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controversy or the most significant issues presented. See sec.
7430(c)(4)(A). The Court, in its 2003 opinion, upheld
respondent’s determinations relating to the penalties, Mr.
Kovacevich’s employment status, and petitioner’s failure to
withhold Mr. Kovacevich’s FICA and FUTA taxes.
The Court of Appeals for the Ninth Circuit merely remanded
the case for the Court to recalculate the amounts owed by
petitioner after the application of section 3402(d). W. Mgmt.,
Inc. v. Commissioner, 176 Fed. Appx. 778 (9th Cir. 2006).
Section 3402(d) provides that to the extent Mr. Kovacevich paid
income tax on the wages at issue, respondent cannot collect the
FICA and FUTA taxes from petitioner. See id. The Court of
Appeals, however, affirmed this Court’s determinations relating
to the substantive issues in the case (e.g., Mr. Kovacevich’s
employment status and petitioner’s failure to withhold Mr.
Kovacevich’s FICA and FUTA taxes). Simply put, petitioner did
not substantially prevail and thus, is not entitled to litigation
costs.
Contentions we have not addressed are irrelevant, moot, or
meritless.
To reflect the foregoing,
An appropriate order and
decision will be entered.
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Last modified: November 10, 2007