- 9 -
arguments presented by respondent that were not addressed and
rejected in Butts and Mosteirin I. Additionally, no factual
controversy remained after Mosteirin I. Respondent knew, and
indeed agreed, that the facts were indistinguishable from the
prior Allstate cases. Given that these facts were available to
respondent, legal precedents did not substantially support
respondent's position.
Furthermore, we do not agree that it was necessary for
respondent to try the pension and self-employment tax issues
together with the classification issue.5
It is time for respondent to suffer the consequences of
continually advocating a position previously judicially
disapproved. We conclude that respondent's position regarding
the classification issue was not substantially justified.6
5 We do not find convincing respondent's bald assertion
that it was necessary.
6 Respondent also argues that the Government was
substantially justified in litigating the classification issue
because the Court correctly articulated the applicable legal
standard in Butts v. Commissioner, T.C. Memo. 1993-478, affd. per
curiam 49 F.3d 713 (11th Cir. 1995), and Smithwick v.
Commissioner, T.C. Memo 1993-582, affd. per curiam sub nom. Butts
v. Commissioner, 49 F.3d 713 (11th Cir. 1995), as one of the
right to control the insurance agency, but we did not correctly
apply the legal test to the NOA's in those two cases.
Respondent's argument relies on our statement in Lozon I that
respondent was half right. Respondent understands this statement
to mean that the Court agreed that we misapplied the test.
Respondent is mistaken. In stating that respondent was half
right, we meant that respondent was correct in noting that the
Court articulated the applicable legal standard, but was
incorrect in asserting that we misapplied the test. Thus,
(continued...)
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