John M. & Rebecca A. Dunaway v. Commissioner ( 2005 )

124 T.C. No. 7UNITED STATES TAX COURT
JOHN M. & REBECCA A. DUNAWAY, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 10542-03. Filed March 14, 2005.
Petitioners are pro se litigants.
Held: Under sec. 7430, I.R.C., petitioners are
not entitled to recover as litigation costs any amounts
representing the value of their research time.
Held, further, petitioners are entitled to recover
as litigation costs out-of-pocket postage and delivery
costs and their mileage costs and parking fees incurred
to attend a court hearing.
John M. Dunaway and Rebecca A. Dunaway, pro sese.
Thomas J. Travers and Aimee R. Lobo-Berg, for respondent.
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OPINION
SWIFT, Judge: This case is before us under section 7430 on
petitioners’ motion for litigation costs. Respondent determined
a deficiency of $728 in petitioners’ 2001 Federal income tax,
which determination respondent has conceded.
Respondent agrees that his position in his notice of
deficiency was not substantially justified and that petitioners
are to be regarded herein as the prevailing party for purposes of
the instant motion for litigation costs. Also, respondent has
conceded that petitioners are entitled to recover $95.06 in
litigation costs consisting of the $60 Court filing fee and
$35.06 in postage and delivery costs.
The primary issues for decision are whether the pro se
petitioners herein are entitled to recover as litigation costs:
(1) Amounts representing the value of their research time and
(2) additional out-of-pocket postage and delivery costs and out-
of-pocket mileage costs and parking fees incurred by petitioner1
to attend the Court hearing in this matter.
Unless otherwise indicated, all section references are to
the Internal Revenue Code as amended, and all Rule references are
to the Tax Court Rules of Practice and Procedure.
1
All references to petitioner in the singular are to
petitioner John M. Dunaway.
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Background
At the time the petition was filed, petitioners resided in
Meridian, Idaho.
Petitioners timely filed their 2001 joint Federal income tax
return. On June 16, 2003, respondent mailed to petitioners the
notice of deficiency.
On June 21, 2003, petitioners mailed to the Court by
certified mail a three-page letter, which was filed by the Court
as petitioners’ petition (original petition). With the original
petition, petitioners did not submit the $60 Court filing fee
that was due. Rule 20(b). The envelope in which the original
petition was mailed is in evidence, and a postage cost therefor
of $4.65 is indicated on the envelope.
On August 26, 2003, petitioners mailed to the Court by
certified mail an amended petition, in proper form, and included
the $60 filing fee.
On or about March 19, 2004, after various communications
with petitioners,2 respondent conceded the $728 tax deficiency
determined against petitioners, and petitioners mailed to
respondent’s Portland office by certified mail a letter in which
petitioners set forth their claim for litigation costs.
On April 19, 2004, at a cost of $15.95, petitioners
delivered to the Court via Federal Express their motion for an
award of litigation costs with an attached expense report
2
The nature of these referenced communications is not
reflected in the record, and petitioners claim no costs relating
thereto.
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(original expense report). Therein, petitioners claimed costs of
$60 for the Court filing fee, $66.29 for postage, delivery, and
office supplies, $200 for lost wages, and $783 for the purported
value of petitioners’ research time.3
Also in April of 2004, at a cost of $13.77, petitioners
delivered to respondent via Federal Express additional documents
relating to their motion for litigation costs.
On May 4, 2004, a hearing on petitioners’ motion for
litigation costs was held in Boise, Idaho. To attend the
hearing, petitioner drove his car the 30-mile round trip from
petitioners’ home in Meridian to the courthouse in Boise,4 and
petitioner incurred $3 to park his car while attending the Court
hearing. Petitioner’s wife did not accompany petitioner to the
courthouse and apparently went to work.
On June 8, 2004, petitioners mailed to the Court by
certified mail a revised five-page expense report which claimed
$10.50 relating to the automobile mileage costs to travel to the
3
Petitioners calculated the $200 in lost wages in
anticipation that both petitioners would attend the scheduled
Court hearing on May 4, 2004, and that each petitioner would lose
$100 in wages to do so. The $783 for petitioners’ research time
was calculated at $5.25 per hour for 141 hours. Included in the
research time are time estimates for making phone calls and
emails, which time also apparently was calculated at the same
$5.25 hourly rate.
