FILED U.S. COURT OF APPEALS ELEVENTH CIRCUIT September 11, 2002 THOMAS K. KAHN CLERK [PUBLISH]

IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT

___________________________ No. 01-14520

___________________________ D.C. Docket No. 00-00622-CV-T-S PETER THOSTESON, Plaintiff-Appellant,

versus UNITED STATES OF AMERICA, Defendant-CounterClaimant-Appellee, QUENTIN GARNER UMPHREY, et al., Counter-Defendants.

___________________________ Appeal from the United States District Court for the Middle District of Alabama

____________________________ (September 11, 2002)* Honorable Eugene E. Siler, Jr., U.S. Ci rcuit Judge for the Sixth Circuit, sitting by designation.
2 Before EDMONDSON, Chief Judge, CARNES and SILER * , Circuit Judges. SILER, Circuit Judge: Plaintiff Peter Thosteson filed this action against the United States seeking a refund of his partial payment of the tax pe nalty assessment made against him pursuant to 26 U.S.C. § 6672, based on the failure of the company for which he worked to submit payroll withholding trust fund taxes (the “taxes”). A trial was held, and the jury returned a verdict in his favor for all tax quarters at issue. Pursuant to Rule 50 of the Federal Rules of Civil Procedure, the district court granted judgment as a matter of law for the Defendant United States of America (the “government”), finding Thosteson liable for all tax quarters at issue. Thosteson appeals that decision. We affirm.
I. In response to an Internal Revenue Se rvice (IRS) assessment, Thosteson filed this action against the government. He seek s a refund of his partial payment of the taxes from the third quarter of 1994 through all four quarters of 1995 (until November1 Judgment was actually entered for $1,560,235.45, which includes interest from the date of the assessment. Plainti ff did not contest this figure below, nor does he contest it in this appeal.
3 28, 1995), which his employer, Lorac, Inc., failed to remit to the government. The judgment amounts to $1,293,427.09. 1
Prior to submission of the case to the jury, the government made a motion for judgment as a matter of law. The court rese rved decision on that motion. After the jury began deliberations, it returned with a question: “If the jury were to find that plaintiff was a responsible person for onl y following quarters, third quarter of 1995, fourth quarter of 1995, but was not willful inthe failure to pay ta xes of said quarters, will Mr. Thosteson be assigned a penalty?” The court answered that an individual must be both “responsible” and “willful” to be liable for the pena lty. Subsequently, the jury returned a verdict in favor of th e taxpayer. For the last two quarters of 1994 and the first two quarters of 1995, the juryfound that Thosteson was not a responsible party. For the third and fourth quarters of 1995, the jury found that Thosteson was a responsible party, but his conduct in not paying the taxes was not willful. The government renewed its request for a judgment as a matter of law. The court granted that motion, overturning the jury verdict and entering judgment for the government.4 The district court recounted the followi ng basic facts in its opinion granting the Rule 50 motion: Plaintiff was an incorporator of Lorac, Inc., an employee leasing business. Initially he was one of th e company’s vice-presidents, and his main responsibility was sales and “g rowing” the business. He had limited authority to hire and fire employees, to determine financial policy, to set salaries and wages, to pay employees, and to enter loan agreements on Lorac’s behalf. He opened bank accounts for Lorac with People’s Bank in Dothan, Alabama, and was a signatory on those accounts with the ability to write ch ecks under his sole signature for amounts up to $750. Lorac had two different kinds of checks: Checks that expressly required two signatures for amounts above $750, and checks that did not. On at least three occasions, Plaintiff wrote checks for more than $750 under his sole si gnature on Lorac checks that did not expressly require two signatures [checks in the amount of $1,000, $923.04 and $45,000]. The evidence at trial did not show that those checks were not honored, and conclusive ly proved that at least one such check was honored [entered into ev idence along with the bank statement indicating that the check was cashed and honored]. Further, Plaintiff also had the authority to sign Lorac’s Form 941 withholding tax returns, and he did so for the third and fourth quarters of 1995. In the spring of 1995, Plaintiff purchased a 24% stake in Lorac from its sole shareholder, Garner Umphrey, for $288. Umphrey, however, did not cash the check that Pl aintiff used to pay him. At some point before the bankruptcy, Plaintiff also became the pr esident of Lorac. Plaintiff testified at trial that he knew during the entire period at issue in this suit that a responsible person has a duty under the law to assure that withholding taxes are re mitted to the United States. And he testified that as of August 28, 1995[,] he was aware that Lorac had failed to remit withholding taxes to the Un ited States, and that, in October 1995, he became aware of the full amount of withholding taxes that Lorac owed. The undisputed evidence showed th at after Plaintiff became aware that Lorac owed withholding taxe s to