### IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

No. 1 7

- 20174

GAIL MCCLENDON , Plaintiff

– Appellant ,

v.
UNITED STATES OF AMERICA , Defendant

– Appellee

.

Appeal from the United States District Court for the Southern District of Texas

Before DAVIS, JONES, and HIGGINSON , Circuit Judges

. W. EUGENE DAVIS, Circuit Judge: Gail McClendon appeals the district court’s summary judgment determining that her late husband, Dr. Robert McClendon (“McClendon”) , was personally liable under 26 U.S.C. § 6672 for over $4.3 million in penalties for
the unpaid withholding taxes of his medical practice

. She also appeals the district court’s subsequent denial of McClendon’s motion requesting reconsideration of the summary judgment. As explained more fully below, we REVERSE the denial of the motion for reconsideration, AFFIRM IN PART and VACATE IN PART the summary judgment, and REMAN D the case for further proceedings consistent with this opinion

. United States Court of Appeals Fifth Circuit 

### FILED June 14, 2018 Lyle W. Cayce Clerk Case: 17-20174 Document: 00514513428 Page: 1 Date Filed: 06/14/2018No. 17

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2 I.
In 1979 , McClendon founded Family Practice Associates of Houston (“FPA”), a professional medical association . By 1995 , FPA employed five
doctors , numerous nurses , and related support staf f. D uring that year, t he board of directors of FPA hire d Richard Stephen, a certified p ublic accountant,
to serve as FPA’s chief financial officer. From 1995 to 2009, Stephen informed the board that FPA was doing w ell financially and that all of FPA’s tax obligations were being met. O n or about May 11, 2009, however, FPA learned from the Internal Revenue Service (“IRS”) that Stephen’s representations were false. Specifically, the IRS had no record of any payroll tax deposits on behalf of FPA for several of the previous years. FPA subsequently discovered that Stephen failed to rem it FPA’s f ederal withholding taxes for twenty

- one consecutive quarters, from the third quarter of 2003 to the third quarter of 2008, and that he had been stealing money from FPA for many years. The consequences were disastrous : FPA accrued an unpaid withho lding tax balance of over $11 million.
A ccording to McClendon ’s deposition testimony and affidavit , a s soon as the board discovered that the payroll taxes were unpaid, FPA stopped paying
its creditors and vendors, a s advised by counsel. To avoid using any of FPA’s existing or future funds, and to ensure that FPA’s staff employees received their payroll checks in May 2009, McClendon and his wife loaned FPA $100,000. In addition, McClendon and his two fellow board members created a separate company, MST Inte rests, L.L.C., to use their own personal funds to pay FPA’s non

- IRS creditors. FPA remitted all existing receivables and any new receivables it subsequently received directly to the IRS

. The amount of
receivables FPA paid the IRS totaled over $400,000

. FPA also turned over to Case: 17-20174 Document: 00514513428 Page: 2 Date Filed: 06/14/2018No. 17

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3 the IRS $250,000 in insurance proceeds it received on the insurance claim it filed for employee theft. 1 McClendon and the other board members file d a criminal complaint against Stephen. I n 2013 , Stephen pleaded guilty in Texas stat e court to first

degree felony theft of property over $200 ,000

. He was sentenced to ten years in prison.
II. On August 2 7, 2012, the IRS assessed approximately $4.3 million in penalties against McClendon perso nally , pursuant to 26 U.S.C. § 6672 , 2 for the twenty

- one quarters FPA failed to remit its withholding taxes. McClendon paid a nominal portion of the penalties and then filed suit under 26 U.S.C. § 7422 , 3 seekin g a refun d of the portion paid and abatement of the penalties assessed

. McClendon alleged th at the IRS wrongfully assessed the penalties because he “was not a responsible party and did not willfully fail to remit funds due to the IRS , ” as required to impose liability under § 6672

. In response, t he Government filed a counterclaim against McClendon , seeking to convert the penalties into a $4.3 million judgment. The Governm ent also filed a counterclaim against Stephen, adding him as a party to the action. The Government maintained that join ing Stephen was proper because both

