Colosimo v. United States
630 F.3d 749
| 8th Cir. | 2011Background
- Colosimo was president/treasurer, board member, and 50% owner of C & C Distribution, which employed ~30 and leased space from C & C Realty.
- C&C Distribution failed to file unemployment and employment tax returns for 2000–2002; IRS notices brought the liability to light.
- Wiedner, the company’s outside accountant, initially thought a federal ID issue but later confirmed a large unpaid employment tax liability.
- After stopping operations in 2004, the company continued paying creditors, including over $300,000 to C&C Realty, into 2005.
- Colosimo sued the IRS for a refund of penalties; IRS counterclaimed for unpaid taxes; district court found Colosimo a responsible person and willful, awarding judgment to the IRS.
- On appeal, Colosimo argues lack of responsibility and willfulness due to Gillaspey’s actions and that the district court misweighed facts and credibility.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Colosimo was a 'responsible person' under §6672 | Colosimo lacked duty/authority due to Gillaspey | Colosimo held status and authority to avoid default | Yes, Colosimo was a responsible person |
| Whether Colosimo acted willfully in failing to pay over taxes | Colosimo didn’t know of the liability until June 2004 | Willfulness shown by payment to other creditors after knowledge | Yes, Colosimo acted willfully |
| Whether knowledge of the liability before June 2004 affected responsibility or willfulness | Knowledge before June 2004 is not required for responsibility | Knowledge can influence willfulness; post-notice payments show willfulness | Knowledge irrelevant to responsibility; willfulness proven by post-notice payments |
Key Cases Cited
- Slodov v. United States, 436 U.S. 238 (U.S. 1978) (trust funds held in trust and accountability of officers)
- Ferguson v. United States, 484 F.3d 1068 (8th Cir. 2007) (responsible person must have status, duty and authority; willfulness defined)
- Bart on v. United States, 988 F.2d 58 (8th Cir. 1993) (knowledge of liability irrelevant to responsible-person status)
- Honey v. United States, 963 F.2d 1083 (8th Cir. 1992) (willfulness includes preferred-creditor payments; risk knowledge)
- Jenson v. United States, 23 F.3d 1393 (8th Cir. 1994) (subordinate malfeasance does not relieve a responsible person)