§ 136.315 RSMo — Litigation expenses may be allowed in certain tax cases, when, definitions, procedure — award may be denied or reduced

1. As used in this section the following terms shall mean:

(1) "Party" , a natural person or sole proprietorship with a Missouri adjusted gross income of less than seventy-five thousand dollars in each of the two taxable years preceding the date of filing; a corporation or partnership with a federal taxable income of less than one hundred thousand dollars in each of the two taxable years preceding the date of filing; or an association, labor union or not-for-profit organization with less than fifty employees on the date of filing; provided, however, that a corporation that is a subsidiary or affiliate of a corporation with a federal taxable income of one hundred thousand dollars or more in each of the two taxable years preceding the date of filing is not a "party" under this section;

(2) "Prevail" , to obtain disposition by final judgment or order, dismissal, or default which is favorable on all or substantially all issues;

(3) "Proceeding" , a case before the administrative hearing commission or a court with respect to a tax imposed under chapter 143 or any sales or use tax imposed by chapter 144 or Section 43(a) of Article IV of the Missouri Constitution;

(4) "Reasonable litigation expenses" , those actual expenses, not in excess of ten thousand dollars, that the administrative hearing commission or court finds were reasonably incurred in opposing the department's action, including, but not limited to, court costs, attorneys' fees and fees for expert and other witnesses.

2. When a party prevails in a proceeding filed after January 1, 1984, the court or administrative hearing commission may award the party reasonable litigation expenses if it finds that the position of the state was vexatious or was not substantially justified. Fees and expenses shall not be awarded if the final disposition is substantially the same as a settlement previously offered by the department to the taxpayer.

3. A party seeking an award for fees and other expenses pursuant to this section shall, not later than thirty days after final disposition is made in the proceeding, submit to the court or administrative hearing commission an application which provides evidence of eligibility for an award pursuant to this section, alleges in what particulars the department was vexatious or not substantially justified in its position and which specifies the amount sought. If the amount sought includes an attorney's fee or the fee for an expert witness, the application shall include an itemized statement for each such fee indicating the actual time expended in service to the applicant and the rate at which the fees were computed. The burden of proof shall be on the party seeking an award under this section to demonstrate the facts required as a condition to recovery.

4. The court or administrative hearing commission, in its discretion, may reduce the amount to be awarded pursuant to this section, or deny an award, to the extent that the prevailing party, during the course of the proceedings, engaged in conduct which unduly and unreasonably protracted the final resolution of the matter in controversy or when an overriding public interest exists which would make an award unjust.