                          T.C. Memo. 2002-270



                        UNITED STATES TAX COURT



                   CASEY A. ROGINIEL, Petitioner v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent



        Docket No. 2328-01.             Filed October 24, 2002.


        Marshall C. Sanders, for petitioner.

     Robert Taylor, for respondent.



                          MEMORANDUM OPINION


     PAJAK, Special Trial Judge:     This case is before the Court

pursuant to petitioner’s motion for litigation costs under

section 7430 and Rules 230 through 233.    Unless otherwise

indicated, all section references are to the Internal Revenue

Code.     All Rule references are to the Tax Court Rules of Practice

and Procedure.
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     Petitioner seeks to recover litigation costs of $1,560.

     In accordance with Rule 232(a), we dispose of the motion

before us without a hearing.    Accordingly, we rule on

petitioner’s motion on the basis of the parties’ submissions and

the record in this case.   The underlying issues raised in the

petition were settled by a stipulation of settlement.

     At the time the petition in this case was filed, petitioner

resided in Phoenix, Arizona.

     By letter dated July 24, 2000 (30-day letter), respondent

sent petitioner an examination report with respect to

petitioner’s 1999 taxable year in which respondent determined

that petitioner’s filing status was changed from head of

household to single; the dependency exemptions for petitioner’s

two children were disallowed; and the earned income credit was

disallowed.   In the 30-day letter, respondent advised petitioner

that if he disagreed with the proposed changes, respondent would

consider any supporting information and documentation that he

might care to submit.   Along with the 30-day letter, respondent

provided petitioner with Form 886-H, Supporting Documents, which

outlined the type of information and documentation relevant to

resolving issues related to filing status, dependency exemptions,

and the earned income credit.    Respondent also advised petitioner

of his right to file an administrative appeal for the proposed

changes and enclosed with the 30-day letter a copy of Publication
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5, Your Appeal Rights and How To Prepare a Protest If You Don’t

Agree.

     Petitioner did not request an Appeals Office hearing.

     On August 6, 2000, petitioner responded to respondent’s July

24, 2000, letter by providing a copy of petitioner’s decree of

dissolution of marriage (decree).   The decree designated

petitioner as the primary residential parent for both children.

     In response to petitioner’s August 6, 2000, submission,

respondent sent petitioner Form 886-A, Explanation of Items,

which indicated that additional information was required by

respondent.    Respondent specifically stated that acceptable forms

of supporting documentation to verify the children’s residency

would include “SCHOOL AND/OR MEDICAL RECORDS LISTING YOUR NAME AS

PARENT OR GUARDIAN, THE CHILD’S NAME, THE ADDRESS OF RECORD DATED

JANUARY THROUGH DECEMBER OF THE TAX YEAR.”   Acceptable forms of

supporting documentation to verify support would include

cancelled checks or receipts for rent/mortgage and utilities.

The letter also stated that “IF YOU ARE ABLE TO FURNISH THE

REQUIRED DOCUMENTATION WITHIN 90 DAYS, WE WILL BE ABLE TO

RECONSIDER OUR CURRENT DETERMINATION.”

     On December 7, 2000, respondent mailed to petitioner a

notice of deficiency in the amount of $4,324 for the taxable year

1999.    The notice of deficiency reflected the same adjustments as

determined in respondent’s 30-day letter.
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     On or about December 20, 2000, respondent received

additional documentation from petitioner.    The documentation

included:   (1) a letter from the school attended by petitioner’s

children; (2) Social Security cards for the children; (3)

magazine covers addressed to the children at petitioner’s home

address; and (4) a customer statement to petitioner for child

care for the children.    The school letter did not list the

children’s home address.

     On or about January 23, 2001, petitioner met with his

counsel.

     On January 26, 2001, respondent sent a second Form 886-A to

petitioner requesting additional information to substantiate

petitioner’s positions.    Again, respondent enclosed a Form 886-H

detailing acceptable documentation.

     On February 20, 2001, petitioner’s petition was filed.      On

April 24, 2001, respondent’s answer was filed.

     After the petition was filed, Appeals Officer Loren L.

Peterson (Mr. Peterson) was assigned petitioner’s case.    On or

about May 24, 2001, Mr. Peterson mailed a letter to petitioner to

schedule a conference to attempt to settle the case without going

to trial.