1 FPA also issued a check for $2,000 to its 401(k) plan manager (John Hancock Insurance Company) and a check for $1,840.42 to Dr. James Trippett. McClendon contended that these funds did not belong to FPA, but related to FPA’s 401(k) p lan and were erroneously deposited into FPA’s account.
2 Section 6672 provides that “[a]ny person required to collect, truthfully account for, and pay over any tax imposed by this title who willfully fails” to do so shall “be liable to a penalty equal to the total amount of the tax . . . not accounted for and paid over.” 26 U.S.C. § 6672(a). The term “responsible person” is commonly used to refer to the statutory phrase,

“ person required to collect, truthfully account for, and pay over any tax imposed by [ the Internal Revenue Code].” See Barnett v. I.R.S. , 988 F.2d 1449, 1453 n.6 (5th Cir. 1993).
3 Section 7422 allows for a civil action against the United States for any internal revenue tax “erroneously or illegally assessed” after “a claim for refund or cr edit has been duly filed with the Secretary [of the Treasury].” 26 U.S.C. § 7422(a), (f)(1). Case: 17-20174 Document: 00514513428 Page: 3 Date Filed: 06/14/2018No. 17

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4 Stephen and McClendon had been assessed § 6672 penal ties for FPA’s unpaid withholding taxes for the same time periods . The Government further
contended that , under the jurisprudence interpreting § 6672, Stephen and McClendon were jointly and severally liable for the penalties

. The Government thereafter filed a motion seeking summary judgment against McClendon only . The Government argued that it was entitled to summary j udgment because the evidence established the two requirements necessary for liability under § 66 72: (1) McClendon was a “responsible person” for payment of FPA’s payroll taxes ; and (2) McClendon “willfully failed” to pay the taxes to the IRS

. T he Government contended that McClendon’s failure was willful because he admitted to using FPA funds to pay c reditors other than the IRS after he learned of the unpaid payroll taxes. In particular , McClendon admitted that he loaned FPA $100,000 to cover the May 2009 payroll for FPA’s staff employees ; that he paid Dr. Trippett $1,840 ; and that he paid John Hancock Insurance Company $2000. The Government additionally asserted that McClendon was grossly negligent in delegating, with no oversight, the responsibility of paying payroll taxes to Stephen for years and that such conduct also constituted willfulness under § 6672

. Therefore, t he Government
asserted that summary judgment should be granted in its favor for the $4 .3 million in assessed penalties, less any payments or credits to which McClendon was entitled. In his opposition to the Government’s motion, McClen don con ceded that he was a responsible person under § 6672. H e contested, however, that he willfully failed to pay FPA’s payroll taxes after learning of the unpaid taxes

. McClendon asserted that the $2,000 payment to John Hancock Insurance Company and the $1,840 payment to Dr. Trippett involved funds relating to FPA’s 401(k) plan and did not involve any funds belonging to FPA that could have been used to pay the IRS

. He further asserted that his $100,000 loan to Case: 17-20174 Document: 00514513428 Page: 4 Date Filed: 06/14/2018No. 17

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5 FPA also could not have been used to pay the IRS because those funds were “encumbered

. ” Specifically, he asserted that he loaned FPA the money with the restriction and agreement that the funds would only be used to cover the May
2009 payroll for FPA’s staff employees . He also asserted that his loan constituted “reasonable cause,” absolving him of § 6672 liability under the jurisprudence . Finally, McClendon contended that he was not grossly negligent by relying on Stephen to handle FPA’s payroll taxes. In its reply memorandum, the Government reassert ed that McClendon’ s admission that he loaned FPA $100,000 to pay its employees instead of the IRS after learning of the unpaid taxes established that McClendon acted willfully under § 6672

. The Government further maintained that , contrary to McClendon’s co ntention s , his $100,000 loan to FPA was not “ encumbered ”

u nder the relevant jurisprudence and, thus, could have been used to pay the IRS . Finally, the Government asserted that McClendon’s actions did not constitute “ reasonable cause

