Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca4-08-01564/USCOURTS-ca4-08-01564-0/pdf.json

Nature of Suit Code: 870
Nature of Suit: Tax Suits
Cause of Action: 

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PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

CHARLES B. ERWIN, 

Plaintiff-Appellant,

v.

UNITED STATES OF AMERICA,

Defendant-Appellee,  No. 08-1564

v.

STEPHEN C. COGGIN; WILLIAM G.

PINTNER; JAMES BARRY LIGHT;

HARTSELL B. LIGHT, JR.,

Third Party Defendants. 

Appeal from the United States District Court

for the Middle District of North Carolina, at Durham.

James A. Beaty, Jr., Chief District Judge.

(1:06-cv-00059-JAB-WWD)

Argued: September 23, 2009

Decided: January 13, 2010

Before MOTZ, Circuit Judge, HAMILTON, Senior Circuit

Judge, and Irene M. KEELEY, United States District Judge

for the Northern District of West Virginia,

sitting by designation.

Affirmed by published opinion. Judge Motz wrote the majority opinion, in which Judge Keeley joined. Senior Judge Hamilton wrote a dissenting opinion.

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COUNSEL

ARGUED: Emma Claire Merritt, TUGGLE, DUGGINS &

MESCHAN, PA, Greensboro, North Carolina, for Appellant.

Christine Durney Mason, UNITED STATES DEPARTMENT

OF JUSTICE, Washington, D.C., for Appellee. ON BRIEF:

J. Nathan Duggins, III, TUGGLE, DUGGINS & MESCHAN,

PA, Greensboro, North Carolina, for Appellant. John A.

DiCicco, Acting Assistant Attorney General, Kenneth L.

Greene, UNITED STATES DEPARTMENT OF JUSTICE,

Washington, D.C.; Anna Mills S. Wagoner, United States

Attorney, Greensboro, North Carolina, for Appellee.

OPINION

DIANA GRIBBON MOTZ, Circuit Judge:

This appeal arises from the district court’s imposition of

personal liability on Charles Erwin for payroll withholding

taxes owed by GC Affordable Dining, Inc. ("GCAD"). Erwin

owned a one-third interest in GCAD and served as a GCAD

corporate officer and director, and, on behalf of GCAD,

selected business sites, hired and fired employees, and negotiated and personally guaranteed loans and other contracts for

the company. The district court held as a matter of law that

Erwin (1) was responsible for payment of these taxes and (2)

willfully failed to pay them. Erwin challenges both holdings

on appeal. For the reasons that follow, we affirm.

I.

Over the last 25 years, Erwin, a North Carolina entrepreneur, has owned or operated at least 60 restaurants. In June

1994, Erwin joined with three other North Carolina

businessmen—Geoffrey Grenert, Stephen Coggin, and John

Miracle—to form GCAD, a franchisee of Golden Corral

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Franchising System, Inc. ("Golden Corral"). GCAD eventually opened and operated five Golden Corral restaurants.

At GCAD’s founding, Erwin and Grenert each owned one

third of the corporate stock; Coggin and Miracle each owned

one sixth of the stock. Shortly thereafter, Grenert left the

enterprise; eventually, Miracle sold his interest in GCAD to

Mark Cole. But at all times, Erwin retained at least a one-third

interest in the company.

In addition to owning all of the corporate stock in GCAD,

Erwin and his partners served as its directors and officers.

Coggin served as president, Miracle (and later Cole) as vice

president, and Erwin as vice president, secretary, and treasurer.1

The partners hired two managers to oversee day-to-day operations, payroll, and accounting.

In early 1995, Erwin and his partners—along with their

wives—personally guaranteed construction and operating

lines of credit with First Union Bank for GCAD. Erwin and

his partners also secured a construction line of credit for a

corporation, Tiffany, LLC, which they established as a flowthrough real estate holding company for GCAD. Tiffany

leased or purchased land and equipment for the restaurants;

GCAD, in turn, leased the land and equipment from Tiffany.

Erwin participated in selecting sites for the restaurants and

signed lease-related documents for all restaurant locations on

behalf of both Tiffany and GCAD. Erwin also personally

guaranteed rent payments on at least four of the leases, and

personally guaranteed lines of credit from food vendors for

the benefit of the GCAD restaurants.

Despite early profits, the GCAD restaurants soon began to

1

In his original IRS claim, Erwin did not acknowledge his service as

treasurer of GCAD. In deposition, however, he conceded that he had held

that position. 

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lose money. In January 1997, Erwin and his partners decided

to fire one of the original day-to-day managers and consolidate operations under the other. Erwin expressly acknowledged his "involve[ment]" in both decisions. During 1997,

Erwin conferred at least weekly with Coggin regarding

GCAD’s affairs. Moreover, Erwin and his partners met

monthly during 1997, and at least quarterly in 1998, to discuss

GCAD matters. In an effort to improve business, Erwin also

visited the GCAD restaurants and met with store managers

during 1997 and 1998.

Unfortunately, business did not improve. GCAD had a negative operating cash flow of $2 million by the end of 1997,

and thus had difficulty paying its creditors. In early 1998,

Erwin and Coggin negotiated a payment plan to settle GCAD

debts owed to one food vendor, LoPresti, with whom Erwin

had personally guaranteed GCAD’s line of credit.

During this period, Erwin and his partners decided to

replace the remaining original manager with William Pintner,

a seasoned Golden Corral employee. On a weekly basis, Pintner and Erwin discussed sales figures and strategies to

increase profits.2 Early in Pintner’s tenure, he recommended

that the partners fire their accountant and hire Barry and

Buddy Light (the "Light brothers") to handle accounting and

payroll for GCAD; the partners followed this advice.

Despite these efforts, GCAD continued to lose money. In

December 1998, Erwin and his partners learned that the Light

brothers had failed to pay the entire quarterly payroll tax withholdings for the third quarter of 1998. The partners made a

2Pintner testified in deposition that he spoke to Erwin daily regarding

sales and the performance of individual stores, and that Erwin visited the

stores every month or two. Pintner further testified that Erwin directed the

payment of GCAD’s bills. As to the latter claim, in deposition, Erwin neither admitted nor expressly denied Pintner’s testimony, testifying only, "I

can’t say whether I ever [directed payment of bills]. I know it was not a

practice." 

