The trust fund penalty under section 7122 for the failure to pay payroll taxes was assessed against a CPA in the case of Walter M. Cheatle, Plaintiff v. United States of America, Defendant. U.S. District Court, West. Dist. Va.; Civil No. 3:07CV00062, December 9, 2008. The secretary and treasurer of a corporation was liable for the trust fund recovery penalty assessed against him in connection with the corporation's unpaid withholding taxes; however, a portion of the amount was abated. The individual was a "responsible person" because he exercised significant control over the day-to-day management of the corporation and over the company's payroll, had the power to write checks on behalf of the corporation, had the authority to hire and fire employees, sign corporate income tax and payroll tax returns and to determine which creditors to pay and when. Further, he acted willfully because he continued to authorize payments to nongovernmental creditors even after he became aware of the delinquent tax obligations. However, the individual was entitled to a credit toward the company's outstanding tax liability in the amount of a trust fund recovery payment that the government had already collected from the corporation's president. The individual was not liable for this amount, even though the government had erroneously refunded the payment.

MEMORANDUM OPINION

MOON, United States District Judge: This matter is before the Court on the United States' Motion for Summary Judgment (docket no. 13) and Walter Cheatle's Motion for Partial Summary Judgment (docket no. 16). On November 16, 2007, Cheatle ("Plaintiff") filed a Complaint (docket no. 1) against the United States ("Defendant") to recover penalties and interest that he claims was erroneously and wrongfully collected by Defendant in connection with his payment of employment taxes on behalf of Growers of Culpeper, Inc ("Growers"). Defendant counterclaimed (docket no. 2) and later filed a Motion for Summary Judgment, seeking to recover a trust fund recovery penalty ("TFRP") from Plaintiff for Growers' unpaid taxes in the amount of $150,155.57 plus interest accruing after June 2, 2008, pursuant to 26 U.S.C. § 6672. Plaintiff, while not acknowledging the validity of the tax liability claimed by Defendant, then filed a Motion for Partial Summary Judgment requesting that the Court credit his alleged tax liability with a TFRP payment made by James Soelder, the former President of Growers, in the amount of $44,011.24, plus interest accruing after September 27, 1999. For the reasons discussed below, Defendant's Motion for Summary Judgment is GRANTED and Plaintiff's Motion for Partial Summary Judgment is GRANTED.
I. BACKGROUND
Growers owned and operated a six-acre greenhouse in Stevensburg, Virginia. The company grew and sold various plants at wholesale prices to retail stores. In the early 1990s, Growers was owned and operated by Arie Boot, James Soelder, and Peter Chaconas. Boot was President and a member of the Board of Directors. When Boot resigned from his positions in 1992, Soelder and Chaconas purchased his interest, leaving them each with fifty percent ownership in the company. Chaconas then hired Plaintiff, who was elected to the Board of Directors and served as Secretary and Treasurer of Growers. Soelder served as President, and Chaconas served as Vice President. Because Chaconas was largely an absentee owner who secured the initial financing for Growers in exchange for his ownership interest, Soelder and Plaintiff partnered in the day-to-day management of the company. While Soelder focused on growing plants and ensuring their shipment to customers, Plaintiff primarily promoted sales, sought out new customers, and oversaw the financial management of the company. The extent of Plaintiff's involvement with Growers will be explained in much greater detail below.In 1995, Growers withheld income and employment taxes from its employees but failed to remit the taxes to the Internal Revenue Service ("IRS") for January, February, March, August, September, and parts of April. Plaintiff was aware of these outstanding tax liabilities as they accrued. In the fall of 1995, a dispute between the owners of Growers caused the company to file for bankruptcy. Growers never paid its outstanding tax liability for 1995. Unable to recover the withholding taxes from Growers, Defendant assessed a TFRP against both Soelder and Plaintiff in 1998. On February 2, 1999, Soelder agreed to pay $44,011.24 of the TFRP. The IRS erroneously refunded the $44,011.24 to Soelder on April 3, 2006 and is now suing him to retrieve the refund. Plaintiff claims he never received the letter proposing to assess the TFRP because it was sent to as address at which he no longer resided.Defendant claims it is entitled to summary judgment against Plaintiff in the amount of $150,155.57, plus interest accruing after June 2, 2008, because Plaintiff was a responsible officer who willfully failed to collect, truthfully account for, and pay over Growers' withholding taxes. While in no way acknowledging the validity of the alleged tax liability, Plaintiff moves the Court to grant partial summary judgment in his favor crediting Soelder's $44,011.24 payment towards the TFRP assessment, plus interest accruing as of September 27, 1999.

II. APPLICABLE LAW

A. SUMMARY JUDGMENT STANDARD OF REVIEW

Federal Rule of Civil Procedure 56(c) provides that a court should grant summary judgment "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). "As to materiality ... [o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In order to preclude summary judgment, the dispute about a material fact must be "'genuine,' that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. However, if the evidence of a genuine issue of material fact "is merely colorable or is not significantly probative, summary judgment may be granted." Id. at 250.In considering a motion for summary judgment under Rule 56, the court must view the record as a whole and draw reasonable inferences in the light most favorable to the nonmoving party. See, e.g., id. at 248-50 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322-24 (1986); In re Apex Express Corp., 190 F.3d 624, 633 (4th Cir. 1999).If the nonmoving party bears the burden of proof, "the burden on the moving party may be discharged by 'showing' --that is, pointing out to the district court - that there is an absence of evidence to support the nonmoving party's case." Celotex, 477 U.S. at 325. If the moving party shows such an absence of evidence, the burden shifts to the nonmoving party to set forth specific facts illustrating genuine issues for trial. See Fed. R. Civ. P. 56(e); Celotex, 477 U.S. at 324.A court should grant a motion for summary judgment if, after adequate time for discovery, the nonmoving party fails to make a showing "sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322. The nonmoving party "may not rely merely on allegations or denials in its own pleading; rather, its response must --by affidavits or as otherwise provided in [Rule 56] --set out specific facts showing a genuine issue for trial." Fed. R. Civ. P. 56(e)(2). Indeed, the nonmoving party cannot defeat a properly supported motion for summary judgment with mere conjecture and speculation. Glover v. Oppleman, 178 F. Supp. 2d 622, 631 (W.D. Va. 2001) ("Mere speculation by the non-movant cannot create a genuine issue of material fact."). The trial judge has an "affirmative obligation" to "prevent 'factually unsupported claims and defenses' from proceeding to trial." Felty v. Graves-Humphreys Co., 818 F.2d 1126, 1128 (4th Cir. 1987) (quoting Celotex, 477 U.S. at 317).

B. TRUST FUND RECOVERY PENALTY

Federal law requires employers to withhold federal income and social security taxes from employee wages and pay those taxes into the U.S. Treasury. 26 U.S.C. §§ 3102, 3402, 7501. Because the employer holds the taxes in trust for the United States, the taxes are typically called "trust fund taxes." See Slodov v. United States, 436 U.S. 238, 243 (1978). Such taxes are for the exclusive use of the Government and "are not to be used to pay the employer's business expenses, including salaries." Gephart v. United States, 818 F.2d 469, 472 (6th Cir. 1987). Under 26 U.S.C. § 6672, the Government is permitted to collect a TFRP from "[a]ny person required to collect, truthfully account for, and pay over any tax imposed by this title who willfully fails to collect such tax, or truthfully account for and pay over such tax, or willfully attempts in any manner to evade or defeat any such tax or the payment thereof." 1 Liability under 26 U.S.C. § 6672 requires proof that the employee (1) was a "responsible person" with a duty to collect, account for, and pay over trust fund taxes, and (2) willfully failed to discharge his duty as a responsible person. Turpin v. United States, 970 F.2d 1344, 1347 (4th Cir. 1992). Because the United States' tax assessments are presumptively correct, see United States v. Flor D'Italia, Inc., 536 U.S. 238, 242-43 (2002), an employee assessed with a TFRP must "demonstrate that he was not a responsible person or that his failure to pay the taxes was not willful." United States v. Pomponio, 635 F.2d 293, 296 (4th Cir. 1980).
III. DISCUSSION
A. "RESPONSIBLE PERSON" UNDER § 6672
To determine whether an employee is a "responsible person" under § 6672, courts "undertake a pragmatic, substance-over-form inquiry into whether an officer or employee so 'participated in decisions concerning payment of creditors and disbursement of funds' that he effectively had the authority --and hence a duty --to ensure payment of the corporation's payroll taxes." Plett v. United States, 185 F.3d 216, 219 (4th Cir. 1999) (quoting O'Connor v. United States, 956 F.2d 48, 51 (4th Cir. 1992)). "Stated differently, the 'crucial inquiry is whether the person had the effective power to pay the taxes --that is, whether he had the actual authority or ability, in view of his status within the corporation, to pay the taxes owed.'" Id. (quoting Barnett v. Internal Revenue Serv., 988 F.2d 1449, 1454 (5th Cir. 1993).While a "responsible person" must have significant control over the company's finances, "exclusive control is not necessary." Hagen v. United States, 485 F. Supp. 2d 622, 628 (D. Md. 2007) (emphasis in original) (citing Greenberg v. United States, 46 F.3d 239, 243 (3d Cir. 1994)). Furthermore, "the 'responsible person' is not limited to one person in a company but rather may include many persons connected with the same employer." Plett v. United States, 185 F.3d 216, 219 (4th Cir. 1999); see also Bowlen v. United States, 956 F.2d 723, 728 (7th Cir. 1992) (stating that § 6672 casts a "broad net" over many persons in imposing liability for delinquent payroll taxes). Section 6672 "applies to all responsible persons, not just the most responsible person." Hagen, 485 F. Supp. 2d at 628 (emphasis in original) (citing Turnbull v. United States, 929 F.2d 173, 178 (5th Cir. 1991)). Thus, Soelder's status as a "responsible person" is not an impediment to Plaintiff's status as the same.Several factors that courts look to when determining whether an employee is a "responsible person" under § 6672 include whether he or she:
(1) served as an officer of the company or as a member of its board of directors; (2) controlled the company's payroll; (3) determined which creditors to pay and when to pay them; (4) participated in the day-to-day management of the corporation; (5) possessed the power to write checks; and (6) had the ability to hire and fire employees.