     During July 2001, respondent and petitioner’s counsel had

two telephone conferences with regard to petitioner’s case.      As a

result of the telephone negotiations and the submissions of the
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information on or about December 20, 2000, Mr. Peterson

determined that petitioner was entitled to the head of household

filing status, the two dependency exemptions, and the earned

income credit.   Respondent informed petitioner’s counsel that no

concession for attorney’s fees and costs would be made.

     On or about September 7, 2001, respondent sent petitioner’s

counsel a proposed Stipulation Decision conceding all of the tax

issues.

     Between November 21, 2001, and January 2, 2002, respondent

attempted, via telephone calls and letters, to contact

petitioner’s counsel.   The letters included additional copies of

the proposed Stipulation Decision.

     Sometime in January 2002, petitioner’s counsel contacted

respondent.   As a result, respondent prepared and mailed a

Stipulation of Agreed Issues to petitioner’s counsel.

     On January 28, 2002, at the calendar call of the case,

petitioner filed a Motion for Attorney’s Fees and Costs and the

Stipulation of Agreed Issues.

     Section 7430 permits the award of reasonable litigation

costs to a taxpayer in an administrative or court proceeding

brought against the United States in connection with the

determination of any tax, interest, or penalty under the Internal

Revenue Code.    An award of litigation costs may be made where the

taxpayer (1) is the “prevailing party”, (2) exhausted available
                                - 6 -

administrative remedies, (3) did not unreasonably protract the

administrative or judicial proceeding, and (4) claimed reasonable

litigation costs.    Sec. 7430(a), (b)(1), (3), (c).     These

requirements are conjunctive.    Minahan v. Commissioner, 88 T.C.

492, 497 (1987).    Except as provided in section 7430(c)(4)(B),

petitioner bears the burden of proving that he meets each of the

requirements of section 7430.    Rule 232(e).

     To be a prevailing party, a taxpayer must:    (1)

Substantially prevail with respect to either the amount in

controversy or the most significant issue or set of issues

presented, and (2) meet certain net worth requirements.      Sec.

7430(c)(4)(A)(i) and (ii).    However, the taxpayer is not entitled

to an award for reasonable litigation costs if the Commissioner

shows that the position of the United States in the proceeding

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

     Respondent concedes that petitioner substantially prevailed

and meets the net worth requirements.    Respondent argues,

however, that petitioner is not the prevailing party because

respondent was substantially justified in maintaining his

position in the administrative and judicial proceedings.

Respondent also argues that petitioner did not exhaust all

administrative remedies, that petitioner unreasonably protracted

the proceedings, and that the fees requested are unreasonable.

     We focus first on whether petitioner exhausted all available
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administrative remedies.   An award for litigation costs shall not

be made unless the taxpayer has exhausted the administrative

remedies available within the Internal Revenue Service.    Sec.

7430(b)(1); sec. 301.7430-1(b)(1), Proced. & Admin. Regs.    We

find that petitioner has not met this requirement.   The 30-day

letter sent to petitioner specifically provided that if

petitioner disagreed with respondent’s findings, petitioner had

“the right to file an administrative appeal”.   Prior to filing

his petition in the Tax Court, petitioner never requested or

participated in a conference with the Appeals Office with respect

to the 1999 taxable year, although such a conference was

available.   Section 301.7430-1(b)(1), Proced. & Admin. Regs.,

provides that, where a conference with the Appeals Office is

available, administrative remedies are exhausted when the

taxpayer (1) participated in a conference with the Appeals Office

before petitioning this Court, or (2) prior to the issuance of

the notice of deficiency, requested such a conference and no such

conference was granted.    Haas & Associates Accountancy Corp. v.

Commissioner, 117 T.C. 48, 57-59 (2001); Swanagan v.

Commissioner, T.C. Memo. 2000-294; Patel v. Commissioner, T.C.

Memo. 1998-306; Jacoby v. Commissioner, T.C. Memo. 1997-384.

     Because petitioner did not exhaust his administrative

remedies, we have no choice but to rule for respondent.     Thus, we

find no reason to delve into the other requirements.   We have
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considered all other arguments made by petitioner and found them

to be either irrelevant or without merit.       Accordingly, we hold

that petitioner does not qualify for an award of litigation costs

under section 7430.

     To reflect the foregoing,



                                             An appropriate order

                                         and decision will be entered.