4
Under Fed. R. Evid. 201, the Court takes judicial notice
of the location of Meridian, Idaho, approximately 15 miles from
Boise.
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May 4, 2004, Court hearing5 and $3 relating to the parking fee.
The revised expense report also reflected a reduction to $88.96
for petitioner’s lost wages,6 an increase to $158.64 for postage,
delivery, and office supplies, and an increase to $1,248.90
relating to the purported value of petitioners’ research time.7
On September 28, 2004, petitioners also mailed to the Court
by certified mail petitioners’ reply to respondent’s memorandum
brief (petitioners’ reply brief). The envelope in which
petitioners’ reply brief was mailed is in evidence, and a mailing
cost of $4.42 is indicated thereon. We note that petitioners
apparently did not serve upon respondent’s counsel copies of any
of the documents that petitioners submitted to the Court, and
petitioners do not claim any postage or delivery costs relating
to service copies.
Below is a schedule, by category, of petitioners’ claimed
litigation costs, reflecting the differing amounts petitioners
claim in their original and in their revised expense reports:
5
Petitioners calculated the $10.50 mileage costs at $0.35
per mile for 30 miles.
6
The reduced $88.96 for lost wages was calculated at
$11.12 per hour for 8 hours.
7
The increased $1,248.90 relating to petitioners’ research
time actually reflected a reduction from 141 hours in the
original expense report to 128 hours in the revised expense
report, but the increased $1,248.90 apparently included
additional alleged costs of phone calls, copying, and office
supplies. The record does not indicate the hourly rate
petitioners used in their revised calculation.
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Original Revised
Type of Cost Expense Report Expense Report
Court filing fee $ 60.00 $ 60.00
Research time 783.00 1,248.90
Lost wages 200.00 88.96
Postage, delivery, and
office supplies 66.29 158.64
Mileage -- 10.50
Parking -- 3.00
Total $1,109.29 $1,570.00
Discussion
A prevailing party may be awarded reasonable litigation
costs incurred in connection with a case filed in this Court.
Sec. 7430(a); Rule 230.
Respondent concedes that petitioners qualify as prevailing
parties under the requirements of section 7430(c)(4) and that no
limitation under section 7430(b) applies to preclude petitioners
from qualifying for an award of litigation costs under section
7430(a). As stated above, respondent concedes that petitioners
are entitled to an award of litigation costs of $60 for the Court
filing fee and $35.06 for various postage and delivery costs.
Value Relating to Research Time
Petitioners claim that they are entitled to recover as
litigation costs under section 7430 $1,248.90 relating to the
value of petitioners’ research time.8
8
With two exceptions, we treat as the costs at issue
herein only those costs reflected in petitioners’ revised expense
report.
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Respondent argues that petitioners are not entitled to
recover anything for the value relating to petitioners’ research
time.
The courts have consistently held that under section 7430
pro se taxpayers may not be awarded an amount reflecting the
value of their personal time in handling the litigation, even
though fees taxpayers pay to attorneys to handle the litigation
would be recoverable. See, e.g., Frisch v. Commissioner, 87 T.C.
838, 846-847 (1986) (pro se taxpayer, who also was an attorney,
not entitled to the value of his time in handling the
litigation). Petitioners are not entitled to an award under
section 7430 with respect to the value or costs relating to
petitioners’ research time.
Petitioners also argue that, at the least, they should be
able to recover wages petitioner lost on May 4, 2004, the day of
the Court hearing, a Monday on which petitioner would have worked
had it not been necessary to attend the hearing. At the hearing,
petitioner acknowledged that he had paid vacation leave available
from his employer in order to attend the May 4, 2004, hearing,
but that he was not planning to take such paid leave. The
evidence does not indicate whether petitioner ultimately took
paid leave, and we do not know whether petitioner actually lost
any wages to attend the May 4, 2004, hearing. For lack of
substantiation and without deciding the legal issue as to whether
petitioner as a pro se litigant would have been entitled to
recover as litigation costs an amount reflecting lost wages, we
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do not award petitioners herein litigation costs with respect to
claimed lost wages.
