Note: The following is an excerpt from the introduction to the article as published in The Tax Lawyer. Author citations have been omitted for brevity. Tax Section members may read the article in its entirety in Adobe Acrobat format.
Aleksandr B. Livshits
Recovery of Attorney’s Fees in Tax Litigation Before the Bankruptcy Court: In re Hudson
In In re Hudson, Paul S. Hudson, an attorney, represented himself in an adversary proceeding in U.S. Bankruptcy Court and, at the conclusion of the proceeding, sought to recover attorney’s fees from the Service under section 7430 of the Internal Revenue Code (Code). Because the creditor was the Service and because the debt at issue was the Trust Fund Recovery Penalty (TFRP) owed by Hudson to the Service, the court relied on the Code provision
that regulates attorney’s fees as opposed to a similar provision from the Bankruptcy Code.
This Note evaluates the In re Hudson decision. Part I introduces the facts of In re Hudson and provides a summary of the court’s decision. Part II analyzes (1) the court’s decision to rely on Code section 7430 to evaluate Hudson’s claim for attorney’s fees rather than on section 523(d) of the Bankruptcy Code and (2) describes why, pursuant to section 7430, the bankruptcy court had the jurisdiction over this case. Part III parses section 7430, (1) analyzing the court’s determination that Hudson substantially prevailed on the amount of controversy and on the most significant issue in the case and (2) examining
whether the court was correct in holding that the government’s position was not substantially justified. Finally, Part IV discusses why Hudson’s pro se status should disqualify him from receiving litigation costs and attorney’s fees pursuant to section 7430.