§ 3030. Awarding of costs and certain fees. (a) In general. In any administrative or court proceeding which is brought by or against the commissioner in connection with the determination, collection, or refund of any tax, the prevailing party may be awarded a judgment or a settlement for:(1) reasonable administrative costs incurred in connection with such administrative proceeding within the department, and
(2) reasonable litigation costs incurred in connection with such court proceeding.
(b) Limitations. (1) Exhaustion of administrative remedies. A judgment for reasonable litigation costs shall not be awarded under subdivision (a) of this section in any court proceeding unless the court determines that the prevailing party has exhausted the administrative remedies available to such party within the department. Any failure to agree to an extension of the time for the assessment of any tax shall not be taken into account for purposes of determining whether the prevailing party meets the requirements of the preceding sentence.
(2) Only costs allocable to the state. An award under subdivision (a) of this section shall be made only for reasonable litigation and administrative costs which are allocable to the state of New York and not to any other party.
(3) Costs denied where prevailing party protracts proceedings. No award for reasonable litigation and administrative costs may be made under subdivision (a) of this section with respect to any portion of the administrative or court proceeding during which the prevailing party has unreasonably protracted such proceeding.
(4) This section shall provide the exclusive means for a prevailing party to be awarded administrative and litigation costs incurred in connection with any administrative or court proceeding which is brought by or against the commissioner in connection with the determination, collection, or refund of any tax.
(c) Definitions. For purposes of this section:
(1) Reasonable litigation costs. The term "reasonable litigation costs" includes:
(A) reasonable court costs, and
(B) based upon prevailing market rates for the kind or quality of services furnished:
(i) the reasonable expenses of expert witnesses in connection with a court proceeding,
(ii) the reasonable cost of any study, analysis, engineering report, test, or project which is found by the court to be necessary for the preparation of the party's case, and
(iii) reasonable fees paid or incurred for the services of attorneys in connection with the court proceeding, except that such fees shall not be in excess of seventy-five dollars per hour unless the court determines that an increase in the cost of living or a special factor, such as the limited availability of qualified attorneys for such proceeding, justifies a higher rate.
(2) Reasonable administrative costs. The term "reasonable administrative costs" means:
(A) any administrative fees or similar charges imposed by the department, and
(B) expenses, costs, and fees described in subparagraph
(B) of paragraph one of this subdivision, except that any determination made by the court under clause (ii) or (iii) of such subparagraph shall be made by the division of tax appeals in cases where the determination under subparagraph (C) of paragraph five of this subdivision of the awarding of reasonable administrative costs is made by the division of tax appeals. Such term shall only include costs incurred on or after the date of the notice of deficiency, notice of determination or other document giving rise to the taxpayer's right to a hearing.
(3) Attorney's fees. For purposes of paragraphs one and two of this subdivision, fees for the services of an individual (whether or not an attorney) who is authorized to practice before the division of tax appeals shall be treated as fees for the services of an attorney.
(4) Burden of proof. For purposes of this section, "burden of proof" means the necessity or duty of proving, by a preponderance of the evidence, a fact or facts in dispute on an issue raised between the parties to a proceeding referred to in subdivision (a) of this section.
(5) Prevailing party. (A) In general. The term "prevailing party" means any party in any proceeding to which subdivision (a) of this section applies (other than the commissioner or any creditor of the taxpayer involved):
(i) who (I) has substantially prevailed with respect to the amount in controversy, or (II) has substantially prevailed with respect to the most significant issue or set of issues presented, and
(ii) who (I) within thirty days of final judgment in the action, submits to the court an application for fees and other expenses which shows that the party is a prevailing party and is eligible to receive an award under this section, and the amount sought, including an itemized statement from an attorney or expert witness representing or appearing in behalf of the party stating the actual time expended and the rate at which fees and other expenses were computed (except to the extent differing procedures are established by rule of court), and (II) is an individual whose net worth did not exceed two million dollars at the time the civil action was filed, or is an owner of an unincorporated business, or any partnership, corporation, association, unit of local government or organization, the net worth of which did not exceed seven million dollars at the time the civil action was filed, and which had not more than five hundred employees at the time the civil action was filed; except that an organization described in section 501(c)(3) of the internal revenue code exempt from taxation under section 501(a) of such code, or a cooperative association as defined in the cooperative corporations law, may be a party regardless of the net worth of such organization or cooperative association.
(B) Exception if the commissioner establishes that the commissioner's position was substantially justified.
(i) General rule. A party shall not be treated as the prevailing party in a proceeding to which subdivision (a) of this section applies if the commissioner establishes that the position of the commissioner in the proceeding was substantially justified.
(ii) Burden of proof. The commissioner shall have the burden of proof of establishing that the commissioner's position in a proceeding referred to in subdivision (a) of this section was substantially justified, in which event, a party shall not be treated as a prevailing party.
(iii) Presumption. For purposes of clause (i) of this subparagraph, the position of the commissioner shall be presumed not to be substantially justified if the department, inter alia, did not follow its applicable published guidance in the administrative proceeding. Such presumption may be rebutted.
(iv) Applicable published guidance. For purposes of clause (ii) of this subparagraph, the term "applicable published guidance" means (I) regulations, declaratory rulings, information releases, notices, announcements, and technical services bureau memoranda, and
(II) any of the following which are issued to the taxpayer: advisory opinions and opinions of counsel.
(C) Determination as to prevailing party. Any determination under this paragraph as to whether a party is a prevailing party shall be made by agreement of the parties or (i) in the case where the final determination with respect to tax is made at the administrative level, by the division of tax appeals, or (ii) in the case where such final determination is made by a court, the court.
(6) The term "administrative proceeding" means any procedure or other action before the division of taxation (such as the bureau of conciliation and mediation services) or division of tax appeals.
(7) The term "court proceeding" means any civil action brought in a court of the state of New York (including proceedings before the surrogate's courts under section nine hundred ninety-eight of this chapter).
(8) The term "position of the commissioner" means:
(A) the position taken by the commissioner in a judicial proceeding to which subdivision (a) of this section applies, and
(B) the position taken in an administrative proceeding to which subdivision (a) of this section applies as of the date of the notice of deficiency, notice of determination or other document giving rise to the taxpayer's right to a hearing.
(d) Multiple actions. For purposes of this section, in the case of:
(1) multiple actions which could have been joined or consolidated, or
(2) a case or cases involving a return or returns of the same taxpayer (including joint returns of married individuals) which could have been joined in a single court proceeding in the same court, such actions or cases shall be treated as one court proceeding regardless of whether such joinder or consolidation actually occurs, unless the court in which such action is brought determines, in its discretion, that it would be inappropriate to treat such actions or cases as joined or consolidated.
(e) Right of appeal. (1) Court proceedings. An order granting or denying (in whole or in part) an award for reasonable litigation or administrative costs under subdivision (a) of this section in a court proceeding, may be incorporated as a part of the decision or judgment in the court proceeding and shall be subject to appeal in the same manner as the decision or judgment.
(2) Administrative proceedings. A determination or decision granting or denying (in whole or in part) an award for reasonable administrative costs under subdivision (a) of this section by the division of tax appeals or the tax appeals tribunal shall be subject to exception or review in the same manner as the determination or decision.
