Liti

*398 MEMORANDUM ***

Seini and Kolotolu Liti (“the Litis”) appeal the denial of their motions for litigation costs and sanctions against the Commissioner of Internal Revenue (“Commissioner”). The Litis assert that the Tax Court erred in denying their motion for litigation costs, filed pursuant to Internal Revenue Code § 7430, 26 U.S.C. § 7430 . The Litis also contend that the Tax Court erred in summarily denying their motion for sanctions against the Commissioner, pursuant to I.R.C. § 6673, 26 U.S.C. § 6673 (a)(2). The Litis argue that the Tax Court erred by holding that the IRS was “substantially justified” in filing fraud charges against the Litis, thus preventing an award for litigation costs and sanctions.

I.

Previously we vacated the Tax Court’s initial order, denying the Litis’ motion, and remanded so that the Tax Court could provide a fuller explanation of its reasoning. Liti v. Comm’r, 289 F.3d 1103, 1104-05 (9th Cir.2002). The Tax Court issued its revised decision, for a second time, and the Litis timely appealed.

II.

A. The Tax Court’s decision on remand

This court, in its opinion regarding the taxpayers’ first appeal, noted that it could not properly review a Tax…