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Nature of Suit Code: 870
Nature of Suit: Tax Suits
Cause of Action: 

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FI LED 

United Scates Court of Appeals 

Tenth Cir::uir 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

OCT 3 1989 

ROBERT L. HOECKER 

Clerk PAUL THOMAS (TOM) INMAN, ) 

) 

Plaintiff-Appellee/ ) 

Cross-Appellant, ) 

) 

V • ) 

) 

UNITED STATES OF AMERICA, ) 

) 

Defendant-Appellant/ ) 

Cross-Appellee, ) 

) 

V • ) 

) 

JERRY D. GARLAND and ) 

EDWARD C. HAWKINS, ) 

) 

Defendants-Appellees, ) 

) 

and ) 

) 

TERRANCE (Terry) N. TAYLOR, ) 

) 

Defendant/Cross-Appellant. ) 

Nos. 86-1962 

86-1997 

86-2054 

(D.C. No. 84-C-310-B) 

(N.D. Okla.) 

ORDER AND JUDGMENT1 

Before McKAY an~ TACHA, Circuit Judges, and O'CONNOR, Chief 

District Judge. 

1 This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppel. 10th Cir. R. 

36.3. 

2 Honorable Earl E. O'Connor, Chief Judge of the United States 

District Court for the District of Kansas, sitting by designation. 

Appellate Case: 86-1962 Document: 01019974276 Date Filed: 10/03/1989 Page: 1 
This case comes before us on appeal from the district court's 

denial of directed verdict, denial of motion for judgment notwithstanding the verdict, and denial of attorney's fees. 

I. Facts 

This action was initially filed by plaintiff Inman to recover 

$771.54 which he paid to the government in partial satisfaction of 

a penalty assessed against him under 26 U.S.C. 6672 3 (1982). The 

government counterclaimed against plaintiff for $646,397.05, the 

unpaid balance of the assessment against him. The government also 

joined three additional defendants, Garland, Hawkins and Taylor. 

The government claimed defendant Garland owed $594,300.63, defendant Hawkins owed $594,277.81, and defendant Taylor owed 

$403,485.00 on the assessment against each respective additional 

defendant. The plaintiff and all defendants were employed by Tom 

Inman Trucking, Inc. Plaintiff was chairman of the Board of 

3 S6672. Failure to collect and pay over tax, or attempt to 

evade or defeat tax 

(a) General rule 

Any person required to collect, truthfully account 

for, and pay over any tax imposed by this title who 

willfully fails to collect such tax, or truthfully 

account for and pay over such tax, or willfully attempts 

in any manner to evade or defeat any such tax or the 

payment thereof, shall, in addition to other penalties 

provided by law, be liable to a penalty equal to the 

total amount of the tax evaded, or not collected, or not 

accounted for and paid over. No penalty shall be 

imposed under section 6653 for any offense to which this 

section is applicable. 

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Appellate Case: 86-1962 Document: 01019974276 Date Filed: 10/03/1989 Page: 2 
Directors and the corporation's ninety-eight percent shareholder 

throughout. After plaintiff was in a car accident, defendant 

Garland became president and chief operating officer of the corporation. Defendant Hawkins was secretary-treasurer and defendant 

Taylor was manager of the accounting department. 

The district court entered judgment on the jury verdict. The 

jury found plaintiff Inman and additional defendants Garland and 

Hawkins liable to the government for assessments pursuant to 26 

U.S.C. § 6672. Additional defendant Taylor was found not liable 

to the government for assessments under section 6672. Although 

the total amount awarded to the government was $646,244.10, the 

jury apportioned the amounts as follows, with statutory interest 

from date of assessment to date of judgment, and post-judgment 

interest of 11 percent per annum pursuant to 28 U.S.C. 

§ 196l(c)(l) and 26 u.s.c. § 662l(b): plaintiff Inman, 

$128,662.18; defendant Garland, $291,160.80; defendant Hawkins, 

$226,421.12. 