. ” The district court g ranted the Government’s motion for summary judgment against McClendon

. It determined that McClendon acted willfully under § 6672 because , after learning of the unpaid taxes, he loaned FPA $100,000, which FPA then used to make payroll instead of paying the IRS

. The district court further determined that although McClendon contended that t he loan ’s use was restricted to payment of the May 2009 payroll, th e funds were
not encumbered for purposes of § 6672 liability. Relying on cases from other circuits, 4 the dis trict court concluded that a responsible person cannot “shield

4 The district court noted that in our decision in Barnett , we adopted the Eighth Circuit’s definition of unencumbered funds as stated in Honey v. United States , 963 F.2d 1083 (8th Cir. 1992). The district court further found persuasive the Sixth Circuit’s decision in Bell v. United States , 355 F.3d 387 , 396 (6th Cir. 2004), wherein the court applied Honey and determined that “ [c]orporate funds should not be cons idered encumbered [under § 6672] Case: 17-20174 Document: 00514513428 Page: 5 Date Filed: 06/14/2018No. 17

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6 himself from liability by entering into preferential lending arrangements, in which the person voluntarily assumes a contractual obligation to pay some set of creditors before paying th e government.” The district court further
determined that McClendon was not entitled to the reasonable

- cause defense. It issued a judgment in favor of the Government for the total amount of penalties assessed against McClendon , approximately $4.3 million , less any payments already made

. III. McClendon thereafter filed a motion for reconsider ation under Federal Rule of Civil Procedure 5 4 (b), or in the alternative, to alter or amend the judgment under Rule s 52(b) and 59(e). In the motion, McClendon raised a n ew argument . He asserted that under this Court’s precedent, even if he w ere a responsible person and acted willfully, his liability under § 6672 was limited to the amount of unencumbered funds FPA had available after he learn ed of the unpaid taxes. Pointing to his deposition testimony, his affidavit in support of summary judgment, and copies of checks, h e asserted that the evidence submitted at the summary judgment level reflected that all of FPA’s available unencumbered funds were paid over to the I RS after his discovery of the unpaid taxes . He contended that the only evidence of funds not paid over to the IRS was the $100,000 loan he made to FPA to cover the May 2009 payroll. McClendon asserted that, therefore, he could be liable to the Government f or, at most, $100,000. In its opposition to McClendon’s motion for reconsideration, the Government acknowledged the jurisprudence providing for a cap on § 6672 liability. The Government asserted, however, that McClendon was not entitled

simply because a contractual obligation with a lender or other creditor impacts a company’s ability to use its assets, receivables, or loan advances with complete freedom.” Case: 17-20174 Document: 00514513428 Page: 6 Date Filed: 06/14/2018No. 17

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7 to this limitation on his liability because he “failed to meet his burden of proving what the universe of available funds were, whether they were unencumbered, and if so [whether] they were paid to the IRS.” Pertinent to the issues on appeal, t he Government further contended that entitlement to the limitation on his liability “necessarily require[d] a full accounting of all of the company’s available funds after the given date that knowledge was acquired.” The Government pointed out that McClendon had not introduced any of FP A’s bank records to show how much was deposited after his discovery of the unpaid
taxes. Additionally, the Government argued that even if the cap were available,
the district court would still need to address the Government’s alternative argument on willf ulness: that McClendon was grossly negligent with regard to the risk that FPA’s withholding taxes would go unpaid

. The Government asserted that, in that case, McClendon would not be entitled to a limit on his § 6672 liability equal to the amount of availab le unencumbered funds after discovery of the unpaid taxes

. Furthermore, the Government argued that the district court’s summary judgment was a final judgment which should not be reconsidered. In reply, McClendon provided a copy of an additional check which he asserted showed that FPA’s closing balance in July 2009 of $296,722.28 had all been turned over to the IRS. McClendon further contended that any determination regarding his alleged gross negligence was “rife with genuine issues of material fact.”
The district court denied McClendon’s motion for reconsideration “for two independent reasons