Plett, 185 F.3d at 219. The six factors must be evaluated together, as no single factor is dispositive. Id. (citing Barnett v. I.R.S., 988 F.2d 1449, 1455 (5th Cir. 1993)). Without the six Plett factors, an employee could defeat summary judgment by simply claiming that he lacked the authority to pay his company's payroll taxes. The factors help courts conduct a more probative analysis of the indicia of "responsible person" status. Thus, an examination of the Plett factors in Plaintiff's case is an excellent starting point for discussion.First, it is undisputed that Plaintiff, as Secretary and Treasurer, was one of only three officers for Growers. He also served on the company's Board of Directors. While Plaintiff claims that he lacked real authority and was an officer and director by title only, the evidence in the record suggests otherwise --as an analysis of the remaining Plett factors will show.Second, there is no genuine dispute concerning Plaintiff's control over Growers' payroll. Soelder, Chaconas, and Growers' bookkeeper, Karen King, all unequivocally stated in deposition testimony that Plaintiff controlled the company payroll. 2 In his own deposition, Plaintiff does not deny controlling the payroll. In response to interrogatories from Defendant, Plaintiff also admitted to signing payroll checks in 1995 at a time when he was aware that Growers had outstanding payroll tax liabilities. According to Plaintiff, the fact that he could not fire Chaconas or Soelder, combined with the fact that Soelder signed checks for the payment of delinquent payroll taxes in July 1995, creates a genuine dispute over the payroll factor. These facts alone, however, are insufficient, especially given the fact that significant control over payroll should be sufficient for § 6672 liability to attach as a matter of law --exclusive control is not necessary. See Hagen, 485 F. Supp. 2d at 628; Greenberg, 46 F.3d at 243.Third, the evidence in the record overwhelmingly suggests that Plaintiff was significantly involved in determining which creditors to pay and when to pay them. It not disputed that Plaintiff had the authority to individually cut checks for amounts under $3,000 on behalf of Growers and frequently exercised that authority. In his deposition, Plaintiff admitted to being able to pay bills under this amount and even working out alternate payment arrangements with creditors when bills were late. Soelder and Chaconas both testified that Plaintiff had the authority to direct the payment of bills and put off paying bills until there was sufficient cash. O.R. Barham, a Senior Loan Officer for Growers' bank, stated that Plaintiff was the bank's "first point of contact" when there were problems concerning late payments. King testified that Plaintiff "oversaw all the business of the company and okayed paying the bills." In 1993, Plaintiff drafted a letter on behalf of Growers to the IRS proposing an alternative arrangement of installment payments to pay off the company's back taxes. While Plaintiff could not authorize payments for more than $3,000 without the co-signature of Soelder, there is no dispute that he was significantly involved in discussions as to which bills over that amount the company would pay. In his deposition, Plaintiff admitted meeting with Soelder to discuss Growers' accounts payable list to figure out "who we wanted to pay." Plaintiff would speak to Growers' vendors and then discuss which bills should be paid with Soelder. An employee need not have the final say about which creditors to pay: significant control over disbursements is sufficient for § 6672 liability to attach. Neckles v. United States, 579 F.2d 938, 940 (5th Cir. 1978); Gephart, 818 F.2d at 475. The fact that Plaintiff played a significant role in making these decisions, even if he did not have the ultimate say, is therefore sufficient. Finally, upon learning of the outstanding tax liability, Plaintiff could have refused to sign checks to non-governmental creditors until the liability to Defendant was satisfied. Instead, Plaintiff co-signed on a number of checks for substantial amounts, including a $200,000 check to Express Seed, and individually signed checks for under $3,000 when he knew of Growers' outstanding payroll tax liability. This exhibited preference for non-governmental creditors over the United States supports § 6672 liability as a matter of law. See Plett, 185 F.3d at 222. Given the totality of this evidence, there is no genuine dispute that Plaintiff had the power to determine which creditors to pay and when.Fourth, there is no genuine dispute that Plaintiff significantly participated in the day-to-day management of Growers. Plaintiff concedes that he had managerial responsibilities over Growers' sales department, including one of Growers' salesmen, Pete Nelson. In this capacity, Plaintiff was also responsible for acquiring new customers and managing customer relations with large customers like Wal-Mart, Safeway, and Giant Foods. Evidence in the record also indicates that Plaintiff entered into one or more security agreements with suppliers, signed tax returns on behalf of Growers, and acted as the main contact with Growers' accounting firm. As stated above, Plaintiff's own testimony indicates that he participated in discussions about which creditors to pay and when, authorized the payment of bills, and attempted to negotiate extended terms from a creditor. King testified that Plaintiff ran "the business end of the company." Barham stated that Plaintiff "was in charge of the day-to-day financial management of the company." Joseph Daniel, a prospective investor in Growers and the purchaser of Growers' assets in bankruptcy stated that Plaintiff "was responsible for the day-to-day financial management of the company." Even Plaintiff admitted that "[i]t was really a joint effort between Jim [Soelder] and myself, as far as day-to-day management" of Growers. The fact that, as Plaintiff claims, Soelder may have had the ultimate authority to make major decisions does not necessarily mean that Plaintiff was also involved in the day-to-day management of the company. Given the overwhelming quantum of evidence of Plaintiff's involvement in the management of Growers, there can be no genuine dispute concerning this Plett factor.Fifth, it is not disputed that Plaintiff could individually authorize checks for under $3,000 on Growers' behalf and often did so. While Plaintiff could not individually authorize a check for over $3,000, neither could Soelder. Checks for amounts over $3,000 required the signature of both officers. The inquiry under Plett is whether the employee had the power to write checks, not whether the employee had the power to write checks over a certain amount. Accordingly, there is no genuine dispute that Plaintiff had the power to write checks on behalf of Growers.Sixth, the record indicates that Plaintiff had the ability to hire and fire employees at Growers. King and Soelder both testified that Plaintiff hired King as Growers' bookkeeper. Soelder and Chaconas stated that Plaintiff had the ability to hire and fire employees. While Plaintiff did not admit to hiring King or Nelson, he did admit to being involved in the interviewing process for both employees. Contrary to Plaintiff's assertion, the mere fact that Plaintiff never actually hired or fired anyone at Growers does not mean that he lacked the ability to hire or fire employees.The six Plett factors weigh heavily in support of a conclusion that there is no genuine dispute that Plaintiff so "participated in decisions concerning payment of creditors and disbursement of funds that he effectively had the authority...to ensure payment" of Growers' payroll taxes. See Plett, 185 F.3d at 219. Still, Plaintiff argues that regardless of the Plett factors, summary judgment is inappropriate, as there is a genuine dispute as to whether he had the actual ability to pay Growers' payroll taxes because: (1) the monthly payroll tax liability was for amounts over $3,000 and he lacked the ability to cut checks for $3,000 on his own; and (2) he was following Soelder's directions not to pay the payroll taxes. Similar arguments have been entertained and rejected as a matter of law in several other circuits, and neither point creates a genuine dispute concerning Plaintiff's ability to pay the payroll taxes.As to the first point, even though the monthly payroll tax liability exceeded $3,000 and Plaintiff lacked the authority to cut checks for such large amounts on his own, he could have cut several checks in denominations of $3,000 or less to Defendant in order to satisfy the liability. Even Plaintiff concedes this point. Under Plaintiff's line of reasoning, no one at Growers would have had the actual authority to pay the payroll taxes, since all checks over $3,000 required two signatures and Soelder could not have individually authorized such amounts either. For this same reason, numerous federal courts have squarely held that Plaintiff's "co-signatory defense" fails as a matter of law. See, e.g., Thomas v. United States, 41 F.3d 1109, 1114 (7th Cir. 1994) (ability to refuse a co-signature is sufficient as a matter of law for purposes of § 6672 liability because a refusal to co-sign would prevent payroll from going forward until withholding taxes are paid); Godfrey v. United States, 784 F.2d 1568, 1576 (Fed. Cir. 1984) ("where a person has authority to sign the checks of the corporation, or to prevent their issuance by denying a necessary signature...he will generally be held 'responsible.'"); Bolding v. United States, 565 F.2d 663, 671 (Ct. Cl. 1977); Beeler v. United States, 894 F. Supp. 761 (S.D.N.Y. 1995). Holding otherwise would allow responsible officers to insulate themselves from liability by merely requiring co-signatures on all authorized accounts. The fact that Plaintiff needed a co-signature to authorize checks for over $3,000 does not create a genuine dispute concerning his effective ability to pay the payroll taxes on behalf of Growers.Plaintiff's second point --that he lacked the actual ability to pay the taxes because he was merely following Soelder's directions --was rejected in Plett in light of overwhelming evidence to the contrary. Plett, 185 F.3d at 221 (Plett claimed that he could exercise no independent judgment to make financial decisions and was merely doing "as he was told."). Other courts have also rejected such a defense. See, e.g., Brounstein v. United States, 979 F.2d 952, 955 (3d Cir. 1992) ("Instructions from a superior not to pay taxes do not...take a person otherwise responsible under section 6672(a) out of that category."); Gephart, 818 F.2d at 474-75; Roth v. United States, 779 F.2d 1567, 1571-72 (11th Cir. 1986); Howard v. United States, 711 F.2d 729, 734 (5th Cir. 1983). Consequently, in light of the overwhelming indicia of his authority within Growers as outlined above, Plaintiff's claim that he was merely following the orders of his superior is insufficient to create a genuine dispute concerning his ability to pay the payroll taxes.Finally, the similarity of the facts of Plett, where the Fourth Circuit affirmed a district court order granting summary judgment in favor of the Government under § 6672, to this case further illustrates why summary judgment in Defendant's favor is appropriate. In Plett, two individuals (Plett and Crutcher) operated a hair salon on a day-today basis. A third individual (Santarelli) helped secure the initial financing for the salon but delegated the management decisions to Plett and Crutcher. Plett, 185 F.3d at 220. While Plett did not hold an equity interest in the salon, he served as its Secretary. Plett and Crutcher paid the salon's creditors and employees in the ordinary course of business. Even when the salon's bookkeeper informed Plett and Crutcher that federal payroll taxes were outstanding, Plett continued to sign checks to pay the salon's non-governmental creditors and employees. Id. When the Government assessed a TFRP against Plett, he claimed that he could not be liable because he lacked independent control over the salon's financial activities and was merely doing "as he was told" when he paid non-governmental creditors with knowledge of the salon's outstanding payroll tax liability. Id. at 221. However, relying on the fact that Plett was an officer of the salon, controlled its payroll, paid non-governmental creditors in lieu of the Government, was responsible for the day-to-day operations of the salon, and had the power to sign checks and hire and fire employees, the Fourth Circuit held that Plett was a "responsible person" as a matter of law. Id. at 222.The similarities between Plett's role at the salon and Plaintiff's role at Growers are striking. Both Plaintiff and Plett lacked equity interests in their respective companies and served as officers. Both signed financial documents on behalf of their companies. Plaintiff signed checks, corporate income tax returns, payroll tax returns, a power of attorney, one or more credit applications, a security agreement, and terms of engagement with Growers' accounting firm. Both continued to sign checks to non-governmental creditors at times when they knew payroll taxes were outstanding.Furthermore, several differences between the facts of this case and the facts of Plett suggest that summary judgment is even more appropriate here. Plett claimed he was designated Secretary of the salon without his knowledge and did not serve on the Board of Directors, but Plaintiff clearly knew of his officer roles at Growers and served on the Board of Directors. While Plett was a hairdresser with no previous background in business or finance, Plaintiff had a law degree and was brought into Growers partly because of his significant business background. Plett was relatively low-paid, making $20,000 to $30,000 as a hairdresser. Plaintiff, by contrast, made $90,000 to $100,000 in 1995 --a salary commensurate with that of Soelder, Growers' President.The facts of this case thus cannot be reasonably distinguished from the facts of Plett. Both the Plett factors and the actual facts of Plett demonstrate that there is no genuine dispute concerning Plaintiff's status as a "responsible person" under § 6672. Because there is no genuine dispute that Plaintiff had the actual authority and duty to pay the taxes owed to Defendant, the next inquiry is whether Plaintiff's failure to remit the taxes was "willful."
B. "WILLFULNESS" UNDER § 6672
For liability to attach under § 6672, an employee must not only be a "responsible person," he must also "willfully" fail to discharge his duty to collect, account for, or pay over trust fund taxes to the United States. Turpin, 970 F.2d at 1347. Willfulness may be established by a responsible person's "actual or constructive knowledge that taxes were unpaid." Id. A responsible person's preference of other creditors over the United States also establishes willfulness under § 6672. Pomponio, 635 F.2d at 298, n. 5.Plaintiff testified that he first learned about Growers' outstanding tax liability in 1995 and was aware of the liability as it was accruing. Plaintiff also stated, "If the January [1995] withholding tax payment was not made, I - I would more than likely, would have known about it." In response to Defendant's first request for admissions, Plaintiff admitted that he "signed one or more payroll checks during 1995 at a time when [he was] aware that Growers had outstanding payroll tax liabilities for 1995." In light of this evidence, there can be no genuine dispute that Plaintiff displated actual knowledge that Growers' taxes were going unpaid and was "willful" as a matter of law.Furthermore, King testified that she would take payroll checks and checks to cover Growers' withholding taxes to Plaintiff for his signature. Payroll checks were distributed to the employees, and the checks to cover the taxes were eventually taken to the bank by King, Plaintiff, or Soelder. If there were insufficient funds to cover the withholding taxes, Plaintiff admitted that those checks would sit on his desk unsigned until he could get a co-signature. This evidence shows that Plaintiff displayed constructive knowledge of Growers' tax liability and therefore acted "willfully" as a matter of law.Despite his actual and constructive knowledge of Growers' tax liability, Plaintiff continued to sign checks to non-governmental creditors in preference of the United States on many different occasions. The record shows that, for example, Plaintiff co-signed a check for $200,000 and individually authorized checks for amounts under $3,000 during 1995, when he was aware of Growers' outstanding tax liability. Plaintiff was thus "willful" under § 6672 as a matter of law because there is no genuine dispute that he continued to authorize payments to non-governmental creditors in preference of the United States when he was aware of Growers' payroll tax obligations. Because Plaintiff is a "responsible person" who "willfully" failed to collect, account for, and pay over trust fund taxes as a matter of law, Defendant's Motion for Summary Judgment should be GRANTED.
