N.Y. Tax Law § 3030 — Awarding of costs and certain fees

§ 3030. Awarding of costs and certain fees. (a) In general. In any\nadministrative or court proceeding which is brought by or against the\ncommissioner in connection with the determination, collection, or refund\nof any tax, the prevailing party may be awarded a judgment or a\nsettlement for:\n (1) reasonable administrative costs incurred in connection with such\nadministrative proceeding within the department, and\n (2) reasonable litigation costs incurred in connection with such\ncourt proceeding.\n (b) Limitations. (1) Exhaustion of administrative remedies. A\njudgment for reasonable litigation costs shall not be awarded under\nsubdivision (a) of this section in any court proceeding unless the court\ndetermines that the prevailing party has exhausted the administrative\nremedies available to such party within the department. Any failure to\nagree to an extension of the time for the assessment of any tax shall\nnot be taken into account for purposes of determining whether the\nprevailing party meets the requirements of the preceding sentence.\n (2) Only costs allocable to the state. An award under subdivision\n(a) of this section shall be made only for reasonable litigation and\nadministrative costs which are allocable to the state of New York and\nnot to any other party.\n (3) Costs denied where prevailing party protracts proceedings. No\naward for reasonable litigation and administrative costs may be made\nunder subdivision (a) of this section with respect to any portion of\nthe administrative or court proceeding during which the prevailing party\nhas unreasonably protracted such proceeding.\n (4) This section shall provide the exclusive means for a prevailing\nparty to be awarded administrative and litigation costs incurred in\nconnection with any administrative or court proceeding which is brought\nby or against the commissioner in connection with the determination,\ncollection, or refund of any tax.\n (c) Definitions. For purposes of this section:\n (1) Reasonable litigation costs. The term "reasonable litigation\ncosts" includes:\n (A) reasonable court costs, and\n (B) based upon prevailing market rates for the kind or quality of\nservices furnished:\n (i) the reasonable expenses of expert witnesses in connection with a\ncourt proceeding,\n (ii) the reasonable cost of any study, analysis, engineering report,\ntest, or project which is found by the court to be necessary for the\npreparation of the party's case, and\n (iii) reasonable fees paid or incurred for the services of attorneys\nin connection with the court proceeding, except that such fees shall not\nbe in excess of seventy-five dollars per hour unless the court\ndetermines that an increase in the cost of living or a special factor,\nsuch as the limited availability of qualified attorneys for such\nproceeding, justifies a higher rate.\n (2) Reasonable administrative costs. The term "reasonable\nadministrative costs" means:\n (A) any administrative fees or similar charges imposed by the\ndepartment, and\n (B) expenses, costs, and fees described in subparagraph (B) of\nparagraph one of this subdivision, except that any determination made by\nthe court under clause (ii) or (iii) of such subparagraph shall be made\nby the division of tax appeals in cases where the determination under\nsubparagraph (C) of paragraph five of this subdivision of the awarding\nof reasonable administrative costs is made by the division of tax\nappeals. Such term shall only include costs incurred on or after the\ndate of the notice of deficiency, notice of determination or other\ndocument giving rise to the taxpayer's right to a hearing.\n (3) Attorney's fees. For purposes of paragraphs one and two of this\nsubdivision, fees for the services of an individual (whether or not an\nattorney) who is authorized to practice before the division of tax\nappeals shall be treated as fees for the services of an attorney.\n (4) Burden of proof. For purposes of this section, "burden of proof"\nmeans the necessity or duty of proving, by a preponderance of the\nevidence, a fact or facts in dispute on an issue raised between the\nparties to a proceeding referred to in subdivision (a) of this section.