. ” First, applying the standard for Rule 59(e) motions , the district court determined that McClendon should have raised his limitation of liability argument in the summary judgment briefing and that he could not raise the argument for the first time in his motion to reconsider. Second, the Case: 17-20174 Document: 00514513428 Page: 7 Date Filed: 06/14/2018No. 17

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8 district court concluded that , even if the argument were properly before it, McClendon ’s argument failed on the merits. S pecific ally, the district court determined that “ McClendon had the burden of proof on the issue of the availability of the funds” and that he failed “to submit or identify record evidence” satisfying his burden. The district court then certified its grant of

summ ary judgment in favor of the Government and its denial of McClendon’s motion for reconsideration for immediate interlocutory appeal under Rule 54(b)

. McClendon timely appealed

. IV. This court reviews a grant of summary judgment de novo, applying the

same s tandard as the district court. 5 “The court shall grant summary judgment if the movant shows that there is no genuine dispu te as to any material fact
and the movant is entitled to judgment as a matter of law .” 6 When the
nonmovant bears the burden of proof at trial, “the movant may merely point to an absence of evidence, thus shifting to the non

- movant the burden of demonstrating by competent summary judgment proof that there is an issue of material fact warranting trial.” 7 “All re asonable inferences must be viewed in the light most favorable to the party opposing summary judgment, and any doubt must be resolved in favor of the non

- moving party.” 8 We typically review the denial of a motion for reconsideration , whether under Rule 54( b) or Rule 59(e) , for abuse of discretion. 9 However, when the district court denies a motion to reconsider a grant of summary judgment, but , in doing so, considers any materials attached t hereto and still grants summary

5 In re L a

. Crawfish Producers , 852 F.3d 456, 462 (5th Cir. 2017).
6 F ED

. R. C IV

. P. 56(a).
7 In re La

. Crawfish Producers , 852 F.3d at 462.
8 Id. (citations omitted).
9 Id. (citation omitted). Case: 17-20174 Document: 00514513428 Page: 8 Date Filed: 06/14/2018No. 17

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9 judgment, our review is de novo, as those materials become part of the summary judgment record. 10 A.
In our decision in Austin v. Kroger Tex as, L

. P

. , 11 issued just weeks after the district court’s decision in this matter, we clarif ied the relationship between Rules 5 4 ( b ) and 5 9 ( e )

. Whereas Rule 59(e) applies only to final judgments and does not permit consideration of arguments that could have
been raised previously , Rule 54(b) applies to interlocutory judgments and permits the district court “to reconsider and reverse its decision for any reason it deems sufficient. ” 12 We held that when a district court applies the more

s tringent Rule 59(e) standard i n denying a motion to reconsider an interlocutory order , we must vacate and remand “ for the district court to
reconsider [the] motion f or reconsideration under the more flexible
Rule 54(b). ” 13 In this case , the district court’s summary judgment against McClendon was interlocutory because it did not end the action , as the Government’s counterclaim against Stephen remained pending. 14 Rule 54 (b) , therefore , provided the correct standard for deciding McClendon’s motion for
reconsideration . If the district court had relied only on its first basis for denying the motion

— that McClendon could not raise his limitation of liability argument for the first time in a motion to reconsider under Rule 59(e) , we

10 Id. at 463 (citation omitted).
11 864 F.3d 326 (5th Cir. 2017)

. 12 Id. at 336 (citation omitted).
13 Id. (citation omitted).
14 See F ED

. R. C IV

. P. 54(b) ( “[A]ny order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does not end the action as to any of the claims or parties and may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties’ rights and liabilities.”)