C. ABATEMENT OF THE TFRP
As previously explained, in 1998, the IRS assessed a TFRP against both Soelder and Plaintiff for Growers' outstanding tax liability. On February 2, 1999, Soelder signed IRS Form 2751-AD, agreeing to pay $44,011.24 of the TFRP. The IRS accepted the form on April 27, 1999. The IRS erroneously refunded Soelder's payment on April 3, 2006 and is now suing him to retrieve the refund. In his Motion for Partial Summary Judgment, Plaintiff argues that the Court should credit Soelder's $44,011.24 payment, plus interest accruing as of September 27, 1999, towards his total alleged liability because Defendant is not entitled to double recovery of the TFRP as a matter of law.Plaintiff's concern was addressed by the Fourth Circuit in United States v. Pomponio, 635 F.2d 293, which implicitly barred double recovery in § 6672 cases. Concluding that the district court erred in dismissing the Government's § 6672 suit against a corporation's responsible officers, the Fourth Circuit remanded with instructions to grant the Government's motion to amend the judgment order. While the district court had previously expressed concern that the Government might obtain a double recovery of the TFRP, the Fourth Circuit held that such fears could "be allayed by including appropriate language in the judgment order." Id. at 299. For this reason, and also because counsel for the Government advised that it was the policy of the IRS to collect the amount of the tax only once, the Fourth Circuit did not find it necessary to explicitly prohibit double recovery. But it did note that "[d]ouble recovery by the government is not necessary to fulfill § 6672's primary purpose --protection of government revenues." Id. And at least one district court has read Pomponio to bar double recovery under § 6672. See Johnson v. United States, 203 F. Supp. 2d 416, 425 (D. Md. 2002). The necessary implication of Pomponio is that if the Government had claimed the right to double recovery, or if the district court could not bar double recovery by way of its order, then the Fourth Circuit would have barred double recovery.The Fourth Circuit's take on double recovery in Pomponio is consistent with the Court of Claims' holding in Gens v. United States, 222 Ct. Cl. 407. In that case, Richard Gens, a "responsible person" under § 6672, claimed that he was entitled to an abatement in the amount of two administrative collections made by the Government against two of his former business associates, who were also "responsible persons" under § 6672. The Court of Claims held that Mr. Gens was not entitled to the claimed abatement because the Government is only required to abate a TFRP assessment once its right to retain an administrative collection is established, and such a right had not been established in Gens' case. Id. at 415-16. 3 The right to retain an administrative collection is established "only upon expiration of the statutory period for commencement of a refund suit or, if a refund suit is filed, upon final adjudication of the action." Id. at 415 (quoting Crompton-Richmond Co. v. United States, 311 F. Supp. 1184, 1185 (S.D. N.Y. 1970).In this case, the Government's right to retain the administrative collection from Soelder has been established because the statute of limitations within which he could have filed a refund suit has expired. The limitations period for TFRP refund claims is two years. See 26 U.S.C. § 6511(a); Kuznitsky v. United States, 17 F.3d 1029, 1032-33 (7th Cir. 1994); USLIFE Title Ins. Ex rel. Mathews v. Harbison, 784 F.2d 1238, 1243 (5th Cir. 1986). Because Soelder made his payment towards the TFRP in 1999, the statute of limitations expired in 2001. The fact that Defendant erroneously refunded Soelder's payment in 2006, after successful collection, does not make Plaintiff liable for Defendant's mistake. The mistaken refund to Soelder no more gives Defendant a right to recover the same amount from Plaintiff than if Defendant had lost the money through its own carelessness. Once "the Government's right to retain an administrative collection is established," it is "incumbent on the Government to abate, in the amount of the collection, all 100-percent penalty assessments arising from the payroll tax liability." Gens, 222 Ct. Cl. at 415-16. Under the rationale of both Gens and Pomponio, therefore, Defendant must abate Soelder's payment towards Growers' TFRP in its assessment against Plaintiff. Accordingly, Plaintiff's Motion for Partial Summary Judgment is GRANTED. As a matter of law, Plaintiff should receive a credit in the amount of $44,011.24, plus interest accruing as of September 27, 1999, towards Growers' outstanding tax liability.
IV. CONCLUSION
Because Plaintiff is a "responsible person" who "willfully" failed to collect, account for, and pay over trust fund taxes as a matter of law, Defendant's Motion for Summary Judgment is GRANTED. However, because Defendant successfully collected $44,011.24 from Soelder in satisfaction of the TFRP, Plaintiff is entitled to receive a credit in the amount of $44,011.24, plus interest accruing as of September 27, 1999, towards Growers' outstanding tax liability. Plaintiff's Motion for Partial Summary Judgment is GRANTED.It is so ORDERED.1 Section 6672(a) reads: "Any person required to collect, truthfully account for, and pay over any tax imposed by this title who willfully fails to collect such tax, or truthfully account for and pay over such tax, or willfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall, in addition to other penalties provided by law, be liable to a penalty equal to the total amount of the tax evaded, or not collected, or not accounted for and paid over." 26 U.S.C. § 6672(a).2 In his Memorandum in Opposition, Plaintiff claims that Defendant mischaracterizes the testimony of King, implying that she was somehow coached through a confusing syllogism by Defendant's counsel. An examination of the record, however, does not support such a conclusion. When asked whether Plaintiff had "any responsibilities over the accounts receivable, the accounts payable, (and) payroll," King responded "Oh, he --yes. He was over all of it." When again asked whether Plaintiff "was responsible for the payroll for Growers," King responded "Yes. He was my boss." King Dep. 29:8-30:4.3 The administrative collection from one of the associates was the subject of a pending refund suit at the time, and the IRS had entered into a settlement with the other associate. To justify its decision to deny Mr. Gens the requested abatement, the Court of Claims relied on the fact that "[n]owhere in the record is there any evidence that the IRS has an established right to retain any collection made from either associate." Id. at 414-15.

Failure to Collect and Pay Over Tax, or Attempt to Evade or Defeat Tax: Joint and Several Liability: AbatementTaxpayer's case was remanded for a factual determination regarding the extent of the government's right to retain administratively made collections from third parties in order to allow an abatement in the amount owed by the taxpayer.J.J. Cunico, CtCls, 82-2 USTC ¶9549.An individual was entitled to abatement of an assessment against him for unpaid employment taxes, since the taxes had already been paid by another responsible person. Although the person who paid the taxes could file a suit for refund, the government's right to retain the collected tax as finally paid would have been established had the government not sought and acquired the dismissal from the case of the paying party.B.N. McCollum, DC Kan., 89-2 USTC ¶9589.The government's motion to alter or amend an earlier summary judgment (89-2 USTC ¶9589) that abated a tax assessment against an individual for unpaid employment taxes was denied.B.N. McCollum, DC Kan., 90-1 USTC ¶50,127.
Responsible person determined. --Failure to Collect and Pay Over Tax, or Attempt to Evade or Defeat Tax: Responsible Person: Responsible person determinedThe treasurer of a bankrupt corporation was personally liable to the government for withheld taxes that were diverted to pay other creditors. The treasurer breached his duty to hold such collected taxes in trust until they are paid over to the government. Although the treasurer could not sign checks in excess of $1,000 without the signature of another officer, such a limitation on his authority did not protect him from liability as the person responsible for payment of taxes. Further, the government was not bound by a hold-harmless agreement executed in favor of the treasurer by the other corporate officers.E.A. Cella, DC, 80-1 USTC ¶9369.Taxpayer was not an officer, director or employee of a toy company financed by her father and therefore was not liable for unpaid employment taxes of the company.S. Philipson, DC, 55-1 USTC ¶9466.Although the claimant denied that he was a director, officer or shareholder of the corporation, the weight of the evidence showed that he (1) hired and controlled employees of the corporation, (2) controlled the financial and business aspects of the corporation, (3) signed IRS forms, (4) engaged in other activities tending to show his direction and control over corporate funds, and (5) had the corporation formed.J. Labowitz, DC, 73-1 USTC ¶9155, 352 FSupp 202.A district court reversed a bankruptcy court's finding that the chairman of the board of two corporations was not a responsible person with respect to the collection and paying over of withholding and social security taxes. Because the taxpayer had, at all times, the power to see that such taxes were paid, the bankruptcy court's decision was clearly erroneous. The bankruptcy court's finding that the taxpayer did not willfully fail or refuse to pay the taxes in question was also clearly erroneous. After she became aware that the taxes had not been paid, she paid other creditors in preference to the government.T.L. Woodson, DC Mich, 83-1 USTC ¶9258, rev'g BC- DC, 81-2 USTC ¶9791, 15 BR 185.The determination of the liability (a corporate officer) for the payment of withheld taxes is an issue to be decided on the facts of the case. Thus, the court was compelled to dismiss both the government's and the taxpayer's motions for summary judgment.B.H. Hoeniger, DC, 76-1 USTC ¶9296.A corporate officer who paid the corporate liability for FICA taxes under the mistaken assumption that he was personally liable for their payment was entitled to a refund of the taxes and penalties paid.E.B. David, DC, 83-1 USTC ¶9259.After he failed to appear at trial, a district court sustained a 100% penalty against a president and treasurer of a photographic equipment business for his failure to pay over or collect employment taxes. However, an individual who had acted as general manager was not jointly liable for the penalty, since there was not sufficient evidence to suggest that he either preferred other creditors over the government or that he had financial responsibility over corporate affairs beyond that of depositing funds in a corporate account. As a result, the court sustained the penalty assessed against the president, but it dismissed the government's claim against the general manager.R. Sparkman, DC Calif., 84-2 USTC ¶9983.In reversing the Claims Court, the court of appeals held that a corporation's chairman of the board was not liable for the 100-percent penalty for failure to collect and pay withholding taxes because (1) he was not a responsible person who had a duty to collect, account for, and pay over taxes, since there was no evidence that he had or exercised control over such functions and (2) he did not act willfully in failing to withhold taxes because there was no evidence that he had actual knowledge of the nonpayment of taxes due after the first two quarters of the year until the eve of the corporation's bankruptcy. Since the taxpayer was not a responsible person and did not fail willfully to execute a duty to collect and pay taxes, the part of the judgment relating to the IRS's allocation of certain tax payments was vacated as moot.D.J. Godfrey, Jr., CA-FC, 84-2 USTC ¶9974, 748 F2d 1568, rev'g ClsCt, 83-2 USTC ¶9635.For withholding tax purposes, an individual who acquired a company in bleak financial condition and assumed unpaid liabilities had control over such company and was a responsible person. The facts that (1) the list of liabilities assumed did not include reference to unpaid pre-acquisition withholding tax liabilities and (2) such individual subsequently entered into an agreement with a bank to handle receipts and payments were insufficient to relieve such individual of his status as a responsible party. However, a question of material fact existed regarding whether such individual intentionally failed to pay taxes due.H. Bonnabel, DC N.J., 90-2 USTC ¶50,481.Mere titular officers of a corporation were not responsible parties and, even if they were, there was no showing that they willfully failed to pay the taxes due.R.E. Couture, DC, 74-2 USTC ¶9706.The son of the president of a restaurant corporation was not liable for the unpaid employee withholding taxes of the corporation because he was not a responsible person obligated to withhold and pay over taxes. Even though he managed some of the company's restaurants and was authorized to sign checks, he could not disburse funds except in emergency situations, and he did not have authority to pay creditors. In addition, although he held the office of Secretary/Treasurer and technically owned 10 percent of the stock of the corporation, he did not control that interest, had no authority to sell the stock, and was completely accountable to his father. Finally, even if it had been determined that he was a responsible person, he lacked authority to pay the taxes and other debts of the corporation and, therefore, could not be found to have willfully failed to carry out that responsibility.E.D. Goodick, DC La., 92-1 USTC ¶50,279.Individual financial backers who loaned money and obtained lines of credit for a corporation were responsible persons and, therefore, were liable for penalties for failure to pay over withheld income taxes. The backers had the ability to decide where corporate funds were spent and, in fact, exerted this control at least once. They had check-writing authority and could pull their financial support at any time their wishes were not fulfilled. Moreover, the backers' failure to pay the taxes was willful because they knew of the corporation's obligation to pay the taxes. In addition, the corporate officer, who operated the company on a day-to-day basis, was also liable for the taxes as a responsible person. Even though the officer intended to pay the taxes in the long run, he preferred to use current cash flows to carry on the corporation's operations and not to pay over the withheld taxes.C.D. Webster, DC Md., 94-1 USTC ¶50,008.A corporation in bankruptcy that was in the business of providing security guards to its