Noffke v. United States
129 Fed. Cl. 341
| Fed. Cl. | 2016Background
- Mark V. Noffke, a longtime CPA and CFO, served as CFO/executive vice‑president of BOOMj (Beyond Commerce) in 2009 and had check‑signing authority, opened/closed bank accounts, directed electronic transfers, supervised accounting staff, and negotiated settlements with creditors.
- BOOMj failed to timely deposit employment (trust‑fund) taxes for all four quarters of 2009; the IRS assessed § 6672 trust‑fund recovery penalties against Noffke for those quarters.
- Noffke paid the trust‑fund portion for one employee for each 2009 quarter and filed refund claims; he then sued in the Court of Federal Claims seeking refund and a declaration he was not a “responsible person.”
- The parties stipulated many facts (including Noffke’s authority and knowledge of delinquencies); trial testimony showed repeated discussions between Noffke and CEO Robert McNulty about unpaid taxes, McNulty directing payment priorities, and Noffke nevertheless executing payments to vendors while taxes remained unpaid.
- The court treated jurisdictional payment issues under Flora and the divisibility exception for § 6672 as satisfied because Noffke paid an amount attributable to one employee for each quarter, so the refund claim was considered on the merits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Noffke was a "responsible person" under 26 U.S.C. § 6672 | Noffke: mere check‑signing and CFO title are insufficient; McNulty was the ultimate decisionmaker who controlled payment priorities | U.S.: Noffke had substantive control over finances (signing authority, wires, account control, hiring/firing in accounting) and thus was a responsible person | Court: Noffke is a responsible person (authority to sign, direct transfers, open/close accounts, supervise accounting; Godfrey test applied) |
| Whether Noffke acted willfully in failing to pay withheld taxes | Noffke: emphasized McNulty's control and that he repeatedly urged payment (did not specifically contest willfulness) | U.S.: Noffke had actual knowledge of unpaid taxes and used available funds to pay other creditors, satisfying willfulness/reckless‑disregard standard | Court: Willfulness proven — actual knowledge and voluntary decision to pay vendors instead of IRS; liability established under § 6672 |
| Whether partial payment suffices for jurisdiction (Flora full‑payment rule) | Noffke proceeded after paying amount attributable to one employee per quarter | U.S.: did not contest proceeding on partial payment here | Court: Divisibility exception applies to § 6672; case may proceed after payment attributable to one employee for each quarter |
Key Cases Cited
- Diversified Grp. Inc. v. United States, 841 F.3d 975 (Fed. Cir. 2016) (discusses Flora full‑payment rule and divisibility exception)
- Flora v. United States, 362 U.S. 145 (Sup. Ct. 1960) (full‑payment jurisdictional requirement for tax refund suits)
- Godfrey v. United States, 748 F.2d 1568 (Fed. Cir. 1984) (articulates two‑part § 6672 test: responsible person and willfulness; authority to sign checks as important indicia)
- Boynton v. United States, 566 F.2d 50 (9th Cir. 1977) (§ 6672 divisibility reasoning allowing partial payment to confer jurisdiction)
- Ledford v. United States, 297 F.3d 1378 (Fed. Cir. 2002) (reiterates full‑payment rule as jurisdictional prerequisite)