United States v. Hodges
684 F. App'x 722
| 10th Cir. | 2017Background
- Rex Hodges served as temporary manager of four nursing homes and later as manager of Sand Springs Care Center; in both roles he had check-signing authority and responsibility to deposit withheld payroll (trust‑fund) taxes to the IRS.
- Rex paid operating expenses and his salary but failed to remit withheld payroll taxes; IRS assessed § 6672 penalties against him for willful failure to pay over trust‑fund taxes.
- Federal tax liens attached to Rex’s interest in real property before he quitclaimed his interest to his wife, Lisa, on April 30, 2004; additional assessments and liens continued thereafter.
- United States sued to reduce the assessments to judgment and foreclose; district court granted summary judgment reducing assessments to judgment and authorized foreclosure only as to liens that attached before Rex’s transfer.
- The government later discharged the post-transfer liens and settled with Lisa; Rex appealed the judgment reducing assessments and the denial of Lisa’s Rule 12(b)(6) motion; the appeal challenges willfulness/reasonable‑cause under § 6672 and foreclosure on pre‑ and post‑transfer liens.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Liability under I.R.C. § 6672 (willfulness) | Rex: not willful; reasonable cause — funds used to rehabilitate homes, relied on owner Kading and Oklahoma statute | U.S.: Rex conceded responsible person and amount; willful because he knowingly preferred other creditors and took no steps to protect trust funds | Court: Affirmed judgment for U.S.; Rex was willful and failed to show reasonable‑cause exception |
| Application of the reasonable‑cause exception to § 6672 | Rex: urgent need to care for residents, reliance on Kading, state statute authorized borrowing and liens | U.S.: financial distress and reliance on others do not negate willfulness absent efforts to protect funds or external frustration of efforts | Court: Exception narrowly construed; Rex produced no evidence he tried to protect trust funds or was prevented by outside events; exception fails |
| Validity/enforceability of pre‑transfer tax liens | Rex: Lisa allegedly lacked notice so should take free of liability | U.S.: liens arise at assessment and attach to taxpayer’s property regardless of later transfer or transferee notice | Court: Pre‑transfer liens valid and enforceable against property after transfer; foreclosure affirmed |
| Claims re: post‑transfer liens, due process, nominee/fraudulent transfer | Rex/Lisa: alleged denial of Collection Due Process hearing and denied nominee/fraud claims | U.S.: government sought only pre‑transfer liens at summary judgment and later discharged post‑transfer liens | Court: Issues moot as post‑transfer liens were not adjudicated and later discharged; 12(b)(6) denial affirmed |
Key Cases Cited
- Finley v. United States, 123 F.3d 1342 (10th Cir. 1997) (recognizes narrow reasonable‑cause exception to § 6672 liability)
- Smith v. United States, 555 F.3d 1158 (10th Cir. 2009) (willfulness shown where responsible person knows taxes overdue and takes no action)
- Denbo v. United States, 988 F.2d 1029 (10th Cir. 1993) (cannot escape § 6672 liability by merely relying on assurances of others)
- United States v. Fior D'Italia, Inc., 536 U.S. 238 (2002) (tax assessments entitled to presumption of correctness)
- Russell v. United States, 551 F.3d 1174 (10th Cir. 2008) (transfer of property after lien attaches does not remove lien; property passes cum onere)