customers was the employer of these guards because it had control over the guards and the funds used to pay them. It was responsible for the payment of employment taxes regarding these employees, and this obligation could not be avoided by delegating that function to another. However, the government's tax claim for the penalty for the failure to pay over withheld taxes was disallowed with leave to file an amended claim, because it failed to identify a particular person as the responsible person liable for the corporation's FICA and FUTA obligations and did not specify whether the unpaid FICA amounts were attributable to the debtor's portion or the employees' share.Professional Security Services, Inc., BC-DC Fla., 94-1 USTC ¶50,148.Summary judgment was denied where material issues of fact existed as to whether a corporate officer should be classified as a responsible person. The corporate officer had authority to sign corporation checks and could be deemed a person responsible for paying withholding taxes. Further, there was evidence that the officer was aware that the corporation was delinquent in paying over withholding to the IRS.J.P. Ladwig, DC Ill., 94-1 USTC ¶50,192.Married individuals were not responsible persons during the time that a company's tax delinquency accrued and, therefore, were not required to pay over federal income taxes and social security taxes withheld from employees' wages. They lacked control over the decision-making process by which the corporation allocated funds to other creditors instead of paying its withholding tax obligations.M.L. Michaud, FedCl, 97-2 USTC ¶50,972, 40 FedCl 1.The president of a bankrupt company who willfully failed to pay over his company's payroll withholding taxes was a responsible person with respect to the trust fund recovery penalty. The president acknowledged that he was a responsible person under the statute. However, whether two other company officers were responsible persons was questionable. Although one of the officers served as chief financial officer and both had check-writing authority, the president exerted such command over the finances of the company that a reasonable fact-finder could conclude that neither officer had significant control over the company's finances.R.S. Hudson, DC Pa., 99-2 USTC ¶50,914.A bankrupt attorney who was the president and sole shareholder of his law corporation was liable for the trust fund recovery penalty in connection with the corporation's failure to collect and pay over employment taxes.D.A. Smith, DC Hawaii, 99-2 USTC ¶50,998. Aff'g 99-1 USTC ¶50,278.The president and vice president of a corporation who failed to remit withholding taxes to the IRS were determined to be "responsible persons" liable for the trust fund recovery penalty. In addition to being corporate directors and officers, the individuals owned stock in the corporation, were responsible for daily management operations, hired and fired employees, and had the authority to sign checks and pay the corporation's taxes.D.C. Stull, DC Tex., 2000-1 USTC ¶50,168. Aff'd, per curium, CA-5 (unpublished opinion), 2001-1 USTC ¶50,333, 252 F3d 436.A corporate director who lacked control over the company's tax deposits and payments did not qualify as a responsible person liable for the trust fund recovery penalty. Although he made deposits and tax payments at a bank under the direction of the corporate president and was aware of the company's payroll tax delinquencies, he had no decision-making authority regarding the payment of creditors.M.D. McGlaughlin, DC Md., 2000-1 USTC ¶50,183.Questions of fact precluded summary judgment on the government's claim for the trust fund recovery penalty against the sole owner of a real estate appraisal business who was on maternity leave during the quarters at issue. Because her level of involvement with company during her maternity leave was in dispute, it could not be determined on summary judgment that she was a responsible party.P. Ranson, DC Wash., 2001-1 USTC ¶50,161.A federal district court applied improper legal standards to reach its determination that an individual was not a responsible person. The district court erroneously focused its inquiry on whether the taxpayer had knowledge of the unpaid taxes, the taxpayer's functional responsibility, and the fact that another individual had greater control of corporate affairs. That the taxpayer had significant control over the company's affairs was sufficient for him to qualify as a responsible person.D.M. Chapman, CA-9 (unpublished opinion), 2001-1 USTC ¶50,380, 7 FedAppx 804, rev'g and rem'g and unreported District Court decision.The former owner of a plumbing business who transferred 80% of the ownership in the business to his children was deemed to be a responsible person for purposes of the trust fund recovery penalty. The individual was still a 20% owner in the business, had check-signing authority, was often asked to co-sign checks for the business and continued to work to determine the bids the company would make. Moreover, he loaned money to the company when it was in financial difficulty and had considerable influence over how his children ran the business.M.E. Pitts, DC Ariz., 2001-1 USTC ¶50,419.The president and CEO of two trucking corporations, who was assessed penalties for his failure to turn over withholding taxes, was a responsible person under Code Sec. 6672. The undisputed evidence established that he had the authority to instruct his manager to pay the taxing authorities, had significant control over the finances of the corporations, retained the authority to sign checks on behalf of the corporation, and possessed the authority to hire and discharge employees. The taxpayer's argument that he delegated these duties and did not have day-to-day financial responsibilities was unpersuasive.R.C. Bolus, Sr., DC Pa., 2001-2 USTC ¶50,644.An individual who was the sole shareholder of one credit bureau and the president and CEO of a second bureau, both of which failed to pay over withholding taxes, qualified as a responsible person who willfully failed to collect, account for, or remit the funds to the IRS. Thus, he was liable for the assessed trust fund recovery penalties. No triable issues of fact existed as to the individual's liability for the penalties.W.K. Hankins, DC Ind., 2001-2 USTC ¶50,692.A third-party defendant's motion for summary judgment in connection with the IRS's assessment of a trust fund recovery penalty against him due to a corporation's failure to pay over employment taxes was denied. He unsuccessfully contended that he was not a responsible person because he was not an employee, officer or shareholder of the corporation. However, he served as corporate counsel and as the entity's chief financial officer. He also directed the president to make payments to various creditors, including tax payments to the IRS, was involved in the preparation and filing of the company's payroll tax returns, prepared corporate tax returns and was responsible for ensuring that the payroll tax deposits were made.D.K. Scheingold, DC N.J. (unpublished opinion), 2002-2 USTC ¶50,510.The chairman of a corporation was liable for the trust fund recovery penalty in connection with the corporation's failure to pay over employment taxes. He qualified as a responsible person because he had the authority to sign checks, hire and fire employees, participate in management, determine corporate financial policy, and authorize the payment of bills. He also discussed corporate business with other company officers on a weekly basis and was the corporation's majority shareholder, a member of its board of directors, and a guarantor of corporate loans.C.S. Perlman, DC Fla., 2002-1 USTC ¶50,346.The founder and president of a corporation was a responsible person with liability to pay the IRS's assessment of unpaid employment and withholding taxes, plus interest and penalties, for one tax year. He held the position of president of the company and attended its board meetings, he was generally responsible for the operation of the company and possessed the authority to sign checks and approved the check signing of the only other company employee with checking signing authority. Furthermore his decision not to pay over or withhold the employment taxes was willful. He made the decision to pay other creditors in preference to the IRS knowing that taxes were due and he failed to take corrective actions.G. Sutton,, DC Tex., 2002-2 USTC ¶50,552, 194 FSupp2d 559.The president of a corporation was considered the responsible person with liability to pay the assessment of unpaid taxes, plus interest and penalties, for two tax years. He was the highest-ranking officer and had substantial authority to direct operations. Moreover, he signed the payroll tax returns and had signature authority on corporate accounts. He paid other creditors in preference to the IRS knowing that taxes were due and failed to take corrective actions. That he resigned from his position of president was meaningless as he exercised control in all relevant areas both before and after the purported resignation.L.A. Mitchell, DC N.J. (unpublished opinion), 2002-2 USTC ¶50,537. Aff'd, CA-3 (unpublished opinion), 2004-1 USTC ¶50,113, 82 FedAppx 781.The CFO of a bankrupt airline company was a "responsible person," who willfully failed to file quarterly excise tax returns and pay the accompanying tax to the government. The CFO held a corporate office, possessed control over the financial affairs of the airline company, possessed the authority to disburse corporate funds, and possessed the ability to pay the excise taxes without the approval of the company's Board. There was a material issue of genuine fact, however, as to whether the controller of the company had the requisite corporate decision making authority within the company to be considered a responsible person with regard to the delinquent excise taxes. Although the controller applied for credit on behalf of the company and signed promissory notes that bound the company, he was not in charge of the department that was responsible for tracking the excise taxes and he was not involved in overall day-to-day operations of the company.D.R. Ferguson, DC Iowa, 2004-1 USTC ¶50,247, 317 FSupp2d 945.The bankruptcy court erroneously held that the president and sole shareholder was not a responsible person for purposes of the trust fund recovery penalty. Although the taxpayer did not run the day-to-day operations of the corporation, she had sole authority to right checks for the company. The bankruptcy court's conclusion that the taxpayer was not a responsible person was strongly based on the lack of authority or power over daily management of the company. However, the taxpayer's status as president, sole shareholder and her authority to sign checks was sufficient to make her the responsible person.E.L. Marino, DC Fla., 2004-1 USTC ¶50,262, 311 BR 111, rev'ing BC-DC Fla., 2004-1 USTC ¶50,261.A president and fifty percent shareholder of an employee leasing company was liable for the trust fund recovery penalty in connection with his company's failure to pay employee withholding taxes. Evidence established that the taxpayer was a responsible person because he had check signing authority, even though he claimed that he did not often exercise such authority, and had the authority to manage and direct the employees of the company. The taxpayer also had the authority to hire and fire all levels of employees, which he displayed when he fired his business partner, who was also a fifty percent shareholder.S. Farkas, FedCl, 2003-2 USTC ¶50,574.A debtor who served as vice-president of a general contracting business was a responsible person as a matter of law. He had significant authority over the employees, as well as over the finances of the company during the tax periods in issue. Questions remained regarding whether he willfully failed to pay over the withholding taxes.V.K. Pugh, BC-DC Nev., 2004-2 USTC ¶50,352, 315 BR 889.A debtor's objection to the IRS's claim for the trust fund recovery penalty assessed against him was denied because he was determined to be a responsible person who willfully failed to pay over withheld taxes. The debtor stipulated that he was a responsible person and his failure to remit the withheld taxes was willful because he was aware of the company's employment tax deficiency yet chose to pay creditors other than the government. The fact that the debtor was told by the company's owner not to pay the taxes and that he might have been fired had he disobeyed orders did not excuse his liability for nonpayment.L. Borman, BC-DC Fla., 2005-1 USTC ¶50,109.An individual was liable for the trust fund recovery penalty, during the time he was no longer president of the corporation. The taxpayer admitted to being the chairman of the board, the sole director, vice president, secretary, and treasurer. Between himself, his spouse and his children, he controlled about 50 percent of all outstanding stock and he has controlling interest in the corporation. At all times, the interim president served at his will. Undoubtedly, the taxpayer was a "responsible person" liable to pay the trust fund taxes.D.J. Frank, BC-DC N.C., 2005-1 USTC ¶50,222.The manager of a casino was not a responsible person for purposes of the trust fund recovery penalty since he had no authority over payroll or tax matters. Although he supervised department managers and was otherwise responsible for the day-to-day operations of the casino, the manager did not have significant decision-making authority over the financial affairs of the company to be responsible for payroll taxes. Authority to decide which checks were to be written, and to whom, rested in the sole shareholder, director and corporate officer of the casino.B.E. Dewing, DC Nev., 2005-1 USTC ¶50,275.The chief financial officer of a bankrupt company was not a responsible person for purposes of imposition of the trust fund recovery penalty, despite have check-signing authority, because the company president had absolute control over all of the company funds. The company president reviewed the cash flow balance daily, authorized the creditors to be paid and even wired funds to another creditor to prevent the IRS from obtaining the funds after the CFO sent the IRS a check without the president's knowledge.J.D. Salzillo, FedCl, 2005-1 USTC ¶50,324, 66 FedCl 23.The sole owner and president of a corporation was a responsible person who willfully failed to pay the corporation's employment tax liabilities for purposes of imposing the trust fund recovery penalty. He signed Form 941 employment tax returns on behalf of the corporation, could independently sign checks on behalf of the corporation and signed a sworn statement that he was solely responsible for all tax debts incurred by the corporation. The taxpayer's failure to pay the taxes was willful