Congratulations to the Weston Hurd team of Sam Lauricia, Scott Lucas, and Matthew Miller. In a recent order issued by the U.S. District Court for the Eastern District of Michigan, the Court awarded Weston Hurd client Mann Construction legal fees plus costs incurred during a five-year litigation with the Internal Revenue Service and the United States Department of Justice-Tax Division.
Following Weston Hurd prevailing for its client in the U.S. District Court and the Sixth Circuit Court of Appeals, Weston Hurd filed a motion requesting the Court award Mann Construction reimbursement of legal fees and costs incurred during the multi-year litigation. The USDC concurred granting Weston Hurd’s motion on November 1, 2024 (see Mann Construction, Inc., et al. v. United States of America 1:20-cv-11307).
The dispute centered on a purported listed transaction and the IRS’s failure to follow notice-and-comment rulemaking procedures when it issued Notice 2007-83. Weston Hurd attorneys Sam Lauricia, Scott Lucas, and Matthew Miller argued the notice violated the Administrative Procedure Act’s (APA) notice-and-comment rulemaking requirements when the listed transaction Notice was issued without an opportunity for a formal comment period. In March 2022, the Sixth Circuit Court of Appeals agreed and in a unanimous opinion, reversed a district court ruling in the matter of Mann Construction, Inc. v. United States, No. 21-1500 (6th Cir. 2022). In its opinion, the Sixth Circuit stated, “Because the IRS’s process for issuing Notice 2007-83 did not satisfy the notice-and-comment procedures for promulgating legislative rules under the APA, we must set it aside.”
The District Court granted Mann Construction’s request for legal fees and expenses pursuant to IRC Section 7430. IRC Section 7430 sets forth rules for making qualified offers. Prior to commencing the litigation, the result of which Mann Construction was the prevailing party, Mann Construction tendered a qualified offer to the IRS. The qualified offer proposed that the IRS settle, the all-or-nothing dispute, for $1.00. The IRS did not respond to the qualified offer, thus paving the way for the Court’s award of attorney fees and costs in the amount $221,838.40 announced on November 1, 2024.
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