Postage & Delivery Costs
As indicated, respondent concedes that petitioners, under
section 7430, are entitled to recover a total of $35.06 in
postage costs. Set forth in the schedule below for each mailing
and delivery are the total amounts petitioners claim they are
entitled to recover as postage and delivery costs under section
7430 and the specific amounts respondent concedes:
Petitioners Respondent
Date Postage & Delivery Costs Claim Concedes
06/21/03 Postage for original petition $ 4.65 --
1
08/26/03 Postage for amended petition 117.70 $ 2.67
03/19/04 Postage for letter to IRS 4.42 2.67
2
04/19/04 Federal Express motion to Court 15.95 15.95
04/--/04 Federal Express letter to IRS 13.77 13.77
3
04/--/04 Postage for unspecified mailing 8.50 --
06/08/04 Postage for revised expense report to Court 9.60 --
4
09/28/04 Postage for reply brief to Court 4.42 –-
Total $179.01 $35.06
1
This $117.70 reflects postage cost and the purported cost
of office supplies. Petitioners do not separately identify the
costs of postage and office supplies relating to this Aug. 26,
2003, mailing.
2
This $15.95 was omitted from petitioners’ revised expense
report, but such amount was included in the original expense
report and was conceded by respondent. We include the cost of
this Apr. 19, 2004, delivery as part of petitioners’ motion for
litigation costs.
3
Petitioners claim that this $8.50 represents postage and
office supplies relating to an alleged April 2004 mailing, but no
evidence indicates that this mailing occurred.
4
This $4.42 relates to the certified mailing of
petitioners’ reply brief, which was submitted after petitioners’
revised expense report. We include the cost of this Sept. 28,
2004, mailing as part of petitioners’ motion for litigation costs.
With regard to the June 21, 2003, mailing to the Court, the
envelope in which petitioners mailed the original petition
verifies that petitioners incurred a cost of $4.65.
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With regard to the August 26, 2003, mailing to the Court,
respondent has conceded $2.67, but petitioners claim $117.70 for
postage and related office supplies. The amended petition
consists of the same number of pages as the original petition,
and we conclude that petitioners likely incurred the same cost to
mail the amended petition as they incurred to mail the original
petition, or $4.65. The record does not contain any
substantiation of additional office supplies purchased in
connection with this mailing, and we do not award petitioners any
amount with regard thereto.
With regard to the March 19, 2004, mailing to respondent,
respondent has conceded $2.67, but petitioners claim $4.42. The
March 19, 2004, letter is not contained in the record, but
respondent has conceded its existence, and in light of the
established cost of petitioners’ other mailings, we conclude that
petitioners incurred a cost of $4.42 to mail the March 19, 2004,
letter to respondent.
With regard to the two April 2004 Federal Express deliveries
(one to respondent and one to the Court), respondent has conceded
the full amounts claimed by petitioners.
With regard to an alleged April 2004 mailing, petitioners
claim $8.50 for postage and office supplies. The record does not
contain any substantiation of this purported mailing.
With regard to the June 8, 2004, mailing to the Court of the
five-page revised expense report, petitioners claim to have
incurred an estimated cost of $9.60. The evidence indicates that
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the cost to mail the revised expense report likely was at least
as much as the cost to mail the original and amended petitions,
which each were three pages. Petitioners have not substantiated
a higher amount for the cost of this mailing. We conclude that
petitioners incurred a cost of $4.65 to mail the revised expense
report.
The envelope in which petitioners’ reply brief was mailed to
the Court verifies that petitioners incurred a cost of $4.42 with
regard thereto.