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capital call for approximately $150,000 and wired the money

to the Light brothers with instructions. Erwin, who contributed $95,000 of the $150,000, testified that he personally

instructed the Light brothers "that absolutely under no circumstances whatsoever were [the Light brothers] ever to be

late with any taxes." Despite Erwin’s admonition, the Light

brothers failed to pay in full the payroll taxes for the fourth

quarter of 1998.

Coggin testified that in late 1998, he and Erwin also sent

the Light brothers $50,000 for additional payment to the

favored food vendor, LoPresti, and instructed the Light brothers not to pay the rent because Erwin and Coggin themselves

would handle the rent payments directly. Erwin never testified

to the contrary.

Also in late 1998, Erwin became involved in negotiations

—which became final in May 1999—to release GCAD from

obligations under one of its leases. The landlord, seeking to

terminate the lease to accommodate another party, agreed to

wire $1.65 million to CNL American Properties Fund, Inc.

("CNL"), a company financing GCAD’s restaurant building

and equipment, to cover rents GCAD owed CNL on that and

other leases. At that time GCAD—and Erwin as personal

guarantor—owed CNL substantial rental payments.

GCAD’s financial condition continued to worsen throughout 1999, and GCAD did not pay in full its withholding taxes

for the first three quarters of that year. In August 1999, Erwin

and his two partners learned of this latest delinquency. In

December 1999, the partners made another capital contribution of $50,000 to help cure these deficiencies, but GCAD

never paid the taxes in full. Nevertheless, Erwin and his partners continued to employ the Light brothers.

In February 2000, Erwin and his partners finally fired the

Light brothers. After doing so, Erwin decided to take control

of GCAD accounting functions, including payroll. He moved

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GCAD’s financial operations from Ohio to the North Carolina

offices of his solely owned company, Chelda. After that time,

GCAD remained current on its payroll withholding payments.

In late 2000, Erwin became the 100 percent owner of GCAD;

shortly thereafter he dissolved the corporation. Between

August 1999 and the close of business in 2000, the GCAD

restaurants generated approximately $5 million in sales revenue. Rather than paying the outstanding 1998 and 1999 tax

deficiencies, however, GCAD continued to pay rent and supplier expenses. Erwin acknowledged that, pursuant to his

direction, GCAD paid its landlord and suppliers rather than

the IRS; he maintained that GCAD did so because this was

the only way to remain in business.

Following the demise of GCAD, the IRS assessed tax deficiencies against Erwin in the amount of the unpaid payroll

withholding taxes owed by GCAD. Erwin paid a portion of

the assessed amounts and then brought this action against the

United States to recover those amounts. The Government

counterclaimed for $264,579, the amount of GCAD’s unpaid

deficiencies from the fourth quarter of 1998 and the first three

quarters of 1999, plus interest. The United States subsequently filed third-party complaints against Coggin, Pintner,

and the Light brothers.

The parties filed cross motions for summary judgment. The

district court, adopting the recommendation of the magistrate

judge, denied Erwin’s motion and granted the Government’s.

The court also granted the Government’s motions to issue a

final judgment against Erwin and stay the proceedings against

Coggin, Pintner, and the Light brothers pending the outcome

of Erwin’s anticipated appeal.

Erwin timely noted this appeal.

II.

The Internal Revenue Code requires employers to withhold

social security and federal excise taxes from their employees’

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wages. See 26 U.S.C. §§ 3402(a), 3102(a) (2006); Plett v.

United States, 185 F.3d 216, 218 (4th Cir. 1999). The

employer holds these monies in trust for the United States. 26

U.S.C. § 7501(a) (2006). Accordingly, courts often refer to

the withheld amounts as "trust fund taxes"; these monies exist

for the exclusive use of the government, not the employer. See

Plett, 185 F.3d at 218. Payment of these trust fund taxes is

"no[t] excuse[d]" merely because "as a matter of sound business judgment, the money was paid to suppliers . . . in order

to keep the corporation operating as a going concern—the

government cannot be made an unwilling partner in a floundering business." Collins v. United States, 848 F.2d 740,

741–42 (6th Cir. 1988).

The Code "assure[s] compliance by the employer with its

obligation . . . to pay" trust fund taxes by imposing personal

liability on officers or agents of the employer responsible for

"the employer’s decisions regarding withholding and payment" of the taxes. Slodov v. United States, 436 U.S. 238, 247

(1978) (interpreting 26 U.S.C. § 6672 (2006)). To that end,

§ 6672(a) of the Code provides that "[a]ny person required to

collect, truthfully account for, and pay over any tax . . . who

willfully fails" to do so shall be personally liable for "a penalty equal to the total amount of the tax evaded, or not . . .

paid over." 26 U.S.C. § 6672(a). Although labeled as a "penalty," § 6672 does not actually punish; rather, it "brings to the

government only the same amount to which it was entitled by

way of the tax." Turnbull v. United States, 929 F.2d 173, 178

n.6 (5th Cir. 1991) (internal quotation marks omitted).

Personal liability for a corporation’s trust fund taxes

extends to any person who (1) is "responsible" for collection

and payment of those taxes, and (2) "willfully fail[s]" to see

that the taxes are paid. Plett, 185 F.3d at 218; O’Connor v.

United States, 956 F.2d 48, 50 (4th Cir. 1992). Once the Government assesses a taxpayer for this liability, the taxpayer has

the burden of proof at trial on both elements of § 6672 liability. See O’Connor, 956 F.2d at 50.

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But we review de novo a district court’s grant of summary

judgment to the Government, resolving all disputed facts in

favor of the taxpayer. See O’Connor, 956 F.2d at 50. Of

course, to defeat summary judgment, the taxpayer (like any

other litigant) must identify an error of law or a genuine issue

of material fact; the taxpayer cannot create a material fact by

reliance on conclusory allegations or bare denials. See Fed. R.

Civ. P. 56(c), (e); Anderson v. Liberty Lobby, Inc., 477 U.S.

242, 256 (1986); see also Bouchat v. Balt. Ravens Football

Club, Inc., 346 F.3d 514, 522 (4th Cir. 2003). Moreover, a

material fact is one "that might affect the outcome of the suit

under the governing law." Anderson, 477 U.S. at 248.

"[I]n the absence of disputed material facts, summary judgment represents a favored mechanism to secure the ‘just,

speedy, and inexpensive determination’" of taxpayer liability

under § 6672. Plett, 185 F.3d at 223 (quoting Fed. R. Civ. P.