the government and after he became aware of the full amount of the taxes that were owed, he continued to write check after check to other creditors under his5 signature alone, including checks to Tack and So Forth, Inc. (a joint venture of Lorac and Plaintiff’s wife) [for $1,000, dated October 18, 2001], himself [for $280, dated October 20, 1995], Builder’s Cash and Carry [for $923, dated October 13, 1995], and Garner Insurance Agency [for $45,000, dated October 13, 2001]. Thosteson v. United States , 182 F. Supp. 2d 1189, 1191-92 (M.D. Ala. 2001) (notes omitted). On appeal, Thosteson emphasizes the ro le of Garner Umphrey, who has also been sued by the government but has disapp eared. He describes their relationship as beginning in the late 1980's through Umphr ey’s uncle, who attended Thosteson’s church. In 1993, Umphrey approached Thos teson about starting an employee leasing business in the civilian context. Umphreywas already involved in employee leasing on behalf of military contractors. Thostes on claims that he orig inally had no related experience or background, but he educated himself in the computer program area of the business and proceeded to build the company through sales and marketing. He credits his sales and marketing efforts inlate 1994 and early 1995 for making the new business become very successful. During 1995, the company had between four thousand and five thousand employees. Nevertheless, Thosteson claims that Umphrey was not only the sole stockholder up through April 1995, but he and his wife al so controlled all major decisions within the business. He alleges th at Umphrey started diverting money from the company into6 his other business enterprises, and thes e alleged transfers amounted to hundreds of thousands of dollars. Regarding the taxes, Thosteson claims that he was not aware of the corporation’s failure to pay them until A ugust 28, 1995. He alleges that he was hospitalized when he found out that the taxes had not been paid. Further, after finding out about the tax arrears in August 1995, even though not knowing the amounts of those arrearages, he used his best effort s to try to establish a repayment plan. Thosteson testified that on August 28, 1995, he confronted Umphrey’s wife and confirmed with her that the company had substantial overdue payroll tax liabilities. Thereafter, he arranged for Lorac to make weekly payments of $30,000 to the IRS. Thosteson and Umphrey’s wife signed three checks for $30,000 on an account of the company, payable to the IRS, and date d August 31, September 6 and September 15, 1995. He alleges that his efforts were frustrated by Umphrey who contradicted his orders and stopped the tax restitution paym ents. Thosteson does not deny, however, that he knew Umphrey ordered the payments to cease. He claims that he continued to use his best efforts to make the busin ess successful because based on his meeting with Lorac’s bookkeeper, he felt that if they continued w ith the business, then the taxes could be successf ully repaid. Thosteson signed the payroll tax return for the third and fourth quarters of 1995.7 He testified that in November 1995, he became the president of Lorac through Umphrey’s consent and in order to formul ate a Chapter 11 bankruptcy plan to repay the taxes and keep the business going. The company’s original petition for reorganization eventually converted to a Chapter 7 liquidation case, and the company went out of business in 1997. The principal service offered by Lorac to its clients, in addition to volume discounts for workers compensation insurance, was relief from the paperwork of handling payroll, including the filing of federal employment tax returns and the payment of those taxes. The client’s employees became employees of Lorac for purposes of payroll processing and payroll taxes.
II. We review de novo a district court’s grant of judgment as a matter of law under Rule 50, applying the same standards as the district court. Slicker v. Jackson , 215 F.3d 1225, 1229 (11th Cir. 2000). We consider whether such sufficient conflicts exist in the evidence to necessitate submitting the matter to the jury or whether the evidence is so weighted in favor of one side thatone party must preva il as a matter of law. Mendoza v. Borden, Inc. , 195 F.3d 1238, 1244 (11th Cir. 1999) ( en banc ). Although we look at the evidence in the light mostfavorable to the non-moving party, the non-movant must put forth more than a mere scintilla of evidence suggesting that2 Section 6672 provides: Any person required to collect, truthf ully account for, and pay over any tax imposed by this title [Title 26 of the United States Code] 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 othe r penalties provided by law, be liable to a pena lty 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).
8 “reasonable and fair-minded pe rsons in the exercise of impartial judgment might reach different conclusions.” Id. (quoting Walker v. NationsBank of Florida, N.A. , 53 F.3d 1548, 1555 (11th Cir. 1995)).
III. Section 6672 imposes liability upon (1) a responsible person (2) who has willfully failed to perform a duty to collect, account for, or pay over federal employment taxes. 2 See Williams v. United States , 931 F.2d 805, 810, reh’g granted and opinion supplemented , 939 F.2d 915 (11th Cir. 1991).