The plaintiff appeals the denial of his directed verdict and 

judgment notwithstanding the verdict motions. The government 

appeals the denial of their motion for judgment notwithstanding 

the verdict. The government also requests that the remainder of 

the assessment against Messrs. Inman, Garland and Hawkins be paid 

and that each be held jointly and severally liable for the total 

amount of tax liability. Finally, defendant Taylor, who prevailed 

at trial, appeals the district court's denial of his request for 

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Appellate Case: 86-1962 Document: 01019974276 Date Filed: 10/03/1989 Page: 3 
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attorney's fees. The government has dismissed its appeal with 

respect to Mr. Taylor. 

II. Standard of Review 

The district court's denial of plaintiff's motion for 

directed verdict and judgment notwithstanding the verdict and the 

government's motion for judgment not withstanding the verdict is 

reviewable de novo by this court. Guilfoyle v. Missouri, Kan. & 

Tex. R. Co., 812 F.2d 1290, 1292 (10th Cir. 1987). "Motions for 

directed verdict and for judgment n.o.v. are considered under the 

same standard." Hurd v. American Hoist & Derrick Co., 734 F.2d 

495, 459 (10th Cir. 1984). "Under this standard, we may find 

error [in the denial of such a motion] only if the evidence points 

but one way and is susceptible to no reasonable inferences supporting the party [opposing the motion]; we must construe the evidence and inferences most favorably to the nonmoving party." 

Zimmerman v. First Federal Sav. & Loan Ass'n, 848 F.2d 1047, 1051 

(10th Cir. 1988). 

A. Discussion of Plaintiff's Motions 

On the issue of plaintiff's motions, we must construe the 

evidence most favorably to the government. Plaintiff contends 

that the evidence against him was insufficient to support a finding of liability. This argument is without merit. Tom Inman 

Trucking, Inc. failed to account for and pay over all of the federal income and social security taxes withheld from the wages of 

its employees during the third and fourth quarters of 1980 and the 

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Appellate Case: 86-1962 Document: 01019974276 Date Filed: 10/03/1989 Page: 4 
first and second quarters of 1981. The plaintiff was the president and ninety-eight percent shareholder of all the corporation's 

stock. There was testimony from defendants Garland and Hawkins 

that plaintiff knew what was going on and made key decisions. 

Mr. Garland and Mr. Hawkins both testified that they regularly 

discussed the corporation's payroll tax delinquencies with plaintiff and that plaintiff ultimately decided what creditors would be 

paid and when. Clearly, there was sufficient evidence to conclude 

plaintiff willfully withheld tax payments under section 6672. The 

district court properly denied plaintiff's directed verdict and 

j.n.o.v. motions. 

B. Discussion on Defendant's Motion 

The government's motion for judgment notwithstanding the verdict asserted that the jury erroneously apportioned the total 

assessment of taxes to each party held liable. The total amount 

awarded to the government was $646,244.10. The government is 

entitled to the full amount awarded by the jury and may collect 

the entire amount from Messrs. Inman, Garland or Hawkins. They 

are all jointly and severally liable under section 6672 for one 

penalty equal to the entire amount of taxes owed, in this case 

$646,244.10. See Sinder v. United States, 655 F.2d 729 (6th Cir. 

1981): Brown v. United States, 591 F.2d 1136 (5th Cir. 1979): Mazo 

v. United States, 591 F.2d 1151 (5th Cir. 1979), cert. denied, 444 

U.S. 842 (1979): Hartman v. United States, 538 F.2d 1336 (8th Cir. 

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Appellate Case: 86-1962 Document: 01019974276 Date Filed: 10/03/1989 Page: 5 
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1976). We remand this matter to the district court to enter judgment, in the total amount the jury awarded, jointly and severally, 

against Messrs. Inman, Garland, and Hawkins. 

The government attempted to argue that they were entitled to 

collect an amount greater than the amount of tax owed by the corporation pursuant to the penalty language contained in section 

6672. The government asserted it could collect the total assessment of taxes from each person held liable. 4 The government's 

argument of their ability to collect more than a total of 

$646,244.10 is incorrect. It is well established that section 

6672's use of the word "penalty" is merely a civil means by which 

the government can collect taxes from a corporate office or 

employee. Hartman v. United States, 538 F.2d at 1340 (citing Kalb 

v. United States, 505 F.2d 506 (2d Cir. 1974), cert. denied, 421 

U.S. 979 (1975); Monday v. United States, 421 F.2d 1210 (7th Cir. 