We award petitioners a total of $52.51 for postage and
delivery costs, which includes the $35.06 respondent already has
conceded, as summarized below:
Date Awarded Postage and Delivery Costs Amount
06/21/03 Postage for original petition to Court $ 4.65
08/26/03 Postage for amended petition to Court 4.65
03/19/04 Postage for letter to IRS 4.42
04/--/04 Federal Express letter to IRS 13.77
04/19/04 Federal Express motion to Court 15.95
06/08/04 Postage for revised expense report to Court 4.65
09/28/04 Postage for reply brief to Court 4.42
Total $52.51
Mileage & Parking
The amounts petitioners claim they are entitled to recover
under section 7430 relating to mileage and parking costs are as
follows:
Date Type of Cost Amount
05/04/04 Mileage $10.50
05/04/04 Parking 3.00
Total $13.50
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The parties are in significant disagreement, as a matter of
law, with regard to whether petitioners are entitled to recover
under section 7430 their out-of-pocket costs for mileage and
parking fees. Petitioners argue that their out-of-pocket costs
qualify as general “litigation costs” under the language of
section 7430(c)(1). Respondent argues that because petitioners’
out-of-pocket costs do not fall within any of the specific
categories of recoverable costs under section 7430(c)(1)(A)
through (B)(iii) such costs, as a matter of law, are not
recoverable.
Set forth below is the relevant language of section 7430(c):
SEC. 7430(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 * * *,
(ii) the reasonable cost of any study,
analysis, engineering report, test, or
project * * *, and
(iii) reasonable fees paid or incurred
for the services of attorneys * * *.
It is respondent’s position that mileage and parking costs
are not recoverable under section 7430(c)(1)(B)(iii) when they
were incurred by the taxpayer or by an attorney hired by the
taxpayer and included as part of the fees and costs reimbursed to
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the attorney. Respondent refers us to three memorandum opinions
of this Court that have held that mileage and parking costs
incurred by pro se taxpayers are not expenses which qualify as
recoverable litigation costs under section 7430(c)(1). Petito v.
Commissioner, T.C. Memo. 2002-271 (mileage and parking fees
denied); Mason v. Commissioner, T.C. Memo. 1998-400 (mileage
denied); Buck v. Commissioner, T.C. Memo. 1993-16 (mileage and
parking fees denied).
None of these memorandum opinions that deal with pro se
taxpayers, however, elaborates at any length on its rationale for
excluding out-of-pocket costs for mileage and parking fees from
the general definition of litigation costs under section
7430(c)(1), and memorandum opinions of this Court are not
regarded as binding precedent. Nico v. Commissioner, 67 T.C.
647, 654 (1977), revd. in part on other grounds 565 F.2d 1234 (2d
Cir. 1977).
We note that respondent’s argument (that petitioners are not
entitled to recover out-of-pocket costs such as mileage and
parking fees because they are not enumerated under section
7430(c)(1)(A) through (B)(iii)) is inconsistent with respondent’s
concession herein that petitioners are entitled to recover $35.06
in substantiated, out-of-pocket postage and delivery costs, which
also are not enumerated in section 7430(c)(1)(A) through
(B)(iii).
We also note that Federal courts interpreting other
attorney’s fee award statutes generally have allowed pro se
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litigants to recover out-of-pocket costs such as mileage and
parking fees.
Under the general language of the attorney’s fee award
statute of the Freedom of Information Act (FOIA), 5 U.S.C. sec.
552(a)(4)(E) (2000),9 two Courts of Appeals and one District
Court have allowed pro se litigants to recover mileage and
parking fees. Bensman v. United States Fish & Wildlife Servs.,
49 Fed. Appx. 646, 647 (7th Cir. 2002) (transportation costs and
parking fees awarded); Kuzma v. IRS, 821 F.2d 930, 933 (2d Cir.
1987) (transportation costs, parking fees, and other out-of-
pocket costs awarded); Blazy v. Tenet, No. 93-2424, 1998 U.S.
Dist. LEXIS 22649, at *8-9 (D.D.C. Apr. 6, 1998) (mem.) (postage
and transportation costs generally awardable if substantiated).
Under the attorney’s fee award statute of the Equal Access
to Justice Act (EAJA), 28 U.S.C. sec. 2412 (2000),10 the language
of which closely resembles the relevant language of section
7430(c)(1), at least two District Court opinions have awarded pro
9
The Freedom of Information Act, 5 U.S.C. sec.