. Case: 17-20174 Document: 00514513428 Page: 9 Date Filed: 06/14/2018No. 17

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10 would be required under Austin to vacate the district court’s denial of the
motion to reconsider and remand for application of the correct standard

. 15
How ever, the district court provided an a dditional basis for denying the
motion . It determined that McClendon ’s motion to reconsider also failed on the
merits because McClendon , at the summary judgment stage and in his motion for reconsideration, “did not dis prove the presumption that he was liable for the penalty by accounting for [FPA’s] funds and demonstrating that they could not cover the tax obligation.” When the district court denies a motion to reconsider a grant of summary judgment , but considers the evidence attached to the motion in doing so and still grants summary judgment , our review is de novo. 16 As explained more fully below, we respectfully disagree that McClendon failed to demonstrate a genuine issue of material fact as to whether the amount of available , unencumbered funds was in sufficient t o pay the $4 .3 million in assessed penalties.
B. The Internal Revenue Code requires businesses to withhold from their employees’ paychecks their employees’ federal income taxes and social security
contributi ons. 17 Businesses must then hold the funds “in trust” for the United States

. 18 Because there is no general requirement that the funds be segregated from the employer’s general funds , “the funds accumulated during the quarter

15 See Austin , 864 F.3d at 337.
16 In re L a

. Crawfish Producers , 852 F.3d at 462.
17 See 26 U.S.C. §§ 3102(a) (relating to deduction of FICA taxes) , 3402(a) (relating to withholding tax on wages applicable to individual income taxes)

. 18 26 U.S.C. § 7501(a). Case: 17-20174 Document: 00514513428 Page: 10 Date Filed: 06/14/2018No. 17

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11 can be a tempting source of ready cash.” 19 Failing to withhold or remit the funds can result in civil and criminal penalties. 20 As stated above, t his case concerns the penalty provision set forth in 26 U.S.C. § 6672, which provides in relevant part: Any person required to collect, truthf ully 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 add ition to other penalties provided by law, be liable to a penalty equal to the total amount of the tax evaded, or not collected, or n ot accounted for and paid over. 21 Importantly, § 6672 does not penalize the business entity itself; it penalizes
the business ’s “officers or employees” who were (1) “responsible for effectuating the collection and payment of trust

- fund taxes” but who (2) “willfully fail[ed] to do so.” 22 Those individuals are “made personally liable to a ‘penalty’ equal to the amount of the delinq uent taxes,” 23 which the IRS then assesses and collects from them “in the same manner as taxes

. ” 24
In cases under § 6672, “ once the Government offers an assessment into evidence, the burden of proof is on the taxpayer to disprove his responsible

person statu s or willfulness.” 25 This rule applies when t he Government
i nitiates the action by filing suit to convert the assessment into a judgment and when the taxpayer initiates the action by filing suit for a refund and the Government counterclaims , as in this case

. 26

19 Slodov v. United States , 436 U.S. 238, 243 (1978).
20 See 26 U.S.C. §§ 6672, 7202.
21 26 U.S.C. § 6672(a).
22 Slodov , 436 U.S. at 244

– 45.
23 Id. at 245.
24 26 U.S.C. § 6671(a). Responsible persons are joint ly and several ly liable , Brown v. United States , 591 F.2d 1136, 1142 (5th Cir. 1979), and they may seek contributio n from each other, 26 U.S.C. § 6672(d).
25 Barnett , 988 F.2d at 1453 (citations omitted).
26 See Morgan v. United States , 937 F.2d 281, 285 (5th Cir. 1991). Case: 17-20174 Document: 00514513428 Page: 11 Date Filed: 06/14/2018No. 17

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12 This Court “generally takes a broad view of who is a responsible person” in a § 6672 case. 27 The crucial inquiry when determining whether someone is a “responsible person” is “whether the person had the ‘effective power’ to pay the taxes.” 28 In the distr ict court, McClendon conceded that he was a responsible person under § 6672.