because he knew of the tax liabilities, but chose to pay other expenses.G. Kraljevich, DC Mich., 2005-1 USTC ¶50,372, 364 FSupp2d 655.An individual was determined to be a responsible person with respect to unpaid employment taxes. The taxpayer, who was involved in the operation of two companies until the time a surety company assumed control, did not present any evidence contradicting that he was a responsible party for tax liability under Code Sec. 6672. Instead, the evidence reflected that the majority of the unpaid employment taxes accrued prior to the time the surety company assumed control. Furthermore, whether the surety was responsible for the unpaid employment taxes had no bearing on whether the taxpayer was a responsible person for purposes of tax liability.J. Dowdy, DC Tex., 2005-2 USTC ¶50,517.The IRS was granted summary judgment against the former president of a non-profit corporation for trust fund recovery penalties under Code Sec. 6672. The taxpayer had significant control of the corporation's finances, had check writing authority, and was responsible for ensuring that the company paid its trust fund taxes. Further, once the taxpayer became aware of the deficiency, he failed to ensure its payment before any other creditors were paid. Such a failure is willful and subjects the responsible person to trust fund recovery penalties under Code Sec. 6672.Reverend R. W. Schlicht, DC Ariz., 2005-2 USTC ¶50,527.An electrical contractor was liable for penalties under Code Sec. 6672 for failing to pay over federal employment taxes owed by two corporations that he formed. Despite having relinquished his management role to family members, he was a "responsible person" for purposes of Code Sec. 6672 liability because he kept the title of president and retained authority to control the company, even if he did not exercise that authority. Specifically, the taxpayer had full check writing authority, full access to company books and records, and the opportunity to exercise substantial financial control over company affairs.J.F. Grillo, BC-DC N.J, 2005-2 USTC ¶50,625.The founder, president and principal stockholder of a company was determined to be a responsible person with respect to unpaid employment taxes. The failure of the taxpayer's accountant and tax specialist to properly designate amounts paid to offset these liabilities did not mean that the IRS should be equitably estopped from collecting under Code Sec. 6672, as the taxpayer mistakenly argued. The trust fund recovery penalty is separate and distinct from the legal obligation imposed on the employer to collect and remit the trust fund taxes. Since the taxpayer did not present any evidence to the contrary, he was found to be a responsible person who willfully failed to pay the owed employment taxes.J.A. Lencyk, DC Tex., 2005-2 USTC ¶50,630, 384 FSupp2d 1028.A 100-percent trust fund penalty was reduced to judgment since the taxpayer was the responsible person even though he did not have day-to-day control of the company. Rather his status as CEO, president and sole shareholder gave him sufficient control to be the responsible person for trust fund purposes.R. Sage, DC N.Y., 2006-1 USTC ¶50,175, 412 FSupp2d 406.The president of a tax-exempt organization was not entitled to a refund of the federal employment and withholding taxes he paid from his personal funds. As president of the board of directors for almost 20 years, he had check-signing authority and control over the organization's financial affairs. Further, he exhibited a reckless disregard of a known risk that the organization was not making required trust fund payments to the IRS and he made no effort to ascertain the status of the organization's tax payments.C.E. Jefferson, DC Ill., 2007-1 USTC ¶50,304, 459 FSupp2d 685.A company's vice president of operations was denied a refund of a trust fund recovery penalty assessed against her for her employer's failure to pay backup withholding taxes. She was a responsible person because her own testimony about her duties and responsibilities and her undisputed check-writing authority established that she could have prevented the company from paying other creditors instead of paying the taxes. She enjoyed exclusive check-writing authority and was responsible for collecting, accounting for, and paying over the withheld taxes. She was in a position to use her ability to prioritize creditors and her check-signing authority to impede the flow of business to the extent necessary to ensure the payment of taxes and nothing in the company's business model prevented her from paying the taxes. In addition, the undisputed evidence clearly established that the willfulness requirement was met.N.A. Cook, DC Ind., 2007-1 USTC ¶50,333.A trust fund recovery penalty was correctly assessed against the chief financial officer of a bankrupt airline company because he was a responsible person who willfully failed to pay the company's excise taxes. The individual was authorized to sign checks and disburse corporate funds on behalf of the company and had the authority to pay the company's excise taxes without board or management approval. The board never explicitly instructed him to not pay the excise taxes but he chose not to do so in order to pay other company expenses.R. Musal, DC Iowa, 2006-1 USTC ¶50,207, 421 FSupp2d 1153. Aff'd sub nom. D.R. Ferguson, CA-8, 2007-1 USTC ¶50,481, 484 F3d 1068.The CEO and board chairman of a motorcycle company was not entitled to a refund of a portion of the trust fund recovery penalty he paid to the IRS in satisfaction of the company's unpaid payroll withholding taxes. Testimony of the CEO and the company's chief operating officer and financial director established that the CEO was a responsible person who willfully failed to pay the company's taxes. He had overall authority, including raising capital and hiring, was involved in the day-to-day management of the company, had the authority to issue checks, and determined which creditors to pay and when to pay them. Further, he instructed the company's financial director that bills pertaining to utilities were to be paid first; thus, checks were issued to other creditors but not to the government.R.K. Hagen, DC Md., 2007-1 USTC ¶50,510, 485 FSupp2d 622.An individual who held no ownership or entrepreneurial stake in debtor corporations was not a responsible person with regard to those corporations' failure to pay over withheld federal taxes. She could not sign checks without the prior authorization of the president and sole shareholder of the corporations and had no power or authority to hire or fire employees. Although she was the secretary of the debtor corporations, the duties that she performed were ministerial and administrative in nature. All of the authority and control over the corporations' administration and finances resided with the president, and the tasks she performed were executed solely upon his instructions.L.M. Benitez, DC PR, 2006-2 USTC ¶50,598.The sole corporate officer of a construction company was a responsible person who willfully failed to pay over federal withholding taxes. The officer continued to write checks, sign returns and act on behalf of the corporation after the date he claimed an insurance company took over control under an indemnity agreement. However, the officer's wife was not liable for the unpaid taxes because there was no evidence that she was an officer or director of the construction company. Her involvement was limited to occasional business purchases and as a signatory with her husband on the indemnity agreement.G. Hartman, BC-DC Pa., 2007-2USTC ¶50,747, 375 BR 740.The chairman of a corporation was a responsible person who willfully failed to collect, account for and pay over the withheld income and employment taxes of the corporation. The IRS's evidence showed that he had the ability to sign checks, hire and fire employees, and sign the corporation's tax returns. He owned stock in the corporation, was ultimately responsible for making financial decisions and directed payment to the corporation's creditors despite knowledge of the corporation's unpaid employment taxes. However, a genuine issue of material fact existed as to whether another corporate officer, the CEO, had sufficient authority over the corporation's financial affairs to be considered a responsible person for purposes of the trust fund recovery penalties.R.C. Savona, DC Calif., 2007-2 USTC ¶50,788.The CEO and the Chief Financial Officer of a trucking company were both responsible persons who were jointly and severally liable for the trust fund recovery penalties in connection with the company's failure to pay its federal employment tax obligations. Both officers acted willfully when they made numerous voluntary and intentional payments to creditors despite having knowledge that the employment taxes were unpaid. Both exercised significant control over the disbursement of company's funds, had active day-to-day involvement in the business and had full authority to sign checks and Form 941 tax returns.J.M. Horovitz, DC Pa., 2008-1 USTC ¶50,186, 543 FSupp2d 441.The founder, shareholder and officer of a corporation was liable for the trust fund recovery penalty because he exercised significant control over the corporation's day-to-day activities and participated in the decision to hire or fire management employees and accountants in charge of the corporation's payroll operations. He also reviewed weekly and monthly financial statements, personally guaranteed payments to vendors and directed checks to be written and expenses to be paid.C.B. Erwin, DC N.C., 2008-1 USTC ¶50,258.The owner and the bookkeeper of a limited liability company (LLC) were liable for trust fund recovery penalties in connection with the operation of a restaurant. The owner was a responsible person because she organized the LLC, entered into a lease agreement for the restaurant, obtained a liquor license and failed to make a timely election for the LLC to be taxed as a corporation. Further, the bookkeeper was also a responsible person because he had the authority to sign checks for the restaurant, to make and authorize bank deposits, to identify and calculate the amount to be withheld for federal payroll taxes, to authorize payment of federal tax deposits and to authorize payroll checks. Moreover, he acted willfully because he knew about the delinquent taxes and voluntarily paid other creditors before paying the government.D.M. Seymour, DC Ky., 2008-2 USTC ¶50,406.An individual who was the president, director, Chief Executive Officer and majority shareholder of a corporation was liable for the trust fund recovery penalty assessed against him in connection with the corporation's unpaid withholding taxes. The individual was a "responsible person" with respect to the corporation because he had complete authority over every aspect of the corporation's finances, including the sole authority to hire and fire employees, take out loans, sign contracts and checks, withhold income and FICA taxes from wages and pay those taxes to the government.J.C. Tornes, DC Ohio, 2008-2 USTC ¶50,431.The majority stockholder of two retail optometry companies was not entitled to a refund of the trust fund recovery penalty he paid to the IRS in satisfaction of the companies' unpaid withholding taxes. The individual was a responsible person because he exercised significant control over the companies' finances, had check-signing authority and the authority to sign the companies' employment tax returns. Furthermore, more than one person can be a responsible person with respect to liability for unpaid taxes.L.H. Joel, DC Ky., 2008-2 USTC ¶50,451.The director, shareholder and secretary-treasurer of a closely held corporation was liable for the trust fund recovery penalty assessed against her in connection with the corporation's unpaid withholding taxes. The individual was a responsible person because she was involved in the corporation's business operations, had check signing authority, attended meetings to discuss the corporation's cash-flow problems, had access to the corporation's financial records and books and knew of the corporation's tax problems. Although her responsibilities did not typically include the payment of withholding taxes and she did not believe that it was within her control, she had the power to pay the corporation's withholding taxes.N. Noronha, DC Ky., 2008-2 USTC ¶50,554.The president of a company was liable for the trust fund recovery penalties assessed against him. The individual was the responsible person with respect to the company since he had the sole authority to write and sign checks on corporate accounts and to hire and fire personnel.C.C. Anuforo, DC Minn., 2008-2 USTC ¶50,584.The owner of a company was liable for the trust fund recovery penalty (TFRP). The individual maintained the company's books, prepared its financial statements, authorized payment of its bills and payroll, reviewed federal income tax returns and prepared and signed federal payroll tax returns. He acted willfully because he had reason to know that the taxes were not being paid and failed to exercise his authority to ensure their payment. Despite knowledge of the tax deficiencies, he regularly directed that payments be made to creditors other than the IRS.S.O. Johnson, DC Ill., 2008-2 USTC ¶50,585.The president of the board of directors of a tax-exempt organization was not entitled to a refund of federal employment and withholding taxes he paid from his personal funds. Although his position was voluntary and uncompensated, and although he was not involved in the day-to-day operations of the day care center, the individual had enough involvement in and control over the organization's financial affairs to qualify him as a "responsible person" within the meaning of Code Sec. 6672.C.E. Jefferson, CA-7, 2008-2 USTC ¶50,587.The owners of three companies and their employee, a certified public accountant (CPA), serving as the vice president of finance for those companies, were all responsible persons for purposes of the trust fund recovery penalty. The owners were the founders, officers, board members, and equal shareholders of each of the three companies. They had check-signing authority, could hire and fire employees, could exercise control over the companies' finances, including the payment of payroll taxes, and were intimately involved in running the companies. Although the CPA/employee had no check-signing authority, he supervised the accounting department, oversaw the preparation of checks, including payroll and federal tax deposit checks and had the authority to direct the accounting department to draft checks to the IRS instead of to other creditors. Further, the individuals acted willfully when they made payments to other creditors despite knowing that the trust fund taxes remained unpaid.S.P. Davis, Sr., DC La., 2008-2 USTC ¶50,613.