552(a)(4)(E) (2000), provides:
The court may assess against the United States reasonable
attorney fees and other litigation costs reasonably incurred
in any case under this section in which the complainant has
substantially prevailed.
10
The relevant language of the Equal Access to Justice
Act, 28 U.S.C. sec. 2412(d)(2) (2000), provides:
(2). For the purposes of this subsection--
(A) “fees and other expenses” includes the reasonable
expenses of expert witnesses, 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 reasonable attorney fees * * *.
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se litigants mileage and parking fees. Liberman v. Commr. of
Soc. Sec., 232 F. Supp. 2d 18, 20 (E.D.N.Y. 2002) (in addition to
items specifically listed in the statutory language, “courts
permit [pro se] litigants to recover telephone, postage, travel,
and photocopying costs under the EAJA”); March v. Brown, 7 Vet.
App. 163, 170 (1994) (a pro se litigant may, if a prevailing
party, recover “all * * * ‘expenses [including postage and
transportation costs] ordinarily arising in the course of
providing legal services’ to a client”, quoting Cook v. Brown,
6 Vet. App. 226, 237-240 (1994)). But see Kooritzky v. Herman,
6 F. Supp. 2d 1, 13 (D.D.C. 1997) (awarded pro se litigant
photocopying costs but not taxi fares and postage), revd. on
other grounds 178 F.3d 1315 (D.C. Cir. 1999).
In cases under the attorney’s fee award provisions of EAJA,
as in this case involving section 7430, the Government has
resisted any award of various out-of-pocket costs even when the
costs were incurred by attorneys on behalf of their clients.
Most courts have rejected such a narrow reading of the statutory
provisions and generally have allowed such out-of-pocket costs to
be recovered. In Intl. Woodworkers of Am., Local 3-98 v.
Donovan, 792 F.2d 762, 767 (9th Cir. 1986), the Ninth Circuit
Court of Appeals, to which an appeal in this case would lie,
stated that the “expenses enumerated in [EAJA] are set forth as
examples, not as an exclusive list” and awarded postage, courier,
telephone, and attorney travel costs as “routine under all other
fee statutes”. See also, e.g., Kelly v. Bowen, 862 F.2d 1333,
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1335 (8th Cir. 1988) (items listed only “examples of expenses for
which compensation may be granted”); Oliveira v. United States,
827 F.2d 735, 744 (Fed. Cir. 1987) (court has authority to award
costs “customarily charged to the client”; trial court must “use
its discretion, in view of the record before it, to determine
whether a specific expense may be recovered”); Aston v. Secy. of
Health & Human Servs., 808 F.2d 9, 12 (2d Cir. 1986) (“examples
of allowable expenses set out in [EAJA] are not exclusive”;
postage, transportation, telephone, and photocopying costs
reimbursable as reasonable fees and expenses); Hoopa Valley Tribe
v. Watt, 569 F. Supp. 943, 947 (N.D. Cal. 1983) (EAJA defines
“other expenses” such as travel and telephone calls incurred by
plaintiff’s attorneys “by example, rather than by limitation” due
to the statute’s use of the word “includes”).
The Tenth Circuit and the D.C. Circuit Courts of Appeals are
the only two Courts of Appeals of which we are aware that have
held that only costs specifically enumerated in the statute are
recoverable under EAJA even when the out-of-pocket costs are
incurred by a litigant’s attorney. See, e.g., Weakley v. Bowen,
803 F.2d 575, 580 (10th Cir. 1986) (“Costs for travel expenses
and postage fees are not authorized”); Mass. Fair Share v. Law
Enforcement Assistance Admin., 776 F.2d 1066, 1069-1070 (D.C.
Cir. 1985) (photocopying costs recoverable, but no award for
postage and messenger services, taxi fares and other travel
costs, or telephone); Action on Smoking & Health v. Civil
Aeronautics Bd., 724 F.2d 211, 224 (D.C. Cir. 1984) (photocopying
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costs recoverable under EAJA, but no award for postage, taxi
fares, or other out-of-pocket costs), citing NAACP v. Donovan,
554 F. Supp. 715, 719 (D.D.C. 1982) (recoverable “costs” are
limited to those costs enumerated under 28 U.S.C. sec. 1920, and
EAJA’s provision for recovery of “fees and other expenses” was
not intended to include postage, transportation, meals, or other
related expenses).