“ Willfulness under § 6672 requires only a voluntary, conscious, and intentional act, not a bad motive or evil intent .” 29 It may be proved in two ways. First, willfulness may be pro ved by evidence that the responsible person (1) had actual knowledge that the business wa s delinquent on its withholding taxes but (2) used the business’s unencumbered funds to pay the business’s

non
- IRS creditors anyway. 30 F unds are considered “encumbered” if they are “subject to restrictions imposed by a creditor hold ing a security interest in the funds which is superior to any interest claimed by the IRS , ” and “those
restrictions preclude a taxpayer from using the funds to pay the trust fund
taxes. ” 31 When willfulness is founded upon this method, the responsible person’s liability under § 6672 is limited to the amount of “available, unencumbered funds deposited into [the business’s] bank accounts after [the responsible person] became aware that the accrued withholding taxes were due.” 32

27 Barnett , 988 F.2d at 145 4 ( internal quotation marks and citations omitted).
28 Id. (citations omitted).
29 Id. at 1457 (citations omitted)

. 30 Id.
31 Id. at 1458 (quoting Honey v. United States , 963 F.2d 1083, 1090 (8th Cir. 1992)).
32 Id. at 1459; see Mazo , 591 F.2d at 1155 (noting that “responsible persons are subject to a duty to apply any available unencumbered funds to reduction of accrued withholding tax liability”) (citations omitted) ; see also United States v. Kim , 111 F.3d 1351, 1357 (7th Cir. 1997) (stating that “ [t]he one limitation

. . . is that the person is only liable to the extent that ‘unencumbered funds’ are available or acquired after the time in which that person becomes aware”) (citation omitted)

. Case: 17-20174 Document: 00514513428 Page: 12 Date Filed: 06/14/2018No. 17

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13 Willfulness may also be proved by evidence that “ the responsible person
act [ed] with a reckless disregard of a known or obvi ous risk that trust funds [would] not be remitted to the Government.” 33 A responsible person, for

examp le, acts with reckless disregard “by failing to investigate or to correct mismanagement after being notified that withholding taxes have not been duly remitted.” 34 C. On appeal, McClendon reasserts the argument he raised in his motion for reconsideration. H e argues that the district court , at most , could have granted summary judgment in the amount of $100,000 because that was the amount of available , unencumbered funds paid to non

- IRS creditors after he became aware of the unpaid taxes. Although McClendon al so reasserts his contention that his $100,000 loan to FPA was encumbered because its use was restricted to the May 2009 payroll, McClendon fails to challenge the district court’s reasons, which we find persuasive, for concluding that the funds were
not enc umbered under the jurisprudence interpreting § 6672. Because McClendon fails to identify any error in the district court’s legal analysis on this issue, it “is the same as if he had not appealed that [part of the] judgment.” 35 Accordingly, we affirm the dis trict court’s determination that McClendon’s $100,000 loan was unencumbered for purposes of § 6672 liability.
H owever, we vacate the remainder of the summary judgment because there is a genuine issue of material fact as to whether FPA had $4.3 million in available, unencumbered funds after McClendon learned of the unpaid taxes

. As detailed above, i n moving for summary judgment , the Government
submitted certified copies of the IRS’s § 6672 assessme nts against McClendon

33 Mazo , 591 F.2d at 1155 (citations omitted)

. 34 Id. (citations omitted).
35 Brinkmann v. Dallas County Deputy Abner , 813 F.2d 744, 748 (5th Cir. 1987). Case: 17-20174 Document: 00514513428 Page: 13 Date Filed: 06/14/2018No. 17

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14 for all twenty

- one quarters at iss ue , which amounted to approximately $4.3
million

. The burden of proof then shifted to McClendon to come forward with competent summary judgment evidence establishing an issue of material fact warranting trial 36 regarding whether he was a responsible person or acted willful ly under § 6672

. 37 A responsible person’s liability under § 6672 is limited to the amount of “available, unencumbered funds deposited into [the business’s] bank accounts after [the responsible person] became aware that the
accrued withholdin g taxes were due.” 38 Although the jurisprudence is unclear whether this liability limitation constitutes an affirm ative defense, it comes into play under the willfulness inquiry and, thus, is part of the taxpayer’s burden of proof. McClendon testified in hi s deposition and in his affidavit that , as soon as the board of directors of FPA discovered that the payroll taxes were unpaid, FPA stopped paying its creditors and vendors. He testified that, t o avoid using any of FPA’s existing or future funds, and to en sure that FPA’s staff employees received their payro ll checks in May 2009, he and his wife loaned FPA $100,000. 39 He further testified that FPA remitted all existing receivables and any new receivables it subsequently received directly to the IRS. McClendon additionally testified that t he amount of receivables FPA paid the IRS totaled over $400,000 , and that FPA also turned over to the IRS $250,000 in insurance proceeds it received on the insurance claim it filed for employee theft. 40 In

