               IN THE UNITED STATES COURT OF APPEALS
                       FOR THE FIFTH CIRCUIT



                           No. 95-50041
                        (Summary Calendar)


IN THE MATTER OF:    SUPER VAN, INC.,

                                                    Debtor.

SUPER VAN, INC.,

                                                    Appellant,


                              versus


STATE OF TEXAS, Texas Employment Commission
and USA, Internal Revenue Service,

                                                    Appellees.



          Appeal from the United States District Court
                For the Western District of Texas
                          (CA-SA-94-716)


                         November 15, 1995

Before DUHÉ, WIENER, and STEWART, Circuit Judges.
PER CURIAM:*

     This is an appeal from a district court decision affirming a

bankruptcy court's holding that the debtor, Appellant Super Van,

Inc., did not qualify for the employment tax liability safeharbor

     *
     Local Rule 47.5 provides: "The publication of opinions that
have no precedential value and merely decide particular cases on
the basis of well-settled principles of law imposes needless
expense on the public and burdens on the legal profession."
Pursuant to that Rule, the Court has determined that this opinion
should not be published.
under section 530 of the Revenue Act of 1978.              The bankruptcy

court's decision was based on a finding that a predecessor had

treated its drivers as employees for tax purposes.               On appeal,

Super Van complains that this finding is clearly erroneous because

the only evidence on this point was the uncontradicted testimony of

its president, Donald Rullo.     Concluding that the bankruptcy court

did not commit reversible error, we affirm.

                                   I.

                        FACTS AND PROCEEDINGS

     Super Van, Inc., which operates a shuttle service business in

San Antonio, Texas, filed a petition for relief under Chapter 11 of

the Bankruptcy Code on November 9, 1992.             The Internal Revenue

Service   ("IRS")   filed   a   proof   of   claim    in   the   amount   of

$107,363.151 for unpaid federal employment taxes, asserting that

Super Van's drivers were employees and not independent contractors.

The Texas Employment Commission filed a similar claim in the amount

of $27,808.15.

     Super Van contested the IRS' claim by filing a Motion for

Determination of Tax Liability under 11 U.S.C. § 505.            At trial in

the bankruptcy court, Super Van advanced two reasons why it was not

liable for these taxes.     First, it argued that its drivers were

independent contractors, not employees.          The bankruptcy court,

however, rejected this argument and concluded that its drivers were

employees.    Super Van does not contest this determination on

      1
         The district court's opinion states this amount to be
$107,271.01.    The exact amount of this claim, however, is
immaterial for purposes of this decision.

                                    2
appeal.

     Second, Super Van argued that even if its drivers were found

to be employees for tax purposes, the safeharbor provision of

section 530 of the Revenue Act of 1978 exempted it from liability.

The relevant portion of section 530 provides:

(a) Termination of certain employment tax liability.--

     (1) In general.--If--
          (A) for purposes of employment taxes, the taxpayer
     did not treat an individual as an employee for any
     period, and
          (B) in the case of periods after December 31, 1978, all
Federal tax returns (including information returns) required to be
filed by the taxpayer with respect to such individual for such
period are filed on a basis consistent with the taxpayer's
treatment of such individual as not being an employee, then for
purposes of applying such taxes for such period with respect to the
taxpayer, the individual shall be deemed not to be an employee
unless the taxpayer had no reasonable basis not treating such
individual as an employee.

                         *    *       *

     (3) Consistency required in the case of prior tax treatment.--
Paragraph (1) shall not apply with respect to the treatment of any
individual for employment tax purposes for any period ending after
December 31, 1978, if the taxpayer (or a predecessor) has treated
any individual holding a substantially similar position as an
employee for purposes of the employment taxes for any period
beginning after December 31, 1977.2

     The controversy in this case relates to the consistency

requirement under section 530(a)(3), which provides that in order

to qualify for the safeharbor the taxpayer and its predecessors

must not have treated any individual holding a substantially

similar position as an employee for employment tax purposes for any

period beginning after December 31, 1977.


    2
       Pub. L. No. 95-600, 92 Stat. 2763, 2885-86. Section 530 is
also reproduced in the notes following 26 U.S.C. § 3401.

                                  3
     Donald Rullo, president and majority shareholder of Super Van,

had operated several other ground transportation services as sole

proprietorships prior to incorporating Super Van in the fall of

1988.   Mr. Rullo testified at trial that neither Super Van nor his

sole proprietorships had ever treated drivers as employees for tax

purposes.    No documentary evidence was adduced in support of this

testimony; neither was any contradictory evidence introduced.           The

bankruptcy court, however, found that a predecessor had treated its

drivers as employees for federal employment tax purposes, thereby

preventing    Super   Van    from    qualifying   for   the   section   530

safeharbor.

     The bankruptcy court subsequently denied Super Van's motion

for reconsideration.        Super Van appealed to the district court

which affirmed the decision of the bankruptcy court, holding that

its findings were not clearly erroneous.          The district court also

denied Super Van's motion for rehearing.

     Super Van now appeals to us, contending that the finding that

it failed to meet the consistency requirement of the section 530

safeharbor is clearly erroneous because the only evidence on this

point was uncontradicted oral testimony, which the court could not

disregard.

