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Herbert Oliver, Sr., and Mary L. Oliver v. United States of America, Herbert Oliver, Sr. Mary L. Oliver, and Geoffrey P. Chism and Stanislaw, Ashbaugh, Chism, Jacobson & Riper v. United States of America, Herbert Oliver, Sr. Mary L. Oliver v. United States v. Ronald P. Baker Old National Bank of Washington, Third-Party-Defendants

Citations: 921 F.2d 916; 90 Daily Journal DAR 14419; 90 Cal. Daily Op. Serv. 9174; 67 A.F.T.R.2d (RIA) 362; 1990 U.S. App. LEXIS 21895Docket: 89-35277

Court: Court of Appeals for the Third Circuit; December 19, 1990; Federal Appellate Court

Narrative Opinion Summary

This case concerns the imposition of penalties under 26 U.S.C. § 6672 on Mary L. Oliver and Herbert Oliver for willfully failing to pay withheld income and social security taxes by their corporation, R.P. Baker Steel Fabricating, Inc. Mary Oliver, involved in corporate bookkeeping, was found by a jury to be a 'responsible person' and liable for unpaid taxes for specific quarters in 1980, while Herbert Oliver was not found liable. The district court denied the Olivers' motion for attorney fees under the Equal Access to Justice Act (EAJA), finding the government's position 'substantially justified.' Sanctions imposed on the Olivers' attorney, Geoffrey Chism, for filing the motion were reversed, as the motion was not frivolous. Mary Oliver's appeal contested jury instructions regarding the burden of proof and the presumption of the IRS tax assessment's correctness, but these errors were deemed harmless. The case highlights issues surrounding the burden of proof in tax assessments and the criteria for awarding attorney fees in tax disputes.

Legal Issues Addressed

Attorney Fees under the Equal Access to Justice Act (EAJA)

Application: The Olivers' motion for attorney fees was denied as the government's position was substantially justified, despite Herbert Oliver being a prevailing party.

Reasoning: The Olivers contend that the district court incorrectly denied their motion for attorney fees under the Equal Access to Justice Act (EAJA).

Burden of Proof in Tax Collection Actions

Application: The court instructed the jury that the plaintiffs had the burden of proof, which Mary Oliver objected to, arguing the government should bear this burden initially.

Reasoning: Mary Oliver contested two jury instructions related to the burden of proof and the IRS tax assessment's presumption of correctness, claiming these errors prejudiced her trial.

Liability under 26 U.S.C. § 6672 for Willful Failure to Pay Withheld Taxes

Application: Mary Oliver was deemed a 'responsible person' who willfully failed to pay withheld taxes for specific quarters in 1980, whereas Herbert Oliver was not found liable.

Reasoning: In a jury trial in August 1988, the jury determined that Mary Oliver was a 'responsible person' under § 6672 and had willfully failed to pay the withheld taxes for specific quarters in 1980.

Presumption of Correctness of IRS Tax Assessment

Application: The district court's failure to require a minimal foundation for the presumption constituted an error, but it was deemed harmless as evidence supported the presumption.

Reasoning: The court noted that since the government met its initial burden, the responsibility then fell on Mary Oliver to demonstrate she was not liable for the assessment.

Rule 11 Sanctions for Filing Frivolous Motions

Application: Sanctions against attorney Geoffrey Chism were reversed as the motion for attorney fees was not deemed frivolous, although not persuasive.

Reasoning: The imposition of these sanctions is reviewed for abuse of discretion.