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Toner v. Commissioner of Internal Revenue

decided: September 3, 1980.

LINDA M. LIBERI TONER, APPELLANT
v.
COMMISSIONER OF INTERNAL REVENUE



APPEAL FROM THE UNITED STATES TAX COURT (T.C. Docket No. 0555-76) On Appellant's Motion for Attorneys' Fees Submitted Under Third Circuit Rule 12(6)

Before Seitz, Chief Judge, Rosenn, Circuit Judge, and Shapiro, District Judge.*fn*

Author: Seitz

Opinion OF THE COURT

This is a motion by the appellant, Linda M. Liberi Toner, for attorneys' fees under the Civil Rights Attorney's Fees Awards Act of 1976, 42 U.S.C. § 1988 (1976).

I.

In 1973, the appellant claimed a deduction of $906.28 for her 1973 educational expenses. Based on a disallowance of this deduction, the Internal Revenue Service sent her a deficiency notice. She elected not to pay the tax and seek a refund. Instead, she petitioned the Tax Court to contest the deficiency. The full Tax Court found against the appellant. See Toner v. Commissioner, 71 T.C. 772 (1979). We reversed the decision of the Tax Court and entered judgment for the appellant. See Toner v. Commissioner, 623 F.2d 315 (1980). The appellant then moved for attorneys' fees pursuant to 42 U.S.C. § 1988 (1976). The government filed a memorandum in opposition to appellant's motion for attorneys' fees.

II.

Section 1988 permits a court, in its discretion, to award attorneys' fees to a prevailing taxpayer, "in any civil action or proceeding, by or on behalf of the United States . . ., to enforce, or charging a violation of, a provision of the United States Internal Revenue Code." 42 U.S.C. § 1988 (1976). Although the appellant in the present case initiated the petition in the Tax Court, she offers two arguments for characterizing this case as an action brought "by or on behalf of the United States" within the meaning of the statute, which we will now address.

A.

The appellant first argues that the phrase "civil action or proceeding" in section 1988 was intended to encompass administrative proceedings. According to this argument, the government initiated a civil action or proceeding within the meaning of section 1988 when it sent her a deficiency notice. Neither the language of the Act, however, nor its legislative history contemplates such a broad definition of "civil action or proceeding." Awards of attorneys' fees against the United States are prohibited by 28 U.S.C. § 2412 (1976) absent specific statutory authorization. We therefore will not imply that attorneys' fees can be assessed against the government, but must find express statutory authorization. See Alyeska Pipeline Co. v. Wilderness Society, 421 U.S. 240, 266-68, 44 L. Ed. 2d 141, 95 S. Ct. 1612 (1975). The language of section 1988 does not expressly provide for attorneys' fees when the government initiates an administrative proceeding.

The dominant weight of the legislative history, as expressed in the congressional debates, also supports the conclusion that Congress considered "civil action or proceeding" to mean some form of judicial proceeding as opposed to an administrative action such as the issuance of a deficiency letter. In introducing the amendment to section 1988 that would allow attorneys' fees against the government in certain tax cases (the Allen amendment), Senator Allen explained the effect of the amendment:

What it does is to add to the civil rights attorneys' fees provision a provision that if the Internal Revenue Service or the U.S. Government brings a civil action against a taxpayer to enforce any provision of the Internal Revenue Code, and the Government does not prevail against the taxpayer, then the court, in its discretion, just as in other cases, would be entitled to award the taxpayer reasonable attorneys' fees. That is all it does, and I hope the amendment will be agreed to.

122 Cong.Rec. 33,311 (1976) (remarks of Sen. Allen) (emphasis added). Senator Kennedy, in urging passage of the Act remarked that under the Allen amendment:

(A) court would be authorized to award attorneys' fees to a taxpayer who is a defendant in a civil action brought by the U.S. Government to enforce the provisions of the Internal Revenue Code. The usual standard applied in cases where fees are awarded to prevailing defendants would apply here as well that is, awards are appropriate where the action initiated by the plaintiff, the ...


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