                                      II.

                                    ANALYSIS

     We review a bankruptcy court's factual findings under the

clearly erroneous standard, and we adhere strictly to this standard




                                       4
of review when the district court has affirmed those findings.3

Conclusions of law are reviewed de novo.4

     Super     Van     insists     that   the       only     evidence    regarding      its

predecessors' employment tax treatment of drivers was Mr. Rullo's

uncontradicted testimony that no predecessor of Super Van had ever

treated drivers as employees.5                Thus, Super Van asserts that the

bankruptcy court's finding that it did not meet the consistency

requirement of section 530 is clearly erroneous.                              Although it

acknowledges that determining credibility is the exclusive province

of the trial court, Super Van maintains that the court cannot

disregard the uncontradicted testimony on this matter.

     We find Super Van's argument unpersuasive.                         It is true that

unimpeached,       competent,       and   relevant           testimony    may     not   be

arbitrarily disregarded by the trial court.                      This does not mean,

however,    that      a    court   is   compelled       to    accept     uncontroverted

testimony      when       it   doubts   the       credibility    of     the    testifying

witness.6    The cases relied on by Super Van simply do not stand for

     3
         In re Young, 995 F.2d 547, 548 (5th Cir. 1993).
     4
         Id.
     5
        In its order denying a motion for rehearing, the district
court suggests that letters from Mr. Rullo to the IRS describing
the operations of Super Van and its predecessors also may have been
evidence on this point and would support the bankruptcy court's
finding.   We need not consider the effect of these letters,
however, to reach our decision.
     6
         Conti v. Commissioner, 39 F.3d 658, 664 (6th Cir. 1994),
cert. denied, __ U.S. __, 115 S.Ct. 1793, 131 L.E.2d 722 (1995);
accord S.E.C. v. Huffman, 996 F.2d 800, 803 (5th Cir. 1993) ("The
district    court  was   not  bound,   however,   to   accept   his
unsubstantiated, self-serving testimony as true."); Lerch v.
Commissioner, 877 F.2d 624, 631 (7th Cir. 1989) ("The Tax Court may

                                              5
the proposition that a court must accept testimony that it does not

believe.7

      In this case, it is evident that the bankruptcy court doubted

the creditability of Mr. Rullo.     The IRS introduced several driver

hiring slips submitted by Mr. Rullo to the City of San Antonio

Transportation Inspector's Office on behalf of Super Van stating

that the listed driver was not a contract driver.       In response, Mr.

Rullo testified that regardless of the information provided on

these slips submitted to the city, Super Van had always treated its

drivers as independent contractors for employment tax purposes.

The bankruptcy court observed that the fact "that he would ignore

what a document says and would do the opposite tells us a lot about

Mr. Rullo."     Moreover, in an order denying Super Van's motion for

reconsideration, the bankruptcy court stated that "[e]ven assuming

Mr.   Rullo's    testimony   was   `unequivocal,   uncontradicted    and

unimpeached,'     the   court   found   Mr.   Rullo's   testimony   also

unbelievable." Doubting Mr. Rullo's credibility, the court was not

compelled to accept his testimony.

      The bankruptcy court's literal finding that a predecessor had


disregard uncontradicted testimony by a taxpayer where it finds
that testimony lacking in credibility."); Smith v. Commissioner,
800 F.2d 930, 935 (9th Cir. 1986) ("the trial court is not
compelled to accept even uncontroverted testimony when it doubts
the credibility of a witness.").
      7
       See Apoliskis v. Concord Life Ins. Co., 445 F.2d 31, 34 n.1
(7th Cir. 1971) ("a trial judge may not totally disregard
uncontradicted and apparently creditable testimony where no basis
for so doing appears in the record.")(emphasis added). The court
in Apoliskis also stated that "[i]ndeed, there is no indication
that the district judge questioned any witness' credibility, and he
appeared to credit the testimony of all witnesses." Id. at 34.

                                    6
treated its drivers as employees for tax purposes (as opposed to a

finding that Super Van did not meet its burden of proof on this

issue) arguably raises a concern about whether this is clearly

erroneous when there appears to be no evidence in the record on

this point other than Mr. Rullo's testimony.       The court did not

commit reversible error, however, in the wording of its finding.

Super Van had the burden of proof on this issue.    Disregarding the

testimony that the court did not believe, the record is totally

devoid of evidence about how Super Van's predecessors treated their

drivers for employment tax purposes.     Thus, Super Van failed to

meet its burden of proof, and the bankruptcy court did not commit

reversible error in making its ruling.

                               III.

                            CONCLUSION

     Super Van had the burden of proving that it qualified for the

section 530 safeharbor. The only evidence in support of its having

met the consistency requirement was the oral testimony of its

president.   The court simply did not believe this testimony and

thus was not required to accept it, even though the testimony was

uncontradicted.   With its sole evidence discredited and rejected,

Super Van could not and did not meet its evidentiary obligation.

Therefore, the bankruptcy court did not commit reversible error in

finding that Super Van had failed to meet its burden of proving

that it had satisfied the consistency requirement of section 530.

AFFIRMED.




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