A. Allocation of the Burden of Proof In tax refund cases, the burden of proof is on the plaintiff to show that the IRS’s findings in assessing a deficiency are incorr ect because its “defic iency determinations are presumed correct.” Trucks, Inc. v. United States , 234 F.3d 1340, 1342 (11th Cir.9 2000) (citing Mays v. United States , 763 F.2d 1295, 1297 (11th Cir. 1985)). Specifically in the context of § 6672 cases, however, we have he ld that “[o]nce an individual is established as a ‘responsible person,’ the burden shifts to the individual to disprove willfulness.” Malloy v. United States , 17 F.3d 329, 331 (11th Cir. 1994); see also Williams , 931 F.2d at 810 (same). The district court observed that though we have allocated to the taxpayer the burden of disproving willfulness, we have “not directly decided who bears the burden of proof on the issue of whether a taxpayer is a responsible person . . . .” The district c ourt, nevertheless, conc luded that it “need not reach that issue here because both parties have agreed that the taxpayer in this suit bears the burden of showing that he was not a responsible person.” We agree that the government would prevail under either standard, but we disagree that the taxpayer bears the burden of showing that he was not a responsible person.
In Malloy , using “is established” with regard to responsibility coupled with “the burden shifts” to the taxpayer logically refe rs to the government as bearing the burden on the issue of responsibility. Therefore, to the extent this burden was not clear after Malloy , we clarify the standard in this regard to be that once the government satisfies its burden in establishing a taxpayer as a “r esponsible person,” the burden shifts to the taxpayer to disprove his willful ness in order to avoid liability.3 In Bonner v. City of Prichard , 661 F.2d 1206, 1209 (11th Cir. 1981) ( en banc ), we adopted as binding precedent the decisions of the former Fifth Circuit handed down prior to October 1, 1981.
10 B. “Responsible” Person A person is responsible within the meaning of § 6672 if he has a duty to collect, account for, or pay over taxes withheld from the wages of a company’s employees. Thibodeau v. United States , 828 F.2d 1499, 1503 (11th Cir. 1987). Responsibility is a matter of status, duty and authority, not knowledge. Mazo v. United States , 591 F.2d 1151, 1156 (5th Cir. 1979). 3 Section 6672 responsibility is a matter of the power and authority to make payment of withholding taxes, which is not dispositively determined by corporate title or position. Neckles v. United States , 579 F.2d 938, 940 (5th Cir. 1978). “Indicia of responsibility include the holding of corporate office, control over financial affairs, the authority to disburse corporate funds, stock ownership, and the ability to hire and fire employees.” George v. United States , 819 F.2d 1008, 1011 (11th Cir. 1987). In the case at bar, the government has met its burden by presenting overwhelming evidence as to all of the men tioned indicia of responsibility. Thosteson vehmently argues that Umphrey was the re sponsible person. However, a company may have more than one responsible person within the meaning of § 6672. Thibodeau , 828 F.2d at 1503. Because Umphrey was responsible does not absolve11 Thosteson of responsibility. Thosteson helped incorporate Lorac, served as vicepresident and president, owned varying le vels of stock in Lorac from 24% to 100%, and possessed the authority to hi re and fire. It is logical that a vice-president who was also a significant shareholder would be a responsible person under the statute. Furthermore, the government’s point thatThosteson admits to being in charge of marketing is well taken. The prin cipal benefit to this employee leasing arrangement, which Lorac’s marketing material s stressed, is the tax and administrative savings, and much of the administrative sa vings has to do with tax-related payroll deductions and withholdings. Thosteson’s principal argument as to the limits of his authority and “responsibility” under § 6672 relates to his claim that he had limited check writing authority, up to only $750, without a counter signature of Umphrey or his wife. In dispensing with this same argument, the Fifth Circuit observed: “[Plaintiff] also argues that he did not have the actual authority to pay the entire tax bill because his check writing authority was limited to relativel y small amounts. . . . [but] [t]he Internal Revenue Service would certainly not have objected to payment of the tax deficiency by several small checks.” Gustin v. I.R.S. , 876 F.2d 485, 492 (5th Cir. 1989). We agree. Thus, even presuming the limitations on his authority imposed by Umphrey and ignoring the overwhelming evidence pres ented by the government to the contrary,12 this would not remove his “responsibility” under § 6672. Therefore, the finding that Thosteson was a “responsible” person as a matter of law was not erroneous. The government has more than met its burden here.