Under the Civil Rights Attorney’s Fees Awards Act, 42 U.S.C.
sec. 1988 (2000), at least two Courts of Appeals, involving
litigants represented by attorneys, have awarded costs beyond
those specifically enumerated by the statutory language, and we
have found none that limits awardable costs to only those
specifically enumerated. See Dowdell v. Apopka, 698 F.2d 1181,
1192 (11th Cir. 1983) (“with the exception of routine office
overhead normally absorbed by the practicing attorney, all
reasonable expenses incurred in case preparation, during the
course of litigation, or as an aspect of settlement of the case
may be taxed as costs under [42 U.S.C.] section 1988”, including
postage, travel, and telephone); Northcross v. Bd. of Educ., 611
F.2d 624, 639 (6th Cir. 1979) (“reasonable out-of-pocket expenses
incurred by the attorney which are normally charged to a fee-
paying client in the course of providing legal services”, such as
travel and telephone costs, recoverable under 42 U.S.C. section
1988).
In cases involving section 7430 and out-of-pocket costs
incurred by attorneys on behalf of their clients, the courts,
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including this Court, uniformly allow an attorney’s fee award to
include various out-of-pocket costs. See United States v. Sam
Ellis Stores, Inc., 768 F. Supp. 286, 290 (S.D. Cal. 1991) (costs
for mileage awarded), affd. 981 F.2d 1260 (9th Cir. 1992); Austin
v. Commissioner, T.C. Memo. 1997-157 (costs for mileage and
parking fees awarded); see also Powers v. Commissioner, 100 T.C.
457, 493 n.13 (1993) (itemized mileage and parking costs deemed
conceded by respondent and awarded by the Court), affd. in part
and revd. in part on other grounds 43 F.3d 172 (5th Cir. 1995).
We perceive no material distinction between substantiated
out-of-pocket costs recoverable by a taxpayer who is represented
by an attorney and substantiated out-of-pocket costs incurred by
a taxpayer who is not represented by an attorney.
Also, with regard specifically to out-of-pocket costs
incurred by pro se taxpayers, we perceive no distinction between
those out-of-pocket costs conceded by respondent herein (such as
postage and delivery costs) and those out-of-pocket costs that
are disputed herein (such as mileage and parking fees). Neither
type of out-of-pocket cost is specifically enumerated under
section 7430(c)(1), and both types of out-of-pocket costs would
appear to be recoverable only under a broad meaning of the word
“includes” as used in section 7430(c)(1).
Further, it is helpful to consider how courts have
interpreted the specific word “includes” in the context of a
number of different statutory provisions. Generally, the word
“includes” is interpreted by the courts as a word of enlargement,
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not of limitation. See, e.g., Fed. Land Bank v. Bismarck Lumber
Co., 314 U.S. 95, 100 (1941) (the term “including” used in a
section of the Federal Farm Loan Act of July 17, 1916, ch. 245,
39 Stat. 380, is not one of all-embracing definition but connotes
simply an illustrative application of a general principle);
Chemehuevi Indian Tribe v. Cal. State Bd. of Equalization, 757
F.2d 1047, 1054 (9th Cir. 1985) (definitional term “includes”
used in a section of the California Revenue and Taxation Code
governing cigarette tax is one of enlargement, not of
limitation), revd. on other grounds 474 U.S. 9 (1985); Heffner v.
Ketchen, 296 P. 768, 770 (Idaho 1931) (the word “including” used
in an Idaho tax lien statute is generally a term of enlargement,
may be used as a word of addition, and indicates something not
included, being sometimes used as equivalent to “also” or “and”).