1); see also Barnett v. IRS, 988 F.2d 1449, 1454 & n.10 (5th

Cir. 1993) (stating that, although the facts in a § 6672 analysis

are critical, "extensive caselaw . . . narrowly constrains a factfinder’s province in § 6672 cases," and noting that for this

reason "countless courts have found responsibility [for purposes of § 6672] as a matter of law").3

With these principles in mind, we turn to Erwin’s contention that the district court erred in holding, as a matter of law,

that Erwin (1) was a person responsible for the payment of

GCAD’s withholding taxes, and (2) willfully failed to pay

those taxes. We consider each argument in turn.

3

See generally C.T. Drechsler, Annotation, Construction, Application,

and Effect, with Respect to Withholding, Social Security, and Unemployment Compensation Taxes, of Statutes Imposing Penalties for Tax Evasion

or Default, 22 A.L.R.3d 8, § 4 & Supp. (1968) (collecting cases in which

courts have found responsibility for § 6672 purposes as a matter of law);

Edward A. Nolfi, Annotation, When Are Persons Other Than Owners,

Directors, Officers, and Employees Potentially Liable for Penalties Under

IRC § 6672 (26 U.S.C.A § 6672), Concerning Failure to Collect and Pay

Over Tax, 84 A.L.R. Fed. 170, §§ 3-31 & Supp. (1987) (same). 

8 ERWIN v. UNITED STATES

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III.

Although the Code defines a responsible person as one "required to collect, truthfully account for, and pay over any

tax," 26 U.S.C. § 6672(a) (emphasis added), the Supreme

Court has interpreted this language to apply to all "persons

responsible for collection of third-party taxes and not . . .

[only] to those persons in a position to perform all three of the

enumerated duties." Slodov, 436 U.S. at 250. Thus, the Code

deems anyone required to "collect" or "account for" or

"remit" taxes a "responsible person" for purposes of § 6672.

See Plett, 185 F.3d at 219.

More than one person may be held responsible for a corporation’s payroll taxes. Indeed, "[t]he term ‘responsible person’

is broad and may include many individuals connected with a

corporation." O’Connor, 956 F.2d at 50; see also Barnett, 988

F.2d at 1455 ("[T]here usually are . . . multiple responsible

persons in any company."). Assessing whether a "person has

the statutorily imposed duty to make the tax payments" constitutes the "key element" in determining responsible person

status. O’Connor, 956 F.2d at 51. "This duty is considered in

light of the person’s authority over an enterprise’s finances or

general decision making[,] . . . [and] is generally found in

high corporate officials charged with general control over corporate business affairs who participate in decisions concerning payment of creditors and disbursement of funds." Id.

(citation omitted).

Titular authority alone does not establish responsible person status. Rather, the proper inquiry focuses "on substance

rather than form." Id. "The substance of the circumstances

must be such that the officer exercises and uses his authority

over financial affairs or general management, or is under a

duty to do so, before that officer can be deemed to be a

responsible person." Id. Put another way, the essential inquiry

is whether a person has significant, but not necessarily exclusive, authority over corporate finances or management deciERWIN v. UNITED STATES 9

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sions. See Plett, 185 F.3d at 222; see also Kinnie v. United

States, 994 F.2d 279, 283-84 (6th Cir. 1993).

We have developed a non-exhaustive list of factors to consider in determining whether "the substance of the circumstances" establishes responsible person status under § 6672.

Thus, we examine whether the employee (1) served as an officer or director of the company; (2) controlled the company’s

payroll; (3) determined which creditors to pay and when to

pay them; (4) participated in the corporation’s day-to-day

management; (5) had the ability to hire and fire employees;

and (6) possessed the power to write checks. Plett, 185 F.3d

at 219; see also O’Connor, 956 F.2d at 51. No single factor

controls; rather, we consider the "totality of the circumstances." See Vinick v. United States, 205 F.3d 1, 8 (1st Cir.

2000); see also Barnett, 988 F.2d at 1455; O’Connor, 956

F.2d at 51.

In this case, the undisputed facts demonstrate that Erwin

was a "responsible person" for § 6672 purposes with respect

to GCAD’s payroll taxes. While not every Plett factor so indicates, most do. Moreover, the totality of the circumstances

conclusively establishes that Erwin had the "effective power"

to pay the taxes owed by GCAD. Barnett, 988 F.2d at 1454.

As to the first factor, it is undisputed that Erwin founded

and served as an officer of GCAD. In fact, Erwin continually

served as secretary, treasurer, vice-president, and director of

the corporation throughout its existence and, at all times,

owned at least a one-third interest in GCAD. Although Erwin

asserts that he acted as a mere "passive investor[] who contributed capital and [only] held the title[s] to protect his interest in the venture," the evidence establishes that in fact his

involvement in GCAD was substantial. Erwin was the only

GCAD owner with any experience in the restaurant business,

and he himself acknowledged in deposition his active involvement in corporate decisions.

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With respect to the second factor, although Erwin and his

two partners did not directly manage GCAD’s payroll, they

exercised substantial supervisory authority over the management team—Pintner and the Light brothers—who did control

payroll. Moreover, Erwin conceded that he participated in setting financial policy for GCAD and, on occasion, directed

payment of GCAD’s withholding taxes. See Kinnie, 994 F.2d

at 284 (stating that a taxpayer need not "always exercise his

powers" to remain responsible for seeing that withholding

taxes are paid, and "may not escape liability by delegating the

task of paying over the taxes to someone else").

Furthermore, within months of learning of GCAD’s tax

deficiencies, Erwin took complete control of GCAD’s financial operations, which establishes his authority to do so.

Erwin himself had no doubt as to his authority over the company’s payroll, testifying that, had he learned of the Light

brothers’ failures to remit payroll withholding taxes during

the first quarter of 1999, "a lot of things would have happened

differently." Erwin testified that he would have taken remedial action at that time, noting that "as soon as [he] did find

out" about the deficiencies, "[he] did bring all the accounting

back to [his] office." Although Erwin did not seize control of

GCAD during the tax periods at issue here, his subsequent

exercise of authority over all of GCAD’s financial operations

certainly "cast[s] light on" the question of whether he was "a

responsible person" during those periods. Vinick, 205 F.3d at

11 n.8.