36 In re La. Crawfish Producers , 852 F.3d at 462.
37 Barnett , 988 F.2d at 1453.
38 Id. at 1459.
39 In addition, McClendon and his two fellow board members created a separate company, MST Interests, L.L.C., to use their own personal funds to pay FPA’s non

- IRS creditors. Whether such funds should be considered as part of FPA’s available , unencumbered funds was not addressed by the district court.
40 FPA also issued a check for $2,000 to its 401(k) plan manager (John Hancock Insurance Company) and a check for $1,840.42 to Dr. James Trippett. McClendon contended that these funds did not belo ng to FPA, but related to FPA’s 401(k) plan and were erroneously Case: 17-20174 Document: 00514513428 Page: 14 Date Filed: 06/14/2018No. 17

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15 addition to his affid avit and his deposition testimony, McClendon submitted copies of checks made out to the IRS for $161,634.77 dated July 31, 2009, and for $134,880.11 41 dated February 8, 2010, totaling $29 6,514.88 , which was just under the closing balance of $296,772

. 28 available in FPA’ s account at the end of July 2009. McClendon also submitted a copy of a check payable to the IRS for $274,749.31 dated August 10, 2010. The district court ’s decision indicates that it believed that McClendon was required to provide an “ accounting for Family Practice’s funds ” in order to satisfy his burden on summary judgment. A recent decision from the Eleventh Circuit, U nited States v. Stein, 42 is on point. In that case, the court held that , even in a tax case where the Government’s tax assessments are presumptively correct, the standa rd summary judgment rules set forth in Rule 56 apply

. 43 Specifically, the court held that a taxpayer’s self

- serving and uncorroborated , but not conclusory, statements in an affidavit or deposition can create an issue of material fact with respect to the correctness of the Government’s
assessments. 44 The court further held that i f there is any corroboration requirement for a taxpayer’s self

- serving testimony , it must come from a source
other than Rule 56. 45 We can find no such corroboration requirement under § 6672. Although, as the Government acknowledged during oral argument, § 6672 provides for a harsh remedy against taxpayers such as McClendon, who was just as much a victim of Stephen’ s criminality as the Government, the statute does not

deposited into FPA’s account. Whether these funds should be considered as part of FPA’s available, unencumbered funds was also not addressed by the district court.
41 The amount of this check was just under the closing balance of $137,314.88 available in FPA’s account at the end of August 2009.
42 881 F.3d 853 (11th Cir. 2018).
43 Id. at 856

- 57.
44 Id.
45 Id. at 858. Case: 17-20174 Document: 00514513428 Page: 15 Date Filed: 06/14/2018No. 17

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16 supplant the evidentiary burdens applicable in a summary judgment proceeding. We conclude that McClendon came forward with competent summary judgment evidence establishing a n issue of material fact warranting trial regarding whether the amount of available , unencumbered funds was sufficient to cover FPA’s tax obligation. Therefore, the district court’s summary judgment imposing over $4.3 million in penalties must be vacated. The Government asserts that this Court may affirm the district court’s summary judgment on an alternative basis. It contends that it is entitled to summary judgment on its claim that McClendon evidenced willfulness through “reckless disregard of a known or obvious risk that trust funds may not be remitted to the Government.” However, the district court did not reach the merits of this argument in granting summary jud gment

. T he district court should have an opportunity to consider the merits of the Governmen t’s reckless disregard argument in the first instance , and it will have that opportunity upon remand