Knowledge of nonpayment. --Failure to Collect and Pay Over Tax, or Attempt to Evade or Defeat Tax: Willfulness: Knowledge of nonpaymentThe president of the company was a responsible person, but his lack of knowledge that withheld taxes were not being paid over might have diminished the willfulness of his action. Therefore, the case was remanded.R.J. Kalb, CA-2, 74-2 USTC ¶9760, 505 F2d 506.In ruling that the major shareholder in two corporations could not be held liable for the corporations' unpaid withholding taxes, the court held that the IRS could not prove that the shareholder acted willfully in failing to pay the taxes since he did not actually know of the tax delinquencies.M.J. Premo, BC-DC Mich., 90-2 USTC ¶50,396.In a charge to a jury, the court instructed that a responsible person has not willfully failed to collect and pay over taxes if he prefers other creditors at a time when he does not know that the taxes have not been paid over. The court further instructed the jury that such a person willfully fails to pay taxes when he learns that the taxes have not been paid and he continues to pay other creditors.R.S. Chappell, DC, 75-1 USTC ¶9296. Aff'd CA-7 (unpublished opinion 11-18-75).A company's newly hired Chief Financial Officer was liable for the company's unpaid employment taxes even though he was unaware of the unpaid amounts. Having been aware of the company's inability to pay debts owed to creditors other than the IRS, he should have investigated the company's ability to pay the IRS. Later, he should not have capitulated to directives from the company's president and a leading creditor of the company to refrain from making the payments.M. Sederoff, BC-DC Calif., 90-2 USTC ¶50,558.A president of a corporation was a responsible person liable for unpaid federal employment taxes to the extent of unencumbered funds received by the corporation after he learned of the nonpayment (i.e., after the corporation's failure to pay became willful with respect to the president). The fact that the president paid other creditors before the IRS with unencumbered funds received after he acquired knowledge of the nonpayment constituted willfulness as a matter of law. The bankruptcy court's conclusion that a responsible person is liable for the penalty only to the extent of unencumbered funds on the date that the failure to pay became willful was reversed. The court distinguished Slodov (¶39,780.69, above), in which a responsible person was held not liable for the trust fund tax incurred before he became a responsible person (rather than before the failure to pay became willful). The president's liability extended to delinquent taxes incurred before he had actual knowledge of the delinquency because he was involved with the corporation at all relevant times and the situation involved different policy interests than Slodov.W.A. King, DC Ala., 95-1 USTC ¶50,241.A construction firm's director-treasurer was liable where he was aware that the taxes were not being paid.Messina, DC, 65-1 USTC ¶9370.An officer-stockholder of two corporations was not liable for unpaid withholding and Social Security taxes owed by one corporation where he relied on an employee of the corporation to pay the taxes, but he was liable for the taxes owed by the successor corporation since he was then aware of the fact that the employee had failed to properly pay the taxes due from the predecessor corporation.R.D. Leuschner, Sr., CA-9, 64-2 USTC ¶9742, 336 F2d 246.Although an officer of a bankrupt corporation qualified as a responsible person, his knowing failure to pay over the taxes, without more, was insufficient to establish that he willfully attempted to evade or defeat the tax.F.P. Macagnone, BC-DC Fla., 98-2 USTC ¶50,624, 224 BR 212.On reconsideration, the bankruptcy court found that it did not err in placing the burden of proof on the IRS to show that the taxpayer was a responsible person.F.P. Macagnone, BC-DC Fla. 99-1 USTC ¶50,276, 228 BR 784.The Bankruptcy Court erred in determining that the government's failure to prove that a bankrupt responsible person willfully failed to collect and pay over employment taxes relieved him of liability for the trust fund recovery penalty. According to well-established precedent in the U.S. Court of Appeals for the 11th Circuit, an individual who has been determined to be a responsible person bears the burden to disprove willfulness.F.P Macagnone, DC Fla., 99-2 USTC ¶50,681. Rev'g and rem'g BC-DC Fla. 99-1 USTC ¶50,276, 228 BR 784.On remand, the bankruptcy court held that the responsible person/debtor was not liable for the trust fund recovery penalty for failure to collect and pay over employment taxes. This was affirmed on appeal. The officer did not show reckless disregard for a known or obvious risk by failing to determine whether funds withheld from employees' wages were remitted to the government. Despite the taxpayer's failure to inquire about the status of the employment taxes after his business encountered financial difficulties, absent a history of delinquency, his failure to do so was not reckless.F.P. Macagnone, DC Fla., 2000-2 USTC ¶50,551. Aff'g BC-DC Fla., 2000-1 USTC ¶50,207.The son of the president of a corporation was a responsible person where he had check writing authority, controlled the daily operations of the company, and was considered a substantial stockholder and at least a de facto vice-president. The failure to pay was willful because he caused payments to be made to other creditors when he knew that such funds were owed to the government. The duty of a responsible person to pay over withheld tax to the government may not be contravened by a superior's contrary instructions.J. Bernard, BC-DC La., 91-2 USTC ¶50,516.A president and major shareholder of a corporation was the responsible officer liable for willfully failing to pay withholding and social security taxes of the corporation's employees. The taxpayer contended that because he lacked knowledge of the corporation's failure to pay taxes until after they were due, his subsequent use of corporate revenues to compensate creditors rather than to pay the delinquent taxes did not evince willfulness. Since this argument was inconsistent with the definition of willfulness promulgated by the Supreme Court and other courts of appeals, it was rejected.D.O. Davis, CA-9, 92-1 USTC ¶50,292, 961 F2d 867. Cert. denied, 113 SCt 969.An officer of a corporation who had the authority to decide whether corporate funds should be expended was a responsible person. The taxpayer did not carry his burden of proving that he did not act willfully in failing to timely pay the taxes. The taxpayer, who forced his role of authority on the other shareholders, had a duty to insure prompt payment of the corporate tax liability. Because the taxpayer was aware of a previous tax delinquency, as well as of the inadequate performance of the acting financial manager, he could not escape culpability by delegating the payment of taxes to the manager or by disregarding his own obligations.R.M. Guito, Jr., DC Fla., 92-1 USTC ¶50,231.A supervisor of a trucking company was a responsible person liable for willfully failing to pay over withholding taxes. The evidence indicated that the taxpayer willfully failed to pay over the taxes. His signing of the paychecks and the withholding tax form indicated that he should have known of his responsibility.W.E. Whiteside, ClsCt, 92-2 USTC ¶50,436.A president of a corporation did not willfully fail to withhold and pay employment taxes for the two calendar quarters prior to his resignation, even though, as president, he had final authority regarding the payment of creditors and directly supervised the person actually responsible for paying the taxes. The taxpayer had no knowledge of any nonpayment nor did he recklessly disregard whether the taxes were paid. Moreover, upon discovery of the nonpayment, a payroll tax deposit was made. Since the IRS offered no evidence to rebut the evidence of payment, there was no genuine issue of material fact, and the taxpayer's motion for summary judgment was granted.J.M. Cohen, DC Calif., 93-1 USTC ¶50,350. Aff'd, CA-9 (unpublished opinion 3/24/94).The chief executive officer (CEO) of an airline carrier in bankruptcy did not "willfully" fail to collect, account for, or pay over taxes. The CEO was not liable for a penalty assessment for taxes accrued before his appointment, and his knowledge of prior tax deficiencies did not establish willfulness with respect to future deficiencies. His attendance at a hearing before the bankruptcy court during his brief tenure as CEO did not provide him with an awareness of current unpaid payroll taxes. There was no evidence that he was anything more than an observer at the hearing or that current delinquencies were discussed there in any detail. In addition, there was nothing in the airline's records that would have alerted him to any substantial deficiency in the payment of currently accruing taxes.B.A. Cooke, DC Calif., 93-1 USTC ¶50,294.A corporate president and director was liable for the penalty for unpaid withholding taxes. Although he claimed to have no knowledge of the corporate vice president's failure to pay over the withholding taxes at issue, he did know of a prior, relatively small tax delinquency levied against his company, took no steps to confirm or ensure that this tax delinquency and future taxes were being paid and signed smaller checks to other creditors during the same time period.P.J. Strunk, DC Iowa, 94-1 USTC ¶50,110.A corporate officer was not liable for the 100% penalty because he did not willfully fail to pay over withholding taxes. At the time of his resignation from the parent of his employer, the parent corporation was current in paying its taxes, and, after his resignation, he lacked actual knowledge of the nonpayment of taxes and was not responsible for preparing the corporation's tax returns.M.P. Running, CA-7, 93-2 USTC ¶50,568.An officer-stockholder of a condominium management company was liable for the trust fund recovery penalty with respect to withholding taxes owed by the predecessor corporation because he willfully failed to pay over the taxes. Even though he did not have actual knowledge of a failure to pay the tax, the officer was put on notice of the obvious risk that the taxes were not paid and acted with reckless disregard to that risk. The officer restructured the company to circumvent any responsibility for the unknown liabilities. His reliance on the bookkeeper's and owner's assessment of the predecessor corporation's state of affairs did not absolve him from making inquiries as to the actual tax liability.S.A. Malloy, CA-11, 94-1 USTC ¶50,145.A corporation's president and majority shareholder was liable for the trust fund recovery penalty because his failure to pay over withheld taxes was willful. He could not avoid liability for the penalty on the ground that, since the jury did not specifically find that he had actual knowledge of the delinquency before resigning and surrendering his stock, he did not act willfully. Willfulness includes the reckless disregard for an obvious or known risk of nonpayment. Also, the evidence did not support the president's contention that his ownership of the corporation had ceased before he discovered the unpaid taxes; thus, a jury instruction regarding his failure to make payment with available corporate assets after discovering the delinquency was valid. Moreover, the jury was properly instructed that a person who is responsible for withholding taxes cannot escape that obligation by delegating it to others.J.N. Hauf, DC N.Y., 97-2 USTC ¶50,645.An employer was liable as a responsible person for his failure to collect and pay over employment taxes owed by his wholly owned corporation. The willfulness requirement was satisfied because, after the IRS had sent several notices of delinquency, the company received unencumbered funds and used those funds to pay employee claims rather than the delinquent employment taxes.C.G. Vaglica, CA-5, 94-1 USTC ¶50,114.An owner and officer of a corporation was liable for the trust fund recovery penalty. He willfully failed to pay the taxes since he knew about the tax liability but continued to pay creditors and employees ahead of the government. The officer's claim that he was not liable for taxes attributable to periods prior to the date he acquired knowledge of the tax liability was rejected because he had a legal duty to make up any prior deficiency once he obtained knowledge of it. Moreover, a lender's alleged refusal to allow the corporation to pay the taxes did not insulate the officer from liability because the corporation voluntarily entered into the lending arrangement and continued to operate and pay employees, thereby incurring new tax liabilities. The individual also could not rely on assurances of others that the taxes would be paid.J.D. Durham, DC Okla., 94-2 USTC ¶50,331.The volunteer chairman of the board of directors of a not-for-profit organization who volunteered his time to the organization was liable as a responsible person for the trust fund recovery penalty. He willfully failed to pay withholding taxes because he signed checks to pay creditors other than the government, and the organization had unencumbered funds in an amount sufficient to pay the taxes. The taxpayer was on notice of substantial cash shortfalls and improprieties in the