Opinion
CIVIL ACTION NO. 99-439
May 01, 2001
ORDER
The plaintiffs have applied for attorney fees and costs [Record No. 23]. The United States has responded [Record No. 29] and the plaintiffs have replied [Record No. 30]. Accordingly, this issue is ripe for review.
The petitioners' motion for attorney fees arises under 26 U.S.C. § 7430, which requires that the petitioners be the "prevailing party" in order to recover said attorney fees. The term prevailing party is defined, for the purposes of this motion, as the party which has "substantially prevailed with respect to the most significant issue or set of issues presented" by the litigation. 26 U.S.C. § 7430 (c)(4)(A)(i)(II). Clearly, this suit involves the petitioners' desire to quash three summonses. Two of the summonses were issued on November 9, 1999, and an additional summons was issued on February 17, 2000. The Court denied the motion to quash the February 17, 2000, summons because it was "unclear what relief" was sought and the plaintiffs did not establish a "legal basis" for said claim. Order at Record No. 26. The motion was denied "for lack of a discernible legal basis." Id. Therefore, the plaintiffs cannot be said to be the "prevailing party" with respect to the "most significant issue or set of issues presented." 26 U.S.C. § 7430 (c)(4)(A)(i)(II).
In addition, the plaintiffs claim that the United States' withdrawal of the summonses at issue clearly indicates that plaintiffs are the prevailing party in this case. However, this reasoning does not stand up under the comprehensive circumstances surrounding this case. As the case at bar unfolded, the United States Attorney for the Eastern District of Kentucky began conducting a "non-tax" grand jury investigation of Dr. So. United States' Response at p. 3. The United States Attorney requested that the IRS join said investigation on March 30, 2000. This request was considered advisable and for the benefit of all the parties involved in this action. First, the IRS would save time and resources by obtaining information through a grand jury subpoena rather than through the summons enforcement action. Second, the plaintiffs would be spared additional attorney fees as the grand jury subpoenas and the summons action would represent an unnecessary duplication of efforts. Therefore, the United States' decision to withdraw the summonses at issue did not indicate a concession that said summonses were invalid. Thus, the plaintiffs did not prevail on this issues at bar and cannot recover attorney fees in this action.
Accordingly,
IT IS ORDERED
(1) That the plaintiffs' motion for attorney fees [Record No. 23] be, and the same hereby is, DENIED.
This the 1st day of May, 2001.