C. Willful Failure Turning to the requirement of willfulness, this court has held that the willfulness requirement of § 6672 is satisfi ed if the responsible person has knowledge of payments to other creditors after he becomes aware of the failure to remit the withheld taxes. Williams , 931 F.2d at 810 (citing Smith v. United States , 894 F.2d 1549, 1553 (11th Cir. 1990) and Thibodeau , 828 F.2d at 1505). Willfulness, however, “does not require a fraudulent or other ba d motive on the part of the responsible person.” Id. (citing Hewitt v. United States , 377 F.2d 921, 924 (5th Cir. 1967)). Thosteson admits that he became aware of the trust fund arrearages on August 28, 1995. He claims, however, that Umphr ey ordered the suspension of the $30,000 weekly repayment schedule. Nevertheless, the “Nurembur g defense,” as some courts have referred to it, is not available to Thosteson. See Brounstein v. United States , 979 F.2d 952, 956 n.5 (3d Cir. 1992) (discussi ng and dismissing “Nuremburg defense,” holding it is no defense that taxpayer “served only as a nominal president whose signature constituted a mere ‘rubber stamp’ for [principal shareholder-director's]4 See also Gephart v. United States , 818 F.2d 469 (6th Cir. 1987) (holding nonshareholder general manager was a res ponsible person, notwithstanding testimony that major shareholder had told him it was none of his business that withheld taxes were not being paid); Howard v. United States , 711 F.2d 729 (5th Cir. 1983) (holding director and treasurer of corporation, who had signatory authority over main corporate checking account, was a responsible person even though chief executive officer upon hearing of payment to IRS had ordered plai ntiff not to pay IRS any more money and subsequently suspended him for several weeks; after resigning in part based on company’s failure to remit the taxes, plaintiff notified IRS of corporation’s unpaid taxes, but though corporation then had subs tantial assets, when IRS sought to collect taxes more than two y ears later, it had none); Greenberg v. United States , 46 F.3d 239 (3d Cir. 1994) (holding controller was a responsible person even though the chief executive officer ordered him notto pay trust fund taxes, and he believed that if he issued a check for the taxes, it would bounce and he would be fired).
13 decisions” and “instructions from a superior not to pay taxes do not . . . take a person otherwise responsible . . . out of that category”); Roth v. United States , 779 F.2d 1567 (11th Cir. 1986) (holding vice president and minority shareholder who handled day-to-day operations and wrote corpor ate checks was a responsible person even though the president had instructedhim not to pay the government). 4 Thosteson knew that the taxes were owed and that they were not being paid under Umphrey’s order. Acting, or rather failing to act, under orders from his superior does not negate his culpability under the statute. Thosteson admits that he became the undi sputed president of the company, with concomitant authority, at the beginning of November, prior to the filing of bankruptcy. He was aware of the arrear ages, and after he became aware of this14 deficiency, he still issued 262 checks to vari ous creditors and others, including himself and his wife’s company. Even if a “res ponsible” person is unaware that withholding taxes have gone unpaid in past quarters, a responsible person who becomes aware that taxes have gone unpaid in past quarters in which he wa s also a responsible person, is under a duty to use all “unencumbered funds” av ailable to the corporation to pay those back taxes. Mazo , 591 F.2d at 1157; see also United States v. Kim , 111 F.3d 1351, 1357 (7th Cir. 1997) (same); Honey v. United States , 963 F.2d 1083, 1089 (8th Cir. 1992) (same). This duty extends not only to funds available to the corporation at the time the responsible person becomes awar e but also to any unencumbered funds acquired thereafter. If the responsible person fails to use such unencumbered funds to satisfy the past unpaid liability, he is deemed personally liable for the taxes that went unpaid in the past while he was re sponsible. The responsible person deemed liable for the unpaid liability of past tax quarters is considered to have “willfully” failed to pay over the taxes for those past quarters, even though he was unaware at that time that the taxes were going unpaid. Mazo , 591 F.2d at 1157