With respect to the third factor, the undisputed facts demonstrate that Erwin, along with Coggin, indeed determined, on

more than one occasion, which GCAD creditors to pay and

when to pay them. In January 1998, Erwin and Coggin negotiated a payment plan with a food vendor, LoPresti, to pay debt

owed by GCAD on a line of credit, which Erwin had personally guaranteed. Later in that same year, Erwin and Coggin

infused $50,000 into GCAD, directing more payments to

LoPresti and (according to Coggin and undisputed by Erwin

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himself) took over the rent payments to CNL, a GCAD landlord whose rent payments Erwin had also personally guaranteed. Moreover, from December 1998 through May 1999,

Erwin, along with Coggin, negotiated a buy-out of one of

GCAD’s leases, which resulted in an additional payment of

$1.65 million to CNL to cover rent owed on that and other

leases.

Thus, during the tax periods at issue, Erwin actively negotiated substantial payments to GCAD creditors on lines of

credit and loans, some of which he had personally guaranteed.

Erwin’s personal guarantees of these lines of credit and other

debts do not alone establish his status as a responsible person.

But the undisputed evidence that Erwin negotiated payments

to these preferred creditors offers additional strong support for

the conclusion that he "use[d] his authority over financial

affairs" of GCAD. O’Connor, 956 F.2d at 51. In this way, he

again acted as a "responsible person" for purposes of § 6672

during the tax periods in question.

GCAD’s dealings with the IRS further demonstrate Erwin’s

control over the company’s financial priorities. In December

1998 and again in December 1999, Erwin and his partners

infused capital into GCAD and explicitly directed the Light

brothers to use that money to pay back taxes. Erwin testified

that he personally instructed the Light brothers to stay current

with GCAD’s payroll withholdings.4 Erwin also testified that

in 2000, when GCAD had significant revenues, he made the

business decision to keep the restaurants’ doors open by paying the landlord and suppliers instead of paying the back taxes

that GCAD owed from previous years.

As to the fourth factor, Erwin did not play the most active

4

In deposition, Erwin maintained that the Light brothers withheld information, making it difficult to monitor GCAD’s finances. It is undisputed,

however, that Erwin had the authority to demand financial information

and to fire the Light brothers, as he ultimately did. 

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role in the day-to-day management of the corporation during

the relevant tax periods; rather he delegated much day-to-day

authority to others. But, of course, "delegation will not relieve

one of responsibility." Purcell v. United States, 1 F.3d 932,

937 (9th Cir. 1993); see also Kinnie, 994 F.2d at 284. Moreover, the undisputed facts establish that Erwin did involve

himself in the company’s general decision making and never

was, as he claims, a mere passive investor. Cf. O’Connor, 956

F.2d at 51-52 (finding question of fact as to responsible person status when "passive investor" did not exercise authority

in managing the company, did not dictate the financial decisions of the company, and had no authority to do so).

Erwin helped to choose sites for the corporation’s restaurants, negotiated and signed leases and other contracts on

behalf of the corporation, personally guaranteed lines of credit

and rent payments for the corporation, met with its restaurant

managers, and involved himself in negotiating payment plans

and buy-outs with corporate creditors. Thus, albeit to a lesser

extent than others, Erwin participated in the day-to-day management of the corporation.5

Consideration of the fifth factor—hiring and firing power

—also demonstrates that Erwin was a "responsible person"

for § 6672 purposes. Erwin himself acknowledged that he was

involved in the hiring and firing of both sets of accountants

and of all upper-level management. Indeed, in early 2000

Erwin took full control of the company’s operations and ultimately made the decision to close GCAD. Of course the latter

conduct did not occur during the tax periods in issue, but it

is nonetheless relevant in establishing that Erwin was a con5Notably, Erwin’s involvement in the regular affairs of the company

increased when Pintner came on board in early 1998, as Erwin went from

communicating monthly with the prior manager to having weekly discussions with Pintner regarding sales figures. Cf. Vinick, 205 F.3d at 5 (noting

taxpayer, deemed not to be a responsible person, became less involved in

the affairs of the corporation during the non-payment periods). 

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sistently active presence in important personnel decisions at

GCAD during its entire existence.

With respect to the sixth factor, we agree with Erwin that

the record does not demonstrate that he had check-writing

authority for GCAD during the relevant tax periods. Although

this factor weighs in favor of Erwin, we must consider it in

the "totality of the circumstances." See Vinick, 205 F.3d at 8;

see also Barnett, 988 F.2d at 1455; O’Connor, 956 F.2d at 51.

Those circumstances include inter alia Erwin’s exercise of

authority over GCAD’s finances by directing certain payments to privileged creditors during the tax periods in question, and taking over GCAD’s day-to-day financial operations

and exercise of ultimate check-writing authority immediately

after the tax periods in question. Taken together, the undisputed facts of the case clearly evidence that during the relevant tax periods Erwin had the power to exercise checkwriting authority had he chosen to do so. Compare Plett, 185

F.3d at 222 (finding "financial control . . . indisputably in the

hands of [the taxpayer]"), with Vinick, 205 F.3d at 11

(explaining that determining responsibility goes to "the central question of power" and emphasizing that "[a]t no time did

[the taxpayer] exercise any decision-making authority over

which creditors [the corporation] paid").

Although in some cases questions as to responsible person

status under § 6672 cannot be resolved at summary judgment,

see, e.g., O’Connor, 956 F.2d at 51-52,6 in this case they

6Erwin mistakenly places heavy reliance on O’Connor, in which the

taxpayer, although a fifty-percent owner of the corporation, did not dictate

any of the company’s financial decisions or set its financial policy, did not

decide which creditors should be paid, did not participate in any of the

company’s operational management, and did not hire or fire employees.

See O’Connor, 956 F.2d at 51. Rather, in stark contrast to Erwin’s active

role in GCAD, the taxpayer in O’Connor merely provided the operational

cash for the company and received periodic financial reports. Id. Our

friend in dissent (who authored O’Connor) does not similarly contend that

O’Connor assists Erwin. 

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surely can. Given the undisputed facts here, we can only conclude that the Government demonstrated Erwin’s responsible

person status as a matter of law.

We note that other courts have reached precisely the same

conclusion in considering similar facts. See, e.g., Jefferson v.