Of particular interest is the fact that the word “includes”
as used in the Internal Revenue Code (or its predecessors) has
been interpreted by the courts broadly. See, e.g., Fid. Trust
Co. v. Commissioner, 141 F.2d 54, 57 (3d Cir. 1944) (in view of
section 1111(b), a trust was considered a transferee although
section 526(f) of the Internal Revenue Code of 1932, ch. 209, 47
Stat. 257, defining transferee, did not enumerate trusts as part
of the definition of “transferee”); Cannon v. Nicholas, 80 F.2d
934, 936 (10th Cir. 1935) (“the word ‘including’ * * * has
various shades of meaning, sometimes of restriction and sometimes
of enlargement” and as used in a predecessor of the Internal
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Revenue Code was not intended to limit distraint of delinquent
taxpayer’s goods to those enumerated).
Significantly, courts interpreting statutory language that
utilizes both the word “includes” and the word “means” in
different parts of the same statutory provision have held that
those two words, in the context of such a juxtaposition, have
different interpretations.
Interpreting section 206 of the Revenue Act of 1926, ch. 27,
44 Stat. 17, the Supreme Court, in Helvering v. Morgan’s Inc.,
293 U.S. 121 (1934), concluded that “includes” and “means” are to
be interpreted differently when both are used in the same
statutory provision. The Supreme Court interpreted the word
“includes” to indicate that what follows contains general
examples (i.e., not an exclusive list) and interpreted the word
“means” to indicate that what follows contains the complete
definition (i.e., an exclusive list).
The natural distinction would be that where “means” is
employed, the term [“means”] and * * * [the language
that follows] are to be interchangeable equivalents,
and that the verb “includes” imports a general class,
some of whose particular instances are those specified
in the * * * [language that follows the term
“includes”]. [Id. at 125, n.1.]
We note that the operative and relevant word used in section
7430(c)(1), relating to litigation costs, is “includes”, while
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the operative word used in section 7430(c)(2), relating to
administrative costs, is “means”.11
In the context of other nontax Federal statutes, when both
words “includes” and “means” are used within the same statutory
provision, courts have held that the word “includes” is a term of
enlargement and extension and that the word “means” is a term of
enumeration and limitation. Am. Sur. Co. v. Marotta, 287 U.S.
513, 517 (1933) (relating to Federal bankruptcy statute); Highway
& City Freight Drivers, Dockmen & Helpers, Local Union No. 600 v.
Gordon Transports, Inc., 576 F.2d 1285, 1289 (8th Cir. 1978)
(relating to Federal bankruptcy statute); Exxon Corp. v. Lujan,
730 F. Supp. 1535, 1545 (D. Wyo. 1990) (relating to Department of
Interior Federal regulatory language), affd. 970 F.2d 757 (10th
Cir. 1992); Brown v. Scott Paper Worldwide Co., 20 P.3d 921, 926
(Wash. 2001) (relating to State employment statute).12
11
The relevant portion of section 7430(c)(2) provides:
SEC. 7430(c)(2) Reasonable administrative costs. The term
“reasonable administrative costs” means--
(A) any administrative fees or similar charges imposed
by the Internal Revenue Service, and
(B) expenses, costs, and fees described in [sec.
7430(c)] paragraph (1)(B) * * *.
12
We acknowledge that, in certain contexts, the words
“includes” and “including” have been interpreted as words of
limitation and confinement. See, e.g., Blankenship v. W. Union
Tel. Co., 161 F.2d 168, 169 (4th Cir. 1947) (“includes” as used
in the Fair Labor Standards Act provision that the word
“employee” includes any individual employed by employer is “a
term of limitation indicating what belongs to a genus, rather
than a term of enlargement”), citing Montello Salt Co. v. Utah,
221 U.S. 452 (1911); Television Transmission, Inc. v. Pub. Utils.
(continued...)
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We believe that the out-of-pocket costs for mileage and
parking fees incurred by petitioner in order to attend the Court
hearing herein are covered by the term “litigation costs” under
the language of section 7430(c)(1) that applies to Tax Court
litigation. Section 7430(c)(1), defining reasonable litigation
costs, does not contain an exclusive list of items recoverable as
litigation costs, especially in light of the paragraph’s use of
the word “includes”, as opposed to the word “means”.
