Unpublished Disposition, 907 F.2d 154 (9th Cir. 1990)

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U.S. Court of Appeals for the Ninth Circuit - 907 F.2d 154 (9th Cir. 1990)

Bryce BUCHANAN, Plaintiff-Appellee,v.UNITED STATES of America, Defendant-Appellant.

No. 89-35704.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 6, 1990.Decided June 27, 1990.



Bryce Buchanan was awarded $18,245 in attorney's fees and $1,494 in costs, pursuant to Sec. 7430 of the Internal Revenue Code, 26 U.S.C. § 7430, on the ground that the government's position in executing a levy against his property was not "substantially justified."1  The government now appeals.

The government contends that even though it lost its case on the merits, it was substantially justified in executing the levy. The government explains that it had two pieces of evidence to support its position that Buchanan's property actually belonged to Congregational Church of Human Morality ("CCHM"), a church that owed more than $300,000 in delinquent taxes. First, Buchanan had said under oath at an earlier hearing that the house did not belong to him, but to CCHM. Second, the deed for his property indicated that the title was held by CCHM.

Buchanan argues that the government should have made further inquiry about ownership before initiating the levy. He claims that the government relied only upon a transcript, in which he had not been asked to specify which church owned the property, and that if he had been asked he would have said that he was referring not to CCHM, but to CCHM-Atlantis, his own church entity. He also explained that when he filled in CCHM as grantee in the deed he meant CCHM-Atlantis, and that the government had not been able to establish any connection between his church and the tax delinquent church.

In addition, Buchanan argues that when he wrote to the IRS, requesting the IRS to release the levy, he submitted proof of ownership in the form of affidavits. He contends that the affidavits and letter showed that he owned the property, that there had been no transfer of ownership, that he or his church had paid all taxes on the property, that the property was insured in his name, and that he had resided there without any claims of a possessory or non-possessory interest by CCHM.

The district court agreed with Buchanan that the government should have made a more thorough inquiry than it did before executing the levy on Buchanan's property and it awarded attorney's fees. The court recognized that " [t]he IRS's error is understandable," but noted that "a reasonable investigation might have prevented this litigation." Excerpt of Record ("E.R.") at 20 (Opinion). The district court granted Buchanan's request for attorney's fees because in its view the government had "jumped to a conclusion," and in doing so, its position had "not [been] substantially justified." E.R. at 24 (Transcript).

We hold that the district court did not abuse its discretion in awarding attorney's fees.2  Buchanan met all of the statutory requirements for an award of attorney's fees in that he had exhausted his administrative remedies, was requesting reasonable fees, and had been the prevailing party on the significant issues. See 26 U.S.C. § 7430. Although the government contends that it was substantially justified in its position and that therefore Buchanan cannot be a prevailing party under the statute, the government was only able to point to two pieces of evidence to support its position. We cannot say that the district court abused its discretion in holding that the government was not "substantially justified" by these two pieces of evidence and that it should have undertaken a more thorough investigation before executing the levy.

For the reasons stated above, the district court's amended judgment awarding attorney's fees is AFFIRMED.


This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by Ninth Circuit Rule 36-3


Section 7430 provides in relevant part:

In any administrative or court proceeding which is brought by or against the United States in connection with the determination, collection, or refund of any tax, interest, or penalty under this title, the prevailing party may be awarded a judgment or settlement for--

(1) reasonable administrative costs ...

(2) reasonable litigation costs....

26 U.S.C. § 7430(a) (1) & (2).

Such a judgment will be awarded only if the party has exhausted its administrative remedies, requested reasonable fees, and is a prevailing party under the statute. 26 U.S.C. § 7430(b) (1) & (2). A "prevailing party" is one

(i) which establishes that the position of the United States in the proceeding was not substantially justified,

(ii) which--

(I) has substantially prevailed with respect to the amount in controversy, or

(II) has substantially prevailed with respect to the most significant issue or set of issues presented....

26 U.S.C. § 7430(c) (4).


The parties agree that the standard of review is whether the district court abused its discretion