United States, 546 F.3d 477, 481 (7th Cir. 2008) (holding

board president responsible person as a matter of law because

he secured loans and directed past payment of taxes for the

corporation, reviewed financial reports, and had checksigning authority); Thosteson v. United States, 331 F.3d 1294,

1299-1300 (llth Cir. 2003) (holding corporate officer and

stockholder a responsible person as a matter of law even

though he had "limited check writing authority, up to only

$750, without a countersignature"); Taylor v. IRS, 69 F.3d

411, 417 (10th Cir. 1995) (holding corporate director and officer a responsible person as a matter of law because he "possessed sufficient control over corporate finances, had

authority to borrow funds and write checks and thereby had

the ‘effective power’ to pay the taxes" (quoting Barnett, 988

F.2d at 1454)); Greenberg v. United States, 46 F.3d 239, 243-

Rather, the dissent heavily relies on Vinick, a First Circuit case that

Erwin never cites. Given that Vinick’s corporate involvement primarily

occurred outside of the tax periods in question and decreased significantly

during the relevant periods, when his partner unilaterally took control of

the company’s day-to-day financial management, the First Circuit held

Vinick was not a responsible person. In contrast, the undisputed facts here

demonstrate Erwin was actively involved in GCAD’s financial affairs and

general management decision making throughout the corporation’s entire

existence. Notably, unlike Vinick, Erwin directed or negotiated payments

to corporate creditors to reduce debts he had personally guaranteed. That

Erwin ultimately took complete control of the corporation’s finances after

the tax periods in question does exactly what Vinick acknowledged such

evidence could do, i.e. "cast light on [his] status as a responsible person"

during those tax periods, 205 F.3d at 11 n.8, because it demonstrates his

authority, at all times, to dictate financial decision making. Erwin even

admitted at deposition that had he learned of the tax deficiencies earlier,

he would have taken remedial action at that time. 

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44 (3d Cir. 1994) (holding in-house controller a responsible

person as a matter of law even though he took instructions

from the controlling stockholder and "feared for his job were

he to independently issue a check for the [tax] delinquency");

Kinnie, 994 F.2d at 284 (holding corporate vice president and

fifty-percent shareholder a responsible person as a matter of

law because he had check-signing authority, hired an accountant to review the books, and eventually took control of the

business); Mazo v. United States, 591 F.2d 1151, 1156 (5th

Cir. 1979) (holding corporate stockholders, officers, and

directors responsible persons as a matter of law even though

others handled all day-to-day operations and prepared all corporate checks).

Erwin’s contention that others in the company may have

been just as, or even more, responsible for GCAD’s failure to

remit payroll taxes during the tax periods in issue does not

free him from § 6672 liability. For § 6672 imposes liability on

"all responsible persons, not just . . . the most responsible person." Turnbull, 929 F.2d at 178. Erwin’s own admissions conclusively demonstrate that he was a responsible person for

§ 6672 purposes during the relevant tax periods.

To summarize, Erwin admitted that at all times he owned

at least one third of the stock of this closely-held corporation

and served as its secretary, treasurer, vice president, and

director. Erwin admitted that he signed loan documents and

leases on behalf of the corporation, thus evidencing that he

shared responsibility for establishing the corporation’s financial policy. Erwin admitted that he approved restaurant site

selection and regularly reviewed sales data. Erwin admitted

holding quarterly meetings with his partners and weekly telephone calls with the general manager to discuss the restaurants. Erwin admitted that he directed or negotiated payments

to certain favored creditors to reduce GCAD debt, which he

had personally guaranteed. Erwin admitted that he hired and

fired upper-management employees, including GCAD’s

accountants. Finally, although Erwin delegated many of the

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day-to-day financial responsibilities of the corporation to others, he admitted that he infused capital into GCAD and

admonished the Light brothers, over whom he had significant

control, to stay current with the company’s tax obligations.7

In short, the undisputed facts—indeed Erwin’s own

admissions—demonstrate, as a matter of law, that Erwin was

a responsible person under § 6672 during the relevant tax

periods.

IV.

Having found Erwin a "responsible person," we turn to

whether he "willfully" failed to collect, account for, or remit

payroll taxes to the United States. Plett, 185 F.3d at 219. This

inquiry focuses on whether Erwin had "knowledge of nonpayment or reckless disregard of whether the payments were

being made." Id. (quoting Turpin v. United States, 970 F.2d

1344, 1347 (4th Cir. 1992)). A responsible person’s intentional preference for creditors other than the United States

establishes willfulness as a matter of law; such an intentional

preference occurs when the responsible person knows of or

7Despite making these and other admissions in deposition, Erwin maintains that we must accept as true his contradictory averments in a laterfiled affidavit, in which he claims in conclusory fashion that during the tax

periods at issue he had no role in managing GCAD or any control over its

financial affairs. Reply Br. at 2. The dissent also appears to embrace this

view, relying on Erwin’s later "sworn statement" as creating an asserted

factual dispute with Erwin’s prior sworn deposition testimony. Such reliance is misplaced; "[i]t is well established that ‘[a] genuine issue of fact

is not created where the only issue of fact is to determine which of the two

conflicting versions of [a party’s] testimony is correct.’" Halperin v. Abacus Tech. Corp., 128 F.3d 191, 198 (4th Cir. 1997) (quoting Barwick v.

Celotex Corp., 736 F.2d 946, 960 (4th Cir. 1984)); accord Waste Mgmt.

Holdings, Inc. v. Gilmore, 252 F.3d 316, 341 (4th Cir. 2001); S.P. v. City

of Takoma Park, Md., 134 F.3d 260, 273 n.12 (4th Cir. 1998) (noting that

a party’s "later denial" of earlier "statements does not create a genuine

issue of a material fact"). 

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recklessly disregards an unpaid deficiency. Id.; Turpin, 970

F.2d at 1347.

By the end of 1998, Erwin knew that GCAD had financial

difficulties. Indeed, in December 1998 Erwin made a special

capital contribution to pay a tax delinquency from a prior

quarter. At that time, Erwin also admonished the Light brothers to make timely payments in the future, but he did not

monitor the situation personally to ensure future payment, nor

did he advise the Light brothers to implement additional internal controls.

Although Erwin’s lack of oversight in all likelihood contributed to the Light brothers’ failure to remit payroll taxes for

the fourth quarter of 1998 and the first three quarters of 1999,

the record, viewed in the light most favorable to Erwin, does

not support a finding—as a matter of law — that prior to

August 1999 Erwin had actual knowledge that the Light

brothers continually failed to pay GCAD’s payroll taxes.

Thus, whether Erwin acted willfully during this time, as a

matter of law, depends on whether he acted with "reckless

disregard" of GCAD’s tax obligations. See Turpin, 970 F.2d

at 1347.

