Berniece Awmiller v. United States ( 1993 )

FARRIS, Circuit Judge:

Berniece Awmiller appeals from the district court’s denial of her request for attorney’s fees under 26 U.S.C. § 7430. We have jurisdiction over the timely appeal pursuant to 26 U.S.C. § 7430(e) and'28 U.S.C. § 1291. We affirm.

The sole issue is whether the position of the United States in Awmiller’s tax refund suit was “substantially justified.” 26 U.S.C. § 7430(c)(4)(A)(i). The phrase “substantially justified” means “justified to a degree that could satisfy a reasonable person.” Pierce v. Underwood, 487 U.S. 552, 565, 108 S.Ct. 2541, 2550, 101 L.Ed.2d 490 (1988); Huffman v. Commissioner, 978 F.2d 1139, 1147 (9th Cir.1992). We review the district court’s determination of whether the government’s position was “substantially justified” for an abuse of discretion. Bertolino v. Commissioner, 930 F.2d 759, 761 (1991).

Awmiller argues that the government was not substantially justified in pursuing this litigation because it could not show that she was a person responsible for the payment of withheld payroll taxes under Title 26, United States Code, Section 6672. We reject the argument.

Although Awmiller ultimately prevailed at trial, a reasonable person could have found that Awmiller was responsible for the payment of withheld federal payroll taxes. She was Comptroller of the corporation, had cosignatory authority over the corporate checking accounts, and signed a $100,000 promissory note on behalf of the corporation. The government’s primary witness, a former president of the corporation, testified that Awmiller had complete control over the payment of creditors.

The district court found that paperwork accessible to the Government and the witnesses accessible to the Government, as well as the mode of operations of the business, made it reasonable to believe that Awmiller had the power to determine whether government withholding taxes would be paid or not. Until the witnesses testified, and one appeared more credible than the other, one could have reasonably predicted that either side would prevail. The court remarked: “I thought that had Ms. Awmiller been less credible and [the Government’s star witness] been more credible, the ease could have gone the other way, and would have gone the other way.... One never knows until one watches it happen in front of the jury just how bad one’s star witness is going to be.”

The district court did not abuse its discretion in finding that the government’s position was substantially justified.

AFFIRMED.