\n (5) Prevailing party. (A) In general. The term "prevailing party"\nmeans any party in any proceeding to which subdivision (a) of this\nsection applies (other than the commissioner or any creditor of the\ntaxpayer involved):\n (i) who (I) has substantially prevailed with respect to the amount in\ncontroversy, or (II) has substantially prevailed with respect to the\nmost significant issue or set of issues presented, and\n (ii) who (I) within thirty days of final judgment in the action,\nsubmits to the court an application for fees and other expenses which\nshows that the party is a prevailing party and is eligible to receive an\naward under this section, and the amount sought, including an itemized\nstatement from an attorney or expert witness representing or appearing\nin behalf of the party stating the actual time expended and the rate at\nwhich fees and other expenses were computed (except to the extent\ndiffering procedures are established by rule of court), and (II) is an\nindividual whose net worth did not exceed two million dollars at the\ntime the civil action was filed, or is an owner of an unincorporated\nbusiness, or any partnership, corporation, association, unit of local\ngovernment or organization, the net worth of which did not exceed seven\nmillion dollars at the time the civil action was filed, and which had\nnot more than five hundred employees at the time the civil action was\nfiled; except that an organization described in section 501(c)(3) of the\ninternal revenue code exempt from taxation under section 501(a) of such\ncode, or a cooperative association as defined in the cooperative\ncorporations law, may be a party regardless of the net worth of such\norganization or cooperative association.\n (B) Exception if the commissioner establishes that the commissioner's\nposition was substantially justified.\n (i) General rule. A party shall not be treated as the prevailing\nparty in a proceeding to which subdivision (a) of this section applies\nif the commissioner establishes that the position of the commissioner in\nthe proceeding was substantially justified.\n (ii) Burden of proof. The commissioner shall have the burden of proof\nof establishing that the commissioner's position in a proceeding\nreferred to in subdivision (a) of this section was substantially\njustified, in which event, a party shall not be treated as a prevailing\nparty.\n (iii) Presumption. For purposes of clause (i) of this subparagraph,\nthe position of the commissioner shall be presumed not to be\nsubstantially justified if the department, inter alia, did not follow\nits applicable published guidance in the administrative proceeding.\nSuch presumption may be rebutted.\n (iv) Applicable published guidance. For purposes of clause (ii) of\nthis subparagraph, the term "applicable published guidance" means (I)\nregulations, declaratory rulings, information releases, notices,\nannouncements, and technical services bureau memoranda, and\n (II) any of the following which are issued to the taxpayer: advisory\nopinions and opinions of counsel.\n (C) Determination as to prevailing party. Any determination under\nthis paragraph as to whether a party is a prevailing party shall be made\nby agreement of the parties or (i) in the case where the final\ndetermination with respect to tax is made at the administrative level,\nby the division of tax appeals, or (ii) in the case where such final\ndetermination is made by a court, the court.\n (6) The term "administrative proceeding" means any procedure or other\naction before the division of taxation (such as the bureau of\nconciliation and mediation services) or division of tax appeals.\n (7) The term "court proceeding" means any civil action brought in a\ncourt of the state of New York (including proceedings before the\nsurrogate's courts under section nine hundred ninety-eight of this\nchapter).\n (8) The term "position of the commissioner" means:\n (A) the position taken by the commissioner in a judicial proceeding\nto which subdivision (a) of this section applies, and\n (B) the position taken in an administrative proceeding to which\nsubdivision (a) of this section applies as of the date of the notice of\ndeficiency, notice of determination or other document giving rise to the\ntaxpayer's right to a hearing.\n (d) Multiple actions. For purposes of this section, in the case of:\n (1) multiple actions which could have been joined or consolidated, or\n (2) a case or cases involving a return or returns of the same\ntaxpayer (including joint returns of married individuals) which could\nhave been joined in a single court proceeding in the same court, such\nactions or cases shall be treated as one court proceeding regardless of\nwhether such joinder or consolidation actually occurs, unless the court\nin which such action is brought determines, in its discretion, that it\nwould be inappropriate to treat such actions or cases as joined or\nconsolidated.\n (e) Right of appeal. (1) Court proceedings. An order granting or\ndenying (in whole or in part) an award for reasonable litigation or\nadministrative costs under subdivision (a) of this section in a court\nproceeding, may be incorporated as a part of the decision or judgment in\nthe court proceeding and shall be subject to appeal in the same manner\nas the decision or judgment.\n (2) Administrative proceedings. A determination or decision granting\nor denying (in whole or in part) an award for reasonable administrative\ncosts under subdivision (a) of this section by the division of tax\nappeals or the tax appeals tribunal shall be subject to exception or\nreview in the same manner as the determination or decision.\n