financial management of the organization, and his failure to investigate and correct such mismanagement was reckless and constituted willful conduct.H. Wright, DC N.Y., 96-1 USTC ¶50,114.A corporate vice president's reckless disregard of the obvious risk that the taxes would not be paid to the government constituted willfulness as a matter of law. Once he became aware of the payroll tax delinquencies, he had a duty to investigate or correct the problem. Another officer's assurances of payment did not relieve him of that duty.W.C. Kelver, DC Colo., 98-2 USTC ¶50,766.Although he may have been negligent, a responsible person was not liable for the trust fund recovery penalty because the failure to pay withholding taxes was not reckless, and, therefore, was not willful. First, he had little responsibility for finances and taxes. He was not involved in preparing company tax returns, nor did he exercise primary authority over check writing and bill paying (except for those arising at construction sites). Second, he had no knowledge of past or present tax deficiencies or other indications that the taxes were unpaid. Since the taxpayer resigned after learning of the unpaid taxes, his failure to pay the taxes at that point did not constitute willfulness.P.E. Abel, DC Pa., 96-2 USTC ¶50,498.A corporate president and chairman of the board of directors was a responsible person subject to the trust fund recovery penalty. For some of the quarters at issue, willfulness was established by the president's admissions that he was aware of the delinquency, reviewed the corporation's payroll tax returns, and signed the company's Forms 941, Employer's Quarterly Federal Tax Return, all of which reflected a balance due. For other quarters, the admissions were vaguely phrased and did not clearly state that the president was aware of the deficiencies for those quarters. Nonetheless, those admissions established the president's knowledge of the deficiencies for those quarters. The admissions regarded conversations with the company's outside accountant, review of the payroll tax returns, and the president's authority over financial decisions. Additionally, the president admitted that he authorized payment of company expenses other than the taxes.A. Hutchinson, DC Tex., 97-2 USTC ¶50,795.A president failed to meet his burden of disproving willfulness. There was evidence that he was aware of the corporation's cash flow problems and recklessly disregarded the risk of nonpayment of taxes, and he made no effort to prove that funds deposited into and withdrawn from corporate accounts during one of the quarters at issue were encumbered and, thus, unavailable for taxes.E. Rojo, BC-DC Fla., 97-2 USTC ¶50,789.Sufficient evidence existed to support a jury verdict that a president and CEO of a corporation was a "responsible person" who willfully failed to pay the corporation's withholding taxes. Accordingly, he was liable for the trust fund recovery penalty. His contention that he lacked control of the corporation's finances and was unable to make the appropriate tax payments was rejected. The taxpayer was aware of the delinquent taxes and that the corporation had sufficient funds to pay the delinquent taxes in full. However, he used the corporation's funds to pay other creditors.M.P. Logal, CA-5, 99-2 USTC ¶50,988. Aff'g DC Tex., 98-2 USTC ¶50,716.A corporation's majority shareholder was found to have willfully failed to see that the withheld federal taxes were paid when he had notice and acted in reckless disregard of a known risk that the funds may not be remitted to the government. Since the taxpayer had personally borrowed the funds to pay an earlier tax deficiency, he was on notice that the corporation's president had mismanaged the company and could not be trusted to pay the taxes. His failure to take a more active role in securing payment constituted willful failure to pay over withheld taxes.P.M. Larson, DC Wash., 99-2 USTC ¶50,787.The president and vice president of a corporation who failed to remit withholding taxes to the IRS acted willfully by paying other creditors and employees ahead of the IRS after becoming aware of the corporation's unpaid tax liabilities.D.C. Stull, DC Tex., 2000-1 USTC ¶50,168. Aff'd, per curiam, CA-5 (unpublished opinion), 2001-1 USTC ¶50,333.The president of a corporation that failed to remit payroll taxes to the IRS qualified as a responsible person for purposes of determining liability for the trust fund recovery penalty. The officer, who had been hired to revive the financially strapped corporation, acted willfully in failing to pay over the taxes because he had knowledge of the tax delinquency and deliberately paid other creditors ahead of the IRS.W.W. Borland II, DC Mich., 2000-1 USTC ¶50,458.The president and majority shareholder of a corporation who was found to be a responsible person willfully failed to pay his corporation's employment taxes. The taxpayer paid off a tax lien that his bank had placed on his corporation's line of credit despite having actual knowledge of the tax deficiencies.E.D. Battles, BC-DC Ala., 2000-1 USTC ¶50,536.Related officers and a consultant of a bankrupt corporation who were deemed to be responsible persons within the meaning of Code Sec. 6672 acted willfully in their failure to remit withheld employment taxes and, thus, were liable for the trust fund recovery penalty. Each individual had knowledge of or were involved in settlement discussions with the IRS concerning the corporation's employment tax liability.W. Mahler, DC Conn., 2000-2 USTC ¶50,808, 121 FSupp2d 179. Aff'd, on another issue, CA-2 (unpublished opinion), 2002-1 USTC ¶50,292.The conduct of a bankrupt corporation's president, who qualified as a responsible person for purposes of determining his liability for the trust fund recovery penalty, was deemed to be willful because he failed to pay the IRS ahead of other creditors despite knowing the company was delinquent.A. Bruno, DC Ill., 2000-2 USTC ¶50,831.The president and sole officer of a closely held corporation willfully failed to pay over withheld employment taxes to the IRS. She admitted that she was aware of the corporation's failure to pay over the taxes and that she paid other creditors ahead of the IRS. Thus, she had no reasonable cause for failing to remit the taxes.J.C. Luce, DC Ohio, 2000-2 USTC ¶50,847, 119 FSupp2d 779.A vice-president of a defunct corporation qualified as a responsible person and was not entitled to a refund of payments issued in partial satisfaction of a trust fund recovery penalty assessed against him individually in connection with the corporation's failure to pay over withheld employment taxes. The taxpayer had extensive control over the financial affairs of the business including the ability to sign checks and pay bills. Moreover, his conduct was willful in that he knew that the withholding taxes were not being paid and that available funds were being used to pay other creditors in preference to the IRS.H.W. Fisher, DC Okla., 2001-1 USTC ¶50,159.A bankrupt corporate officer's objection to the IRS's claim for the trust fund recovery penalty assessed against him was denied because he was properly deemed a responsible person within the meaning ofCode Sec. 6672. The debtor had extensive control over the corporation's financial affairs, including check signing authority and the ability to pay bills. Further, his conduct was willful in that he knew the withholding taxes were not being paid and that available funds were being used to pay other creditors, including himself, in preference to the IRS.W. Karnofsky, BC-DC Fla., 2001-1 USTC ¶50,170.The president, director and sole shareholder of a bankrupt contracting business who qualified as a responsible person and who willfully failed to remit employee withholding taxes to the government was liable for the trust fund recovery penalty. Although he withheld the taxes from his employees' wages during the 10 quarters at issue and knew that the taxes were due and owing, he failed to remit payment to the IRS. Instead, he used corporate funds to pay wages to such employees as himself, his wife and his son, and he paid a broad array of other creditors ahead of the IRS.L.B. Breaux, DC La., 2001-1 USTC ¶50,255.A corporate accountant who was deemed to a responsible person was liable for the trust fund recovery penalty because she had knowledge of the unpaid employment taxes, yet paid off debts to other creditors before the government. That she was directed by the corporation's CEO not to pay the outstanding employment taxes was irrelevant to her knowledge of them.B. Frey, DC Tex., 2001-1 USTC ¶50,417. Aff'd, per curiam, CA-5 (unpublished opinion), 2002-2 USTC ¶50,690, 34 FedAppx 151.Although the partial owner of a closely held business qualified as a responsible person, he was not liable for the trust fund recovery penalty because he did not willfully attempted to evade or defeat payment of employment taxes. The individual's daughter was the business's bookkeeper and managed its finances, including the payment of employment taxes. The individual did not know of the unpaid amounts, and would not be expected to have checked on those payments.M.E. Pitts, DC Ariz., 2001-1 USTC ¶50,419.The conduct of an individual who was conceded to being a responsible person with respect to one of three related businesses, was deemed to be willful; thus he was liable for the trust fund recovery penalty. The IRS's levying of the business's assets did not relieve him of his liability as a responsible person, which was separate and distinct from the business's liability, or negate his knowledge that employment taxes were not being paid.S. Rocha, DC Ore., 2001-1 USTC ¶50,425, 142 FSupp2d 1277.The owner and former president of a bankrupt corporation was not liable for the trust fund recovery penalty because he did not willfully fail to pay his company's employment tax delinquency. While the individual conceded he was a responsible person within the meaning of Code Sec. 6672, he had no reason to know that his company was in arrears since he turned over control of his company when it was in good standing. Moreover, he took immediate action when he became aware of its failure to remit payroll taxes to the IRS, retaking control of the company, ensuring that it remained current with its tax obligations and making arrangements for paying past-due taxes. Moreover, he did not favor other creditors above the IRS.R.D. Nutt, DC Fla., 2003-1 USTC ¶50,395, aff'g BC-DC Fla., 2002-2 USTC ¶50,753.A trust fund recovery penalty was imposed against an individual for failure to pay over employment withholding taxes for one tax year. The taxpayer had significant day-to-day control and decision-making authority over the operations and financial affairs of the company, which was supported by his ability to decide which creditors to pay, unrestrained check-writing authority, and access to corporate books and records. Consequently, he was a responsible person under Code Sec. 6672. Moreover, the taxpayer knew that the company was not paying employment taxes and took no steps to ensure that the taxes would be paid. As a result, the taxpayer's failure to collect, account for, or pay over the company's withholding taxes was deemed willful.H.N. Werkheiser, DC Pa., 2002-1 USTC ¶50,212.A corporate president was deemed to be a responsible person in connection with the corporations failure to pay over employment taxes. In addition to being the corporation's president, he was the chairman of the board, majority shareholder and actively involved in the day-to-day activities of the corporation. That he employed an individual to lead the corporation's financial department was insufficient to relieve him from liability because he had supervisory control of that individual.F.T. Johnson, Jr., DC Md., 2002-1 USTC ¶50,267, 203 FSupp2d 416. Aff'd, per curiam, CA-4 (unpublished opinion), 2003-1 USTC ¶50,345, 50 FedAppx 113. Cert. denied, 10/6/2003.The wife of the owner of a sole proprietorship willfully failed to pay the outstanding employment tax liability of the business. The taxpayer, who was a responsible person, stipulated that she knew the business was delinquent on its withholding obligations during the tax quarters in issue, yet she continued to draft and sign checks to pay other creditors, payroll and personal expenses.D.M. Keohan, DC Mass., 2002-1 USTC ¶50,279.The failure of a corporate vice president, who was a responsible person, to withhold or pay over employment taxes was willful. Following his receipt of the notice of deficiency regarding the corporation's unpaid tax liability, he was aware that the corporation was paying creditors other than the government. In addition, he continued to sign payroll checks and he favored payment of the corporation's debts that were owed to him over the payment of the deficient withholding taxes.B. Crutcher, DC Ala., 2002-1 USTC ¶50,289.A corporate president was liable for the trust fund recovery penalty in connection with the corporation's failure to pay over its employment tax liability. The taxpayer's failure to pay over the taxes at issue was willful. He knew of the corporation's liability for employment taxes but paid net wages to employees knowing that payroll taxes would not be paid over to the government. The taxpayer unsuccessfully contended that his actions were not willful because he acted on orders of the bankruptcy