1970), cert. denied, 400 U.S. 821 (1970). While a section 6672 

assessment imposes a direct and personal liability on the person 

assessed, the government is not entitled to more than one satisfaction of the tax liability owed when two or more persons are 

jointly and severally liable. Kelly v. Lether, 362 F.2d 629, 632, 

635 (8th Cir. 1966). Therefore, the total amount the government 

4 Under the government's argument, it could collect $646,244.10 

from Messrs. Inman, Garland and Hawkins for a total of 

$1,938,732.30, or $646,397.05 from Mr. Inman, $594,300.63 from Mr. 

Garland, and $594,277.81 from Mr. Hawkins, for a total of 

$1,834,975.40. 

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Appellate Case: 86-1962 Document: 01019974276 Date Filed: 10/03/1989 Page: 6 
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can collect is $646,244.10. 

III. Review on Attorney Fees 

The final issue is additional defendant Taylor's cross-appeal 

against the government for his attorney's fees under 26 U.S.C. 

7430. 5 The denial of Mr. Taylor's motion is reviewable under an 

abuse of discretion standard. United States v. 2,116 Boxes of 

Boned Beef, 726 F.2d 1481, 1486 (10th Cir. 1984), cert. denied, 

469 U.S. 1088 (1984), reh'g denied, 470 U.S. 1024 (1985). Under 

section 7430 the prevailing party must show6 that the government's 

5 The language of this statute at the time this action was 

commenced is as follows: 

S7430. Awarding of court costs and certain fees 

(a) In general 

In the case of any civil proceeding which is--

(1} brought by or against the United States in 

connection with the determination, collection, or refund 

of any tax, interest, or penalty under this title, and 

(2) brought in a court of the United States 

(including the Tax Court), 

the prevailing party may be awarded a judgment for 

reasonable litigation costs incurred in such proceeding. 

6 The pertinent language contained in section 7430 at the time 

thi s action was commenced states: 

(2) Prevailing party 

(A) In general 

The term ''prevailing party" means any party to any 

proceeding described in subsection (1) (other than the 

United States or any creditor of the taxpayer involved} 

which--

(i) establishes that the position of the United 

States in the civil proceeding was unreasonable, and 

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Appellate Case: 86-1962 Document: 01019974276 Date Filed: 10/03/1989 Page: 7 
litigating position was unreasonable. 

The question before us is whether the district court abused 

its discretion in finding that the government's case against 

Mr. Taylor was reasonable. The record showed that Mr. Taylor had 

no input, authority, or discretion regarding company decisions 

about what creditors were to pay or not pay. The IRS officer 

assigned to this case had twenty-five years of experience in conducting investigations into section 6672 penalty cases, and in his 

report of March 26, 1982, he unequivocally stated that Mr. Taylor 

was not to be considered a "responsible party'' under section 6672. 

At a later date in 1982, the agent prepared a second report, based 

on his investigation, knowledge, training, and skill, stating that 

Mr. Taylor was not to be considered a "responsible person''. Thus, 

the government was on notice not to proceed against Mr. Taylor. 

Furthermore, the district court judge expressed reservations about 

sending the case against Mr. Taylor to the jury. 

While the government did manage to avoid a directed verdict 

in favor of Mr. Taylor, we hold, looking at the totality of the 

circumstances, that the government was not reasonable in litigating this case against him. Therefore, the district court abused 

its discretion in denying him his attorney's fees. We reverse and 

(ii)(I) has substantially prevailed with respect to 

the amount in controversy, or 

(II) has substantially prepared with respect to 

the most significant issue or set of issues presented. 

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Appellate Case: 86-1962 Document: 01019974276 Date Filed: 10/03/1989 Page: 8 
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remand for a determination of Mr. Taylor's attorney's fees. Judgment is to be entered in accordance with this opinion. 

AFFIRMED in part, REVERSED in part, and REMANDED. 

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Entered for the Court 

Monroe G. McKay 

Circuit Judge 

Appellate Case: 86-1962 Document: 01019974276 Date Filed: 10/03/1989 Page: 9