Page:United States Statutes at Large Volume 110 Part 2.djvu/671

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PUBLIC LAW 104-168-^ULY 30, 1996 110 STAT. 1463 SEC. 602. REQUIREMENT TO CONDUCT REASONABLE INVESTIGATIONS OF INFORMATION RETURNS. (a) GENERAL RULE.— Section 6201 (relating to assessment authority) is amended by redesignating subsection (d) as subsection (e) and by inserting sifter subsection (c) the following new subsection: " (d) REQUIRED REASONABLE VERIFICATION OF INFORMATION RETURNS. —In any court proceeding, if a taxpayer asserts a reasonable dispute with respect to any item of income reported on an information return filed with the Secretary under subpart B or C of part III of subchapter A of chapter 61 by a third party and the taxpayer has fully cooperated with the Secretary (including providing, within a reasonable period of time, access to and inspection of all witnesses, information, and documents within the control of the taxpayer as reasonably requested by the Secretary), the Secretary shall have the burden of producing reasonable and probative information concerning such deficiency in addition to such information return.". (b) EFFECTIVE DATE.— The amendment made by subsection (a) 26 USC 620i shalltakeeffectonthedateoftheenactmentof this Act. ^°^- TITLE VII—AWARDING OF COSTS AND CERTAIN FEES SEC. 701. UNITED STATES MUST ESTABLISH THAT ITS POSITION IN PROCEEDING WAS SUBSTANTIALLY JUSTIFIED. (a) GENERAL RULE.—Subparagraph (A) of section 7430(c)(4) (defining prevaiHng party) is amended by striking clause (i) and by redesignating clauses (ii) and (iii) as clauses (i) and (ii), respectively. (b) BURDEN OF PROOF ON UNITED STATES. —Paragraph (4) of section 7430(c) is £unended by redesignating subparagraph (B) as subparagraph (C) and by inserting after subparagraph (A) the following new subparagraph: " (B) EXCEPTION IF UNITED STATES ESTABLISHES THAT ITS POSITION WAS SUBSTANTIALLY JUSTIFIED. — "(i) GENERAL RULE.—^A party shall not be treated as the prevailing party in a proceeding to which subsection (a) appHes if the United States establishes that the position of the United States in the procee(Ung was substantially justified. " (ii) PRESUMPTION OF NO JUSTIFICATION IF INTERNAL REVENUE SERVICE DID NOT FOLLOW CERTAIN PUBLISHED GUIDANCE.—For purposes of clause (i), the position of the United States shall be presumed not to be substantially justified if the Internal Revenue Service did not follow its applicable published guidance in the administrative proceeding. Such presumption may be rebutted. "(iii) APPLICABLE PUBLISHED GUIDANCE. —For purposes of clause (ii), the term 'applicable published guidance' means— "(I) regulations, revenue rulings, revenue procedures, information releases, notices, and announcements, and