Erwin claims that he thought that the Light brothers would

obey his instruction to stay current with GCAD’s tax obligations, that Coggin was monitoring the Light brothers, and that

the Light brothers were professionals with experience

accounting for Golden Corral restaurants in the past. Arguably, a fact finder fully crediting this testimony might conclude that Erwin’s actions, although negligent, did not rise to

the level of recklessness. See id. at 1347 n.4 ("Mere negligence in failing to ascertain facts regarding a tax delinquency

. . . is insufficient to constitute willfulness under [§] 6672(a)."

(internal quotation marks omitted)).

Even assuming, however, that Erwin did not act willfully

prior to learning of the full extent of the tax deficiencies in

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August 1999, his conduct after that point unquestionably evidences willfulness as a matter of law. During the third quarter

of 1999, GCAD paid just a fraction of its payroll tax liability.

Although Erwin and Coggin each made capital contributions

to cover the deficiency in December 1999, GCAD still owed

over $100,000 for that quarter alone and had not satisfied

deficiencies from 1998 and the first two quarters of 1999. The

record does not conclusively reveal the extent of Erwin’s

actual knowledge at this point in time, but certainly demonstrates that by that time he was on notice that GCAD owed

substantial payroll taxes to the IRS. Yet Erwin and his partners continued to rely on the Light brothers to address the

problem for several more months. Erwin’s failure to assess

and remedy the payroll tax deficiencies immediately upon

learning of their existence in August 1999 constitutes unreasonable willful conduct. Cf. id. at 1350 (noting the relevance

of responsible person’s immediate action to address deficiencies upon learning of them). This is particularly so given that,

at Erwin’s direction, GCAD paid other creditors during this

period. Thus, Erwin is liable for any outstanding third-quarter

1999 deficiencies. See Plett, 185 F.3d at 219.

Moreover, following the lead of every other circuit to consider the question, we adopt the rule that when a responsible

person learns that withholding taxes have gone unpaid in past

quarters for which he was responsible, he has a duty to use all

current and future unencumbered funds available to the corporation to pay those back taxes. See, e.g., Thosteson, 331 F.3d

at 1300-01; United States v. Kim, 111 F.3d 1351, 1357 (7th

Cir. 1997); Honey v. United States, 963 F.2d 1083, 1089 (8th

Cir. 1992); Mazo, 591 F.2d at 1157. Pursuant to this rule, as

of August 1999, Erwin had a duty to use all unencumbered

funds to reduce GCAD’s tax liability from the prior quarters.

The record demonstrates that GCAD generated several million dollars in gross receipts after August 1999 and paid rent

and food vendors with those funds instead of paying the IRS.

(Erwin does not contend that any creditor held a security

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interest in these funds superior to the IRS’s interest. See

Honey, 963 F.2d at 1090.) Accordingly, we hold that, by preferring GCAD’s other creditors to the IRS, Erwin willfully

failed to remit GCAD’s payroll taxes for the fourth quarter of

1998 and the first three quarters of 1999.8

V.

For the reasons set forth above, the judgment of the district

court is

AFFIRMED.

HAMILTON, Senior Circuit Judge, dissenting:

Because I believe a reasonable fact-finder, viewing the evidence in the light most favorable to Erwin and drawing all

reasonable inferences from such evidence in his favor, could

find that he was not a responsible person under 26 U.S.C.

§ 6672, I would vacate the judgment in favor of the Government and remand for trial. Accordingly, I respectfully dissent.

8Erwin raises a putative "reasonable cause" defense, arguing that GCAD

had to use gross receipts to pay rent and vendors in order to stay operational. Courts that have recognized this defense have limited it to situations in which circumstances outside a taxpayer’s control have thwarted

his reasonable efforts to protect trust funds, and have not applied it in situations where the taxpayer made a conscious decision to pay other creditors. See, e.g., Thosteson, 331 F.3d at 1301 (citing Logal v. United States,

195 F.3d 229, 233 (5th Cir. 1999); see also Greenberg, 46 F.3d at 244 ("It

is no defense that the corporation was in financial distress and that funds

were spent to keep the corporation in business with an expectation that

sufficient revenue would later become available to pay the United

States."). Thus, even were we to conclude that a "reasonable cause"

defense to § 6672 liability exists, such a defense would not protect Erwin

under these facts. 

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I.

We review the district court’s grant of summary judgment

de novo. Blaustein & Reich, Inc. v. Buckles, 365 F.3d 281,

286 (4th Cir. 2004). A motion for summary judgment should

be granted "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)(2).

In determining whether a genuine issue of material fact exists

in this case, precluding the entry of summary judgment in

favor of the Government, we must view the evidence in the

light most favorable to Erwin and draw all reasonable inferences from such evidence in his favor. Edell & Assocs., P.C.

v. Law Offices of Peter G. Angelos, 264 F.3d 424, 429, 435-

36 (4th Cir. 2001). We may not make credibility determinations or weigh the evidence. Id. at 435. And although we

should review the record as a whole, we must disregard any

evidence favorable to the Government as the moving party

that a jury would not be required to believe. Id. at 436. See

also Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S.

133, 151 (2000). "That is, [we] should give credence to the

evidence favoring the nonmovant as well as that evidence

supporting the moving party that is uncontradicted and unimpeached, at least to the extent that the evidence comes from

disinterested witnesses." Reeves, 530 U.S. at 151 (internal

quotation marks omitted).

II.

Mindful that in determining § 6672 liability, "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,’" Plett v. United States, 185 F.3d 216, 219 (4th

Cir. 1999), I will focus on the application of the Plett factors

to the record evidence as we must view such evidence at the

summary judgment stage.

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I agree with the majority opinion that the first Plett factor,

which asks whether the party upon whom the Government

seeks to impose responsible person liability under § 6672

served as an officer or director of the company, cuts in favor

of the Government. During the four quarters at issue, Erwin

served as vice-president, secretary, and treasurer of GCAD,

and served on its board of directors.

However, contrary to the majority opinion, I conclude that

the second Plett factor, which asks whether Erwin controlled

the company’s payroll, cuts in favor of Erwin. The evidence

shows that Erwin did not control GCAD’s payroll during the

four tax quarters at issue. First, the record contains a sworn

statement by Erwin that he had no control over GCAD’s payroll. Second, there is no evidence that Erwin personally oversaw GCAD’s payroll. Third, the undisputed evidence shows

that for all four quarters at issue, a professional accounting

and tax service was in charge of GCAD’s payroll, including

collecting withholdings and paying such withholdings to the

Government.1 And although Erwin did participate in the decision to hire such professional accounting and tax service, this

circumstance is a far cry from controlling GCAD’s payroll

functions.

