The

Taxpayer’s Advocate arranged for petitioner to be given audit

reconsideration which included processing the late-filed returns

petitioner filed on March 29, 2001, abating the amounts

previously assessed, and assessing the amounts shown on

petitioner’s returns.
                              - 21 -

     Petitioner filed her petition in the case at hand on April

19, 2001, only 21 days after she filed her returns for

processing.   Twenty-one days is not a reasonable time for

respondent to have completed the administrative proceeding

initiated by petitioner.   Respondent was required to process

petitioner’s returns, abate the amounts previously assessed,

assess the amounts shown by petitioner, and credit petitioner’s

accounts for the amounts that were assessed pursuant to the

returns prepared by respondent.   By failing to allow a reasonable

time for respondent to process her returns and adjust her

accounts before filing a petition, petitioner failed to let the

administrative proceeding run its course.   Therefore, we hold

that petitioner failed to exhaust an administrative remedy that

was available.

                               III.

     For completeness, we address the reasonableness of the

litigation costs claimed by petitioner.   Section 7430(c)(1)

provides that the term “reasonable litigation costs” includes

reasonable court costs, and, based on prevailing market rates for

the kind or quality of services furnished, the reasonable

expenses for expert witnesses, and reasonable fees paid for the

services of attorneys.

     Petitioner states that she borrowed the $8,800 from her

parents to “maintain a location and the ability to litigate.”    It
                               - 22 -

is not clear from that vague statement what costs petitioner

incurred and is seeking to recover.      Petitioner has been pro se

throughout the proceedings and has not paid for the services of

any attorneys.    It is well settled that a taxpayer cannot recover

attorney’s fees for representing herself, even if she happens to

be an attorney, which petitioner is not.      Frisch v. Commissioner,

87 T.C. 838 (1986).

       If it is living expenses for which petitioner seeks

reimbursement, living expenses are not costs for which section

7430(c) allows recovery.    Section 7430 does not provide for the

recovery of a taxpayer’s living expenses; she would have incurred

those expenses whether she was contesting her tax liability or

not.    Petitioner’s lack of income from a job to pay living

expenses and the resulting need to borrow from her parents, the

possible adverse effect of the tax lien on her credit and ability

to obtain employment, identify the so-called consequential

damages for which neither section 7430 nor any other relevant

statutory provision allows relief.      See Weiner v. IRS, 986 F.2d

12, 13 (2d Cir. 1993).

       Petitioner has also requested $186 for long-distance calls

to respondent’s Ogden, Utah, and Phoenix, Arizona, offices,

postage, photocopying, and typewriter rental costs.     However,

petitioner provided no receipts or other substantiation and no

allocation of the total cost among the various items.     Had

petitioner prevailed on the “substantially justified” and
                             - 23 -

“administrative remedies” issues, we might well have allowed a

recovery of some portion of the $186, bearing heavily upon

petitioner for her failure to itemize and substantiate her costs.

See O’Bryon v. Commissioner, T.C. Memo. 2000-379 (applying the

doctrine of Cohan v. Commissioner, 39 F.2d 540, 544 (2d Cir.

1930) to an award of costs under section 7430); see also Malamed

v. Commissioner, T.C. Memo. 1993-1.    In any event, petitioner has

not prevailed, and she is not entitled to recover any costs under

section 7430.

     In light of the foregoing,



                                      An Appropriate Order and

                              Order of Dismissal for Lack of

                              Jurisdiction will be entered.