. Even giving Thosteson the benefit of the doubt, that he was merely paying other creditors in order to keep the company going and preserve its ability to repay the tax debt, he is still liable under the law of this Circuit.15 D. Reasonable Cause Finally, Thosteson raises the putativ e defense of “reasonable cause.” See, e.g., Finley v. United States , 123 F.3d 1342 (10th Cir. 1997) (reasonable cause sufficient to excuse a responsible person’s failure to pay withholding taxes occurs in circumstances where (1) the ta xpayer has made reasonable efforts to protect the trust funds, but (2) those efforts have been frustrated by circumstances outside the taxpayer’s control). This Circuit has not yet addressed wh ether a defense of “reasonable cause” can avoid a finding of willf ulness in this context. We decline, however, to address this issue today. Such defense as applied by other circuits would still not be applicable under the facts of this case for the same reasons set forth by the Fifth Circuit in addressing a similar situation: We have consistently held that the reasonable cause defense to a § 6672 action is exceedingly limited. In Bowen v. U.S. , 836 F.2d 965, 968 (5th Cir. 1988), we stated that “[a]lthough we have recognized conceptually that a reasonable cau se may militate against a finding of willfulness, no taxpayer has yet carried that pail up the hill.” See also Newsome v. U.S. , 431 F.2d 742, 747 (5th Cir. 1970). No such defense may be asserted by a responsible person who knew that the withholding taxes were due, but who made a c onscious decision to use corporate funds to pay creditors other than the government. Newsome , 431 F.2d at 747 n.11; Frazier v. U.S. , 304 F.2d 528, 530 (5th Cir. 1962). Here, [plaintiff] consciously decided to make payments to creditors other than the government even though he knew that the withholding taxes had not been paid. The facts [plaintiff] relied on were not sufficient to support a reasonable cause defense.5 Thosteson’s assignment of error relati ng to the court’s response to the jury’s question is mooted by our finding that judgm ent as a matter of law was not in error. Likewise, there is no merit to his claim th at the grant of the judgment as a matter of law denied him his right to a jury trial.
16 Logal v. United States , 195 F.3d 229, 233 (5th Cir. 1999); cf. Finley , 123 F.3d at 1342 (finding potential “reasonable cause” where as soon as individual determined that taxes were owed, ordered s ubordinate to pay the taxes without reason to doubt that subordinate would do so, and subordinate did not pay the taxes; when the failure was discovered, no unencumbere d funds were available to pay the liability).
IV. We do not quarrel with T hosteson’s contention that Umphrey is the more culpable party, but even so concedi ng, being less culpab le does not exonerate Thosteson from his responsib ility, which he knowingly di sregarded. As we have observed, “[t]he seeds of common sense co mpassion sown by the jury find scant hospitality on this rock hard legal landscape.” Williams , 931 F.2d at 811. The district court did not err in setting aside of the jury’s verdict and granting judgment as a matter of law to the government. 5 AFFIRMED.