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RUHLAND v. UNITED STATES

December 24, 1993

KENNETH G. RUHLAND, Plaintiff,
v.
UNITED STATES OF AMERICA, Defendant.


McAvoy


The opinion of the court was delivered by: THOMAS J. MCAVOY

MEMORANDUM DECISION & ORDER

 On November 20, 1992, plaintiff initiated the instant lawsuit seeking a refund of amounts paid to the United States based on an assessment made under 26 U.S.C. § 6672. Since the time of the filing of the complaint, plaintiff has received a full refund of the amounts paid by him. Plaintiff now seeks to recover an award of costs and attorney's fees pursuant to 26 U.S.C. § 7430. Both the plaintiff and the defendant are moving for summary judgement as a matter of law pursuant to Rule 56 of the Federal Rules of Civil Procedure.

 I. BACKGROUND

 The plaintiff was a 50% shareholder, officer and director of S & B Communication Inc. (hereinafter "S & B") during the third and fourth taxable quarters of 1988, when S & B was delinquent in paying its federal withholding taxes. After an Internal Revenue Service (hereinafter "I.R.S.") investigation, it was determined that plaintiff was the person responsible for S & B's willful failure to pay over its withholding taxes pursuant to 26 U.S.C. § 6672. During the third and fourth taxable quarters of 1988, the delinquency amounted to $ 15,356.74. Plaintiff paid the amount assessed against him, plus interest, and filed a claim for a refund with the I.R.S., alleging that he was not liable as the person responsible under section 6672. Plaintiff's claim was considered by the I.R.S. and was ultimately denied. Plaintiff then filed the present action seeking a refund of the amounts he paid towards the assessment.

 Since the initial filing of the suit, plaintiff's counsel had discovered that S & B had entered into an installment agreement with the I.R.S. whereby S & B would paid off the delinquent withholding taxes for the third and fourth taxable quarters of 1988. The final payment was made on April 22, 1992. On February 23, 1993, after the information was confirmed by the I.R.S., plaintiff's counsel was informed that because of the I.R.S.'s policy of only collecting the trust fund taxes once, the I.R.S. would issue a refund to the amounts paid, plus interest. The issuance of the refund followed shortly thereafter.

 Despite issuance of this refund, plaintiff continues to request a judicial determination that he is not a responsible person under section 6672, for the sole purpose of claiming an award of fees and costs under 26 U.S.C. § 7430.

 II. ANALYSIS

 Rule 56(c) of the Federal Rules of Civil Procedure provides that the court may grant summary judgment where there are no genuine issues of material fact for trial. Fed.R.Civ.P. 56(c). If there are no genuine issues, the movant is entitled to judgment as a matter of law. When the movant meets this standard, the opposing party must present sufficient facts to demonstrate that there exists some genuine issues of material fact in order to defeat the movant's motion for summary judgment. An issue is genuine if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). The court must view the evidence in light most favorable to the party opposing the motion. See Lopez v. S.B. Thomas, Inc., 831 F.2d 1184, 1187 (2d Cir. 1987).

 When the opposing party bears the ultimate burden of proof on a particular issue, such party may defeat a properly supported summary judgment motion by producing specific facts which demonstrate a genuine issue of material fact on that issue. See Montana v. First Federal Savings and Loan Assoc. of Rochester, 869 F.2d 100, 103 (2d Cir. 1989); see also Thompson v. Gjivoje, 896 F.2d 716, 720 (2d Cir. 1990). Here, plaintiff bears the ultimate burden of proof.

 A. DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

 The defendant contends that the United States is entitled to summary judgment as a matter of law on two main issues. First, defendant contends that summary judgment should be granted on the issue of plaintiff's liability under section 6672 because plaintiff was already given his refund rendering the said issue moot. Second, it is also contended that defendant is entitled summary judgment as a matter of law on the issue of costs and ...


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