Moreover, the fact that Erwin and the other shareholders

infused capital into GCAD with instructions that the Light

Brothers catch up the back withholding taxes, merely establishes that Erwin and the other shareholders did not want to

see their investment in GCAD go down the drain because the

corporation was not current in paying its federal withholding

taxes. Accordingly, such infusions and instructions, which

Erwin admitted during his deposition, are not inconsistent

with Erwin’s later sworn statement that he had no control over

GCAD’s payroll. Similarly, Erwin’s seizure of control over

GCAD’s payroll functions after the tax periods at issue and

1

Indeed, even the majority recognizes that "Erwin and his two partners

did not directly manage GCAD’s payroll." Ante at 11. 

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after he learned of the payroll withholding delinquencies for

those periods reasonably suggests that Erwin decided to

become the responsible person under § 6672 from then forward in order to protect his substantial investment. Contrary

to the majority opinion, such conduct does not require an

inference that Erwin was a responsible person under § 6672

for the tax periods in question.

Moving on to the third Plett factor, such factor cuts in favor

of Erwin. Specifically, a reasonable jury could find that Erwin

had limited decision-making authority about which creditors

to prefer. For the most part, any creditor preferences made by

Erwin during the tax periods at issue were made with infusions of investor capital. The record also contains the sworn

statement of Erwin that, prior to October 1999, he had limited, to no decision-making ability, about which creditors of

GCAD to prefer.

When the evidence is viewed through the proper summary

judgment lens, the fourth Plett factor also cuts in favor of

Erwin. Specifically, the record shows that he did not participate in the day-to-day operations of GCAD. First, the record

contains the sworn statement of Erwin that, prior to October

1999, he had no responsibility for the day-to-day management

of GCAD.2 Moreover, the evidence in the record supports the

reasonable inference that, during the four quarters at issue,

with the exception of all aspects of accounting and payroll,

Pintner was solely responsible for the day-to-day operations

of GCAD. Indeed, "Pintner came to GCAD upon the recommendation of various corporate officers of Golden Corral who

presented him as a seasoned operator of the Golden Corral

2As the record evidence must be viewed at the summary judgment

stage, Erwin gave no deposition testimony that is inconsistent with his

later sworn statement that he had "no responsibility for the day-to-day

management of" GCAD. (J.A. 1081). Accordingly, reliance on such statement in the mix of evidence carrying Erwin’s burden in successfully

opposing the Government’s summary judgment motion is not misplaced

as suggested by the majority. Ante at 17 n.7. 

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concept." (J.A. 1077). The evidence supports the reasonable

inference that, during the four quarters at issue, the Light

Brothers were solely responsible for all aspects of accounting

and payroll, including financial reporting to Pintner and, by

extension, the GCAD shareholders. While Erwin’s activities

on behalf of GCAD, for example, the negotiation of leases

and the choosing of site locations for the restaurants, show

that he was more than a passive investor, they do not establish

that he participated in the day-to-day operations of GCAD.

Moreover, the fact that Erwin reviewed GCAD’s sales figures

on a weekly basis can support the reasonable inference that he

did so to monitor the status of his investment. It does not

require the inference, as the majority suggests, that Erwin participated in GCAD’s day-to-day management.3

The fifth Plett factor, which asks whether Erwin had check

writing authority, also favors Erwin.4 The evidence is undisputed that Erwin did not possess the power to sign checks

during the four quarters at issue, nor was he a signatory on

any of GCAD’s bank accounts during such quarters. The

focus of this factor is whether the individual at issue possesses

check-writing authority, because the lack of such authority

suggests that he is not a responsible person under § 6672.

Finally, the sixth Plett factor, which asks whether Erwin

had the ability to hire and fire employees cuts both ways.5 On

3

I note that the majority opinion mentions that Pintner testified in deposition that he spoke to Erwin daily regarding sales figures and the performance of individual stores. See ante at 4 n.2. Because this testimony is

inconsistent with Erwin’s testimony that he only spoke with Pintner about

such matters on a weekly basis, Pintner’s version cannot be considered in

assessing the propriety of the Government’s summary judgment motion.

Edell & Assocs., P.C., 264 F.3d at 429. 

4For purposes of clarity, I note that Plett itself lists check-writing

authority as the fifth of six factors serving as indicia of the requisite

authority to pay a company’s payroll taxes, while the majority opinion in

the present cases lists it as the sixth factor. 

5The majority opinion lists this as the fifth Plett factor. 

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the one hand, the undisputed evidence shows that Erwin substantially participated in the hiring and firing decisions with

respect to GCAD’s top management, including hiring the

Light Brothers. On the other hand, the evidence shows that

Erwin did not participate at all in routine personnel decisions.

Examining the Plett factors in toto, in my considered opinion, Erwin has proffered sufficient evidence to stave off the

Government’s motion for summary judgment. More specifically, when the evidence in this case is viewed in the light

most favorable to Erwin, and all reasonable inferences are

drawn in his favor, a reasonable fact finder could find, under

the totality of the circumstances, that Erwin was not a responsible person with respect to GCAD’s withholding taxes for

the last quarter of 1998 and the first three quarters of

1999—i.e., Erwin did not have the effective power to pay

those taxes during those quarters.

My view is substantially supported by the First Circuit’s

decision in Vinick v. United States (Vinick II), 205 F.3d 1, 9

(1st Cir. 2000), which is not cited by either party. In Vinick

II, the Government assessed a nearly $50,000 penalty against

Arnold Vinick (Vinick) pursuant to § 6672. Id. at 5. The

assessment alleged failed withholding payments for the last

three quarters of 1989 and the first two quarters of 1990 with

respect to Jefferson Bronze, Inc. (Jefferson Bronze). Id.

Vinick paid a small portion of the penalty and filed a claim

for a refund. Id. at 6. After the Government denied the claim,

Vinick sued for a refund. Id. The Government counterclaimed

for the balance due and moved for summary judgment. Id. at

6. The district court granted summary judgment for the Government, and Vinick appealed. Id. The First Circuit reversed

and remanded for further proceedings. Vinick v. Comm’r of

IRS (Vinick I), 110 F.3d 168 (1st Cir. 1997). Following a

bench trial, the district court again ruled in favor of the Government by finding Vinick to be a responsible person. Vinick

II, 205 F.3d at 6. The First Circuit reversed again, holding that

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Vinick was not a responsible person under § 6672 as a matter

of law. Vinick II, 205 F.3d at 15.

