Opinion ID: 677125
Heading Depth: 1
Heading Rank: 1

Heading: prior proceedings and factual background

Text: 2 Marvin James Schiff (Schiff) was the owner of real property in Las Vegas and a hotel and casino built on the property. Schiff formed a corporation which owned and operated the Grand Opening Motor Inn, dba Nevada Palace Casino and Motor Inn (the Nevada Palace). Robert F. Mariscal (Mariscal) became Chairman of the Board, the principal stockholder, a principal of the corporation, and the gaming licensee and operator of the hotel and casino. Eugene Lucas (Lucas) became president, a principal stockholder, and general manager and was a co-defendant in this action, but settled with the United States prior to trial. Schiff was the landlord for the Nevada Palace and charged rent of $80,000 per month. During its entire operating life, the Nevada Palace experienced severe financial difficulties. Its rental payments to Schiff fell into arrears early on, and it also had difficulty meeting payroll and other obligations. 3 In March 1980, Robert Alan Jones (Jones) was hired as a consultant to Mariscal and as a liaison between Mariscal and Schiff. At trial, Jones testified that Mr. Mariscal and Mr. Schiff jointly asked [him] if [he] would briefly help Mr. Mariscal on a consulting basis to put together a new management and operational team and to develop a financial plan for the hotel and casino operations. After this offer, Mr. Mariscal and [Jones] signed a one-page consulting agreement in which [Jones] agreed that [he] would report to [Mariscal] and provide consulting services on and off the premises, and [Mariscal] agreed to compensate [Jones] for [his] time and [his] efforts. Mariscal terminated Jones at the end of April 1980, and never compensated him for his services. 4 In April 1984, Schiff and Jones were assessed in the amount of $79,460.83 as responsible persons under IRC Sec. 6672 for failure to pay over federal income and social security taxes withheld from the pay of the Nevada Palace employees for the first and second quarters of 1980. Both were subsequently assessed with interest in the amount of $26,697.31 on December 15, 1986. 5 On April 11, 1990, the United States filed the instant civil action in the District Court for the District of Nevada against Jones and Renate Schiff, Executrix of the Estate of Marvin James Schiff. Pursuant to Internal Revenue Code (IRC) Sec. 6672 1 , the United States alleged that Schiff and Jones were responsible persons who willfully failed to collect, truthfully account for and pay over to the United States taxes withheld from the employees of the Nevada Palace, for the taxable periods ending March 31, 1980 and June 30, 1980. The magistrate judge, finding that Schiff and Jones were responsible persons and willful, held them liable to the United States in the amount of $79,460.83 each, plus interest. Both Schiff and Jones appeal.