We summarize our analysis as follows: A majority of courts
interpreting other Federal attorney’s fee award statutes allow
substantiated out-of-pocket costs for postage and delivery and
for mileage and parking fees when incurred by pro se litigants;
section 7430 uses the expansive, nonexclusive word “includes”, as
opposed to “means”, when defining “litigation costs”; and
respondent herein concedes postage and delivery costs to be
recoverable litigation costs under section 7430(c)(1) even when
incurred by pro se taxpayers.13
12
(...continued)
Commn., 301 P.2d 862, 863 (Cal. 1956) (“Although ‘includes’ is
ordinarily not a word of limitation, a legislative declaration
that ‘public utility’ includes those performing certain
enumerated services is not a declaration that those performing
other services, not encompassed by the services enumerated, are
public utilities” subject to control and regulation by the Public
Utilities Commission [citations omitted]).
13
We note that there are no Treasury regulations
promulgated specifically under sec. 7430(c)(1) (relating to
litigation costs). There are Treasury regulations promulgated
under sec. 7430(c)(2) (relating to administrative costs), and
they provide (see sec. 301.7430-4(b)(1), Proced. & Admin. Regs.)
an enumeration comparable to the specific enumeration of the
statutory language of sec. 7430(c)(2). After such enumeration,
(continued...)
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Petitioners are awarded an additional $11.25 for mileage and
$3 for parking to attend the May 4, 2004, hearing.
Conclusion
In summary, based on respondent’s concessions and our
conclusions, petitioners are awarded litigation costs for the
Court filing fee, various postage and delivery charges, mileage
13
(...continued)
however, those regulations relating specifically to
administrative costs also expressly provide that additional out-
of-pocket costs, when billed separately by a litigant’s attorney,
may be recoverable as administrative costs, as follows:
necessary costs incurred for travel; expedited mail
delivery; messenger service; expenses while on travel;
long distance telephone calls; and necessary copying
fees imposed by the Internal Revenue Service, any
court, bank or other third party * * * may be
reasonable administrative costs. [Sec. 301.7430-
4(c)(2), Proced. & Admin. Regs.]
Another noteworthy point is that the regulations promulgated
under sec. 7430(c)(2) (relating to administrative costs) contain
a subparagraph which make reference to litigation costs as
follows:
Litigation costs include--
(i) Costs incurred in connection with the
preparation and filing of a petition with the United
States Tax Court or in connection with the commencement
of any other court proceeding; and
(ii) Costs incurred after the filing of a petition
with the United States Tax Court or after the
commencement of any other court proceeding. [Sec.
301.7430-4(c)(3), Proced. & Admin. Regs.]
As will be noted, the above language in subdiv. (ii) of the
regulation provides no list or enumeration comparable to the list
set forth in the statutory language of sec. 7430(c)(1)(A) through
(B)(iii), and it broadly and simply refers, without any
limitation, to “litigation costs” as those “costs” incurred
relating to the handling of a case.
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costs,14 and parking fees relating to this litigation as outlined
below:
Awarded Litigation Costs Amount
Court filing fee $ 60.00
Postage and delivery 52.51
Mileage 11.25
Parking 3.00
Total $126.76
Other arguments made by petitioners, such as a claim for
punitive damages, are without merit and are rejected.
For the reasons stated, we shall award petitioners
litigation costs in the amount of $126.76.15
An appropriate order and
decision will be entered.
14
As indicated, petitioners calculated their mileage costs
at $0.35 per mile when the Government’s actual allowable mileage
reimbursement rate effective on May 4, 2004, was $0.375. 68 Fed.
Reg. 69618 (Dec. 15, 2003). Therefore, at the applicable rate,
which we use, 30 miles traveled results in $11.25 in mileage
costs.
15
The amounts at issue and the amounts awarded herein are
small. Issuance of this Opinion, however, is appropriate due to
the repetitive nature of the costs involved and due to the need
to clarify for pro se taxpayers (as well as for represented
taxpayers) the available recovery under sec. 7430 of out-of-
pocket costs such as postage, mileage, and parking fees.