court to use the company's available funds for environmental cleanup and operating expenses. The bankruptcy court, however, did not compel him to avoid paying the corporation's employment tax obligations.D.F. Cook, FedCl, 2002-1 USTC ¶50,328.The chairman of a corporation was liable for the trust fund recovery penalty because he was a responsible person who willfully failed to remit his company's employment taxes. He failed to fulfill his obligation to apply unencumbered corporate funds to pay its tax liabilities despite his knowledge that the taxes were unpaid. His self-serving statements that he lacked such knowledge were insufficient to satisfy his burden of proving that he had not acted willfully. In addition, he devoted corporate funds to purposes other than payment of the withholding taxes.C.S. Perlman, DC Fla., 2002-1 USTC ¶50,346.A corporate vice president's failure to pay withholding taxes was willful. The record indicated that he continued to make payments to other creditors after learning of the corporation's failure to pay employment taxes.D.W. Parr, DC Tex., 2002-1 USTC ¶50,376.A responsible person who willfully paid other creditors of his delinquent corporation ahead of the IRS was liable for the trust fund recovery penalty. The individual, who was a corporate officer who owned stock in the company, acted willfully in failing to remit the company's withholding taxes because he was aware that other parties were being paid ahead of the IRS. His failure to make the payments on orders of the second responsible person and his approval of payments to other creditors in order to keep the company going and to preserve its ability to repay the delinquent taxes did not relieve him of liability for the penalty.P. Thosteson, CA-11, 2002-2 USTC ¶50,649, 304 F3d 1312.The First Circuit affirmed special jury verdicts that an individual could be held liable for a company's debt. The taxpayer was a responsible person with respect to the company's unpaid employment taxes and the trust fund recovery penalty, and his failure to pay over the taxes was willful. The "effective power" and "significant control" tests for the responsible person prong of liability constituted a proper standard of proof, despite the taxpayer's argument that he had a tenuous and indirect formal connection to the business. There was evidence that the taxpayer retained managerial control of the company and had knowledge of nonpayment of the employment taxes. Moreover, he failed to show that he investigated or corrected mismanagement of funds that allowed other creditors to be paid ahead of the IRS. Thus, the district court did not abuse its discretion in denying a new trial.J.V. Stuart, CA-1, 2003-2 USTC ¶50,585, 337 F3d 31.The president and sole owner of a roofing construction company was the responsible officer liable for the corporation's unpaid payroll taxes. The taxpayer contended that he lacked knowledge of the corporation's failure to pay taxes until after they were due. Moreover, his subsequent use of corporate revenues to compensate creditors rather than to pay the delinquent taxes was done in an attempt to increase the ultimate payout to the IRS. Basing its decision on the credibility of presented testimony, the Bankruptcy Court concluded it was not plausible that the individual did not know that the payroll taxes were not being paid. At the very least, the court concluded that he recklessly disregarded whether the taxes were being paid.C.R. Howard, BC-DC N.C., 2003-2 USTC ¶50,683, 301 BR 456.An officer of a bankrupt corporation that failed to pay over withholding taxes was a responsible person liable for the trust fund recovery penalty. As the entity's majority shareholder and chief operating officer, he ran the company and controlled its financial affairs. Also, he knew about the tax delinquencies and voluntarily paid other creditors ahead of the government. His contention that the company's relationship with its lending institution deprived him of control over the funds was rejected. Disbursement of the corporate funds was not "encumbered" by the contractual obligations with the lender. Thus, the officer acted willfully in failing to remit the taxes.R. Bell, CA-6, 2004-1 USTC ¶50,118,355 F3d 387.The CFO and controller of a bankrupt airline company willfully failed to pay airline ticket excise taxes to the government since both had knowledge that the taxes were not being paid over to the government.D.R. Ferguson, DC Iowa, 2004-1 USTC ¶50,247.A debtor's objection to the IRS's claim for the trust fund recovery penalty assessed against him was denied because he was determined to be a responsible person who willfully failed to pay over withheld taxes. The debtor stipulated that he was a responsible person and his failure to remit the withheld taxes was willful because he was aware of the company's employment tax deficiency yet chose to pay creditors other than the government. The fact that the debtor was told by the company's owner not to pay the taxes and that he might have been fired had he disobeyed orders did not excuse his liability for nonpayment.L. Borman, BC-DC Fla., 2005-1 USTC ¶50,109.A 100-percent trust fund penalty was reduced to judgment since the taxpayer was determined to be the responsible person who willfully failed to pay over trust fund taxes. The sole exception did not apply because he knew of the debt to the IRS and continued to use funds to pay other creditors.R. Sage, DC N.Y., 2006-1 USTC ¶50,175, 412 FSupp2d 406.Despite recurring health problems and absences from work, a CEO was a "responsible person" who willfully avoided tax obligations under Code Sec. 6672. The taxpayer's behavior was willful because he consciously and intentionally preferred another creditor over the United States; factual issues as to prior ignorance of non-payment then became irrelevant. Furthermore, allowing a responsible person to discount his liability based on the amount he actually wrongfully diverted to other creditors is inconsistent with the language of the statute.D. S. Savage, DC-Calif., 2006-1 USTC ¶50,202.The chairperson of a corporation's board of directors and the corporation's largest shareholder was a "responsible person" for purposes of the corporation's unpaid employment taxes and was liable for the trust fund recovery penalty. He satisfied the willfulness requirement because he knew of the corporation's unpaid taxes and made no effort to urge other members of the board to pay the IRS, rather than the other creditors.T.C. Turner, DC Wash., 2006-1 USTC ¶50,238.For the periods after an individual signed a check for partial payment of unpaid withholding taxes that accompanied the federal withholding tax form, his claim of ignorance of the company's withholding tax problems was not credible. Since he was either aware that other liabilities were being satisfied in preference to withholding taxes or recklessly disregarded that information, he willfully failed to pay the federal withholding taxes of the company.D.J. Thatcher, DC Pa., 2006-1 USTC ¶50,334.The manager of a grocery store was determined to be a responsible person with regard to the store's failure to pay over withholding taxes. Despite being the person responsible for the submission of withheld payments, and personally making such payments in the past, the individual did nothing to ensure that the taxes were in fact fully paid for the period at issue, although more than enough liquidation proceeds were generated from the closure of the store to pay the taxes.J.H. Harold, CA-6 (unpublished opinion), 2006-2 USTC ¶50,525, aff'g an unreported DC Ohio decision.A bankrupt airline company's chief financial officer willfully failed to pay the company's excise taxes. The individual was fully aware of the company's financial condition and of the nonpayment of excise taxes but he continued to direct payments to other creditors.R. Musal, DC Iowa, 2006-1 USTC ¶50,207, 421 FSupp2d 1153. Aff'd sub nom. D.R. Ferguson, CA-8, 2007-1 USTC ¶50,481, 484 F3d 1068.A trust fund recovery penalty (TFRP) assessed against a responsible person after he was discharged from bankruptcy was reduced to judgment. The individual was a responsible person because he controlled the business's finances and he recklessly failed to ensure that the withheld taxes were paid over to the government by the employee to whom he had delegated that responsibility.D.H. Klohn, DC Fla., 2008-1 USTC ¶50,228.The Board Chairman of a tax-exempt hospital was not entitled to a refund of the trust fund recovery penalty. The individual was a responsible person because he actively participated in the day-to-day management of the hospital, Also, the individual acted willfully because he had reason to know that the taxes were not being paid and failed to exercise his authority to ensure their payment. The fact that the primary responsibility for paying the taxes rested with another did not excuse him since the trust fund recovery penalty is a joint and several liability. Finally, the individual did not qualify for exemption from the penalty under Code Sec. 6672(e) because he did not serve solely in an honorary capacity as Chairman of the Board.S.K. Verret, DC Texas, 2008-1 USTC ¶50,248, 542 FSupp2d 526..The founder, shareholder and officer of a corporation was liable for the trust fund recovery penalty assessed against him in connection with the corporation's unpaid withholding taxes. The individual was a "responsible person" with respect to the corporation, and had acted willfully because he had reason to know that the taxes were not being paid and failed to exercise his authority to ensure their payment. Despite knowledge of the tax deficiencies, he regularly directed that payments be made to creditors other than the IRS.C.B. Erwin, DC N.C., 2008-1 USTC ¶50,258.An individual who was the president, director, Chief Executive Officer and majority shareholder of a corporation was liable for the trust fund recovery penalty assessed against him in connection with the corporation's unpaid withholding taxes. The individual was a "responsible person" with respect to the corporation and acted willfully because he was aware of the tax debt, yet authorized and made payments to other creditors.J.C. Tornes, DC Ohio, 2008-2 USTC ¶50,431.The majority stockholder of two retail optometry companies was not entitled to a refund of the trust fund recovery penalty he paid to the IRS in satisfaction of the companies' unpaid withholding taxes. The individual continued to sign payroll checks, paying employees, rather than ensuring payment of the taxes, even after he became aware of the companies' delinquent tax obligations.L.H. Joel, DC Ky., 2008-2 USTC ¶50,451.The director, shareholder and secretary-treasurer of a closely held corporation was liable for the trust fund recovery penalty assessed against her in connection with the corporation's unpaid withholding taxes. The individual was a responsible person who acted willfully when she repeatedly failed to examine the corporation's documents and request more information from the IRS despite having knowledge of the corporation's unpaid withholding taxes. She had the power to pay the corporation's withholding taxes and could not rely on her Indian culture to explain her failure to question her husband's business practices and pay the corporation's taxes once she became aware of them.N. Noronha, DC Ky., 2008-2 USTC ¶50,554 (aff'g an unreported Bankruptcy Court decision).The owner of a company was liable for the trust fund recovery penalty (TFRP). The individual maintained the company's books, prepared its financial statements, authorized payment of its bills and payroll, reviewed federal income tax returns and prepared and signed federal payroll tax returns. He acted willfully because he had reason to know that the taxes were not being paid and failed to exercise his authority to ensure their payment. Despite knowledge of the tax deficiencies, he regularly directed that payments be made to creditors other than the IRS.S.O. Johnson, DC Ill., 2008-2 USTC ¶50,585.The president of the board of directors of a tax-exempt organization was not entitled to a refund of the federal employment and withholding taxes he paid from his personal funds. The individual's actions were willful because he ignored signs that the center's taxes were not being paid. While he asserted that he was not aware of the organization's ongoing failure to remit payroll taxes, he had access to the reports made available at the organization's office, and he was aware that at one time taxes had not been paid and penalties had been assessed. Additionally, although he had instructed a director to timely remit withheld taxes to the IRS, he did not ensure that the payments were actually made.C.E. Jefferson, CA-7, 2008-2 USTC ¶50,587 aff'g DC Ill. 2007-1 USTC ¶50,304, 459 FSupp2d 685.The owners of three companies and their employee, a certified public accountant (CPA), serving as the vice president of finance for those companies, were all responsible persons for purposes of the trust fund recovery penalty. The individuals acted willfully when they made payments to other creditors despite knowing that the trust fund taxes remained unpaid. Further, the involuntary bankruptcy proceeding instituted for one of the companies did not strip the owners' of control and authority to pay that company's withholding tax obligations.S.P. Davis, Sr., DC La., 2008-2 USTC ¶50,613.