Vinick was a CPA in private practice and a former IRS

employee. Id. at 4. In 1981, he and two other persons (Letterman and Mayer) formed Jefferson Bronze for the purpose of

operating a foundry. Id. The three men, who each owned onethird of Jefferson Bronze’s stock, personally guaranteed the

Small Business Administration loan used to start-up the business and pledged their homes as collateral. Id. Letterman

became president, Vinick became treasurer, and Mayer

became the day-to-day manager of the foundry. Id. Soon after

its formation, Jefferson Bronze began a long period of financial difficulties. Id.

The remaining relevant facts are as follows: (1) throughout

the history of Vinick’s involvement in the corporation, he

never gave up his accounting practice and never had an office

at Jefferson Bronze; (2) although Vinick had check-writing

authority on Jefferson Bronze’s checking accounts, he never

signed checks prior to the company’s filing for Chapter 11

bankruptcy; (3) Vinick prepared Jefferson Bronze’s quarterly

employment tax returns; (4) in 1983, Letterman fired Mayer,

Letterman and Vinick acquired Mayer’s share of the corporation, and each became a half owner of Jefferson Bronze; (5)

Vinick hired Ronald Ouellette (Ouellette) as the new manager; (6) Ouellette ran the office and the foundry, and his wife

worked part-time as the bookkeeper and signed the company

checks and payroll returns; (7) Vinick occasionally would

visit the Ouellette home to collect information needed to complete the quarterly returns, and after their preparation, Vinick

would return the completed, unsigned forms to the Ouellette

home; (8) usually once a month, Vinick would discuss with

Ouellette the financial condition of the corporation and would

stress to him the need to pay the taxes; (9) during Ouellette’s

tenure as manager, Jefferson Bronze’s financial troubles continued, with Jefferson Bronze failing to timely pay the withholding taxes due; (10) regardless, Jefferson Bronze always

26 ERWIN v. UNITED STATES

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filed its tax returns on time; (11) at some point, Letterman and

Vinick obtained a $35,000 loan for Jefferson Bronze, which

they secured with personal guarantees; (12) in 1985, Vinick

negotiated with an Internal Revenue Service revenue officer

a payment plan for the taxes Jefferson Bronze owed, and

relayed the terms of the plan to Ouellette, who complied with

the plan’s requirements; (13) after Jefferson Bronze completed payment of these taxes, it experienced no further tax

delinquency until Letterman took over as manager; (14) in

January 1988, Letterman decided on his own to take over as

the day-to-day financial manager of the corporation (Ouelette

continued as the foundry manager for non-financial matters);

(15) Letterman’s wife then took over as office manager and

bookkeeper; (16) during this time, Vinick continued to collect

the financial information, to prepare the quarterly tax returns,

and to leave them for Letterman to sign; (17) while he also

continued to advise Letterman to pay the corporation’s taxes,

Vinick became less involved in the financial affairs of the corporation as Letterman’s role increased; (18) in May 1988,

Letterman and Vinick successfully negotiated a refinancing of

Jefferson Bronze’s Small Business Administration loan with

a private bank, including signing the note in their individual

and corporate capacities; (19) additionally, Vinick pledged his

home as collateral on the refinancing; (20) around March

1989, Jefferson Bronze became delinquent on such note,

prompting Letterman and Vinick to discuss the financial

future of Jefferson Bronze with the bank’s vice president; (21)

from April 1989 to June 1990, during Letterman’s tenure as

manager and prior to Vinick’s ever having signed a company

check, Jefferson Bronze again fell behind in its withholding

tax obligations; (22) by July 1990, Jefferson Bronze had filed

for Chapter 11 bankruptcy; and (23) a year later the bank

foreclosed on the note, with Jefferson Bronze finally closing

its doors shortly thereafter.

After applying virtually the same factors as we outlined in

Plett to the facts just set forth, the First Circuit held that "Vinick as a matter of law was not a responsible person within the

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meaning of 26 U.S.C. § 6672(a)." Vinick, 205 F.3d at 15. Significant to the First Circuit’s holding, were the following

facts: (1) at no time did Vinick exercise any decision-making

authority over which creditors Jefferson Bronze paid; (2) during the quarters in question, Vinick had no involvement in the

day-to-day operations of Jefferson Bronze; (3) during the

quarters in question, although Vinick had check-signing

authority, he signed no checks and lacked access to the checkbook; and (4) although Vinick participated in the decision to

hire the general manager, he was not involved in the routine

hiring and firing of employees. In sum, the First Circuit concluded that while Vinick "may have been more than a mere

passive investor in the corporation," the evidence did not

establish that he "possessed actual, exercised authority over

the company’s financial matters, including the duty and

power to determine which creditors to pay," and therefore, "as

a matter of law he cannot be a responsible person." Id. at 14-

15.

While I do not suggest here that, under the facts of the present case, Erwin, as a matter of law, cannot be a responsible

person under § 6672, I do believe that, based on the evidence

in this case, a reasonable jury could find that that he is not a

responsible person under § 6672. The facts in Vinick are substantially similar to the facts in the present case. Like Vinick,

Erwin was a one-third shareholder in the corporation and personally guaranteed loans for the corporation. Like Vinick,

Erwin held the title of the corporation’s treasurer. Like Vinick, Erwin received financial information about the corporation from the general manager and stressed the need to keep

payroll taxes current to the person responsible for actually

paying such taxes. Like Vinick, Erwin participated in the hiring and firing decisions with respect to top management, but

did not with respect to routine personnel decisions. Like Vinick, Erwin took actions to catch up back withholding taxes

from time periods different from the ones in question (i.e.,

Vinick negotiated a payment plan with the Internal Revenue

Service, while Erwin contributed capital with an order to use

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the money to catch up the back withholding taxes). Finally,

like Vinick, Erwin did not participate in the day-to-day operations of the corporation.

In sum, I recognize that this is a close case. However, for

the reasons just set forth, I believe the scale tips in favor of

Erwin at the summary judgment stage.

III.

In conclusion, I would hold the district court erred in holding that the responsible person inquiry cuts in favor of the

Government on summary judgment. Accordingly, I would not

reach the willfulness element and would vacate the judgment

in favor of the Government and remand for trial.

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