. For the foregoing reasons, we REVERSE the denial of the motion for reconsideration, AFFIRM IN PART and VACATE IN PART the summary judgment, and REMAND the case for further proceedings consistent with this opinion. Case: 17-20174 Document: 00514513428 Page: 16 Date Filed: 06/14/2018No. 17

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17 EDITH H. JONES, Circuit Judge, concurring: I am p leased to concur in Judge Davis’s opinion. I add two observations. First, I don’ t see how, under the circumstances before us, the district court
could rule on now

- deceased Dr. Mc Clendon ’s “reckless” disregard of his t ax duties as a matter of law. Given that he and his partners employed Stephen for a decade before the CPA started embezzling, their reliance on his handling of their business affair s seems at least plausible. Second, it takes some chutzpah for the I RS, which submitted 285 pages of exhibits including FPA business records in support of summary judgment, now to assert McClendon did not bear “his” burden to articulate precisely how those records demonstrated whether there were insufficient funds to cover the unpaid withholding taxes and whether all available recei pts were in fact paid to the IRS. Is it too much to assume the tax collectors can read bank and financi al records adeptly, and that ethically, they wouldn’ t make claims without factual foundations of which they ought to be aware? To ch allenge the legal consequences of McClendon’ s $100,0 00 cash infusion is one thing; to claim, in the face of his sworn affidavit and documents, and their own access to corroborative f inancial records, that this isn’ t enough to raise a fact issu e is irrespon sible at best. Case: 17-20174 Document: 00514513428 Page: 17 Date Filed: 06/14/2018No. 17

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18 STEPHEN A. HIGGINSON, Circuit Judge, dissenting: I fail to see how the majority opinion’s analysis justifies its chosen disposition of the appeal. The majority opinion affirms the primary legal ground the district court gave for granting sum mary judgment in the Government’s favor, and takes no issue with the district court’s (correct) alternative holding. Compare McClendon v. United States , No. 4:15

- cv
- 2664, 2016 WL 6804864, at *3

– 4 (S.D. Tex. Nov. 17, 2016), with ante at 13. But the majority nonetheless “vacates” the grant of summary judgment because of an argument the majority agrees McClendon never raised in the original summary judgment briefing. See ante at 4

– 5, 13

– 15. “Although on summary judgment the record is reviewed de novo , this cou rt, for obvious reasons, will
not consider evidence or arguments that were not presented to the district court for its consideration in ruling on the motion.” Skotak v. Tenneco Resins,
Inc. , 953 F.2d 909, 915 (5th Cir. 1992). Because I would not require th e district court to anticipate and construct arguments on the nonmovant’s behalf, I would affirm the district court’s grant of summary judgment on the legally correct grounds stated in that order. The majority opinion also “reverses” the district court’s o rder denying reconsideration, apparently because that order applied the wrong legal standard. Ante at 9

– 10, 16. I agree that under Austin v. Kroger Texas, L.P. , 864 F.3d 326, 336

– 38 (5th Cir. 2017), the district court erred in relying on Rule 59(e). But I would administer the remedy dictated by Austin

— that is, “vacate

. . . and remand for the district court to reconsider [the] motion for reconsideration under the more flexible Rule 54(b),” giving the district court “discretion” to consider late

- raised argum ents (or not) based on the equities of
the situation. Id . at 337. To the extent that the majority opinion is requiring the district court to consider the late

- raised argument, the majority opinion Case: 17-20174 Document: 00514513428 Page: 18 Date Filed: 06/14/2018No. 17

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19 vitiates the district court’s inherent discretion under Rul e 54(b) “ to reconsider and reverse its decision for any reason it deems sufficient ,” id. at 336 (emphasis added), and prevents the district court from enforcing its own deadlines for filing and opposing motions. I would affirm the district court’s grant of summary judgment, vacate the district court’s denial of reconsideration, and remand for the district court to apply the correct Rule 54(b) standard. Because the majority takes a different path, I respectfully dissent. Case: 17-20174 Document: 00514513428 Page: 19 Date Filed: 06/14/2018