OPINION
Appellants the State of Texas; the City of Houston, Texas; and the Transit Authority of Houston, Texas (collectively, the “State”) sued appellees Steve Crawford and Robert Wills, as responsible individuals, for the sales tax liability of S.L. Crawford Construction, Inc. Seeking to establish appellees’ individual liability under section 111.016(b) of the Texas Tax Code, the State asserted that Crawford and Wills willfully failed to pay or cause to be paid the delinquent sales tax amounts. Following a bench trial, the district court concluded that Crawford and Wills did not act willfully, and the court entered judgment that the State take nothing by its suit. The State appeals, asserting that: (1) the district court erred in construing the willfulness requirement of section 111.016(b) to encompass knowledge, but not reckless disregard of the risk that taxes were not remitted, (2) the defendant taxpayers should have had the burden of proof on the issue of willfulness, and (3) the evidence was legally and factually insufficient to *535 support the district court’s judgment on the issue of willfulness. We conclude that the district court properly placed the burden of proof on the State to establish willfulness. As to the State’s first point on appeal, we agree that the term “wilfully” in section 111.016(b) encompasses both knowledge and reckless disregard. However, because we find the evidence sufficient to establish that the defendants did not act with knowledge or reckless disregard, we affirm the judgment of the district court.
Factual and Procedural Background
S.L. Crawford Construction, Inc. (the “Company”) was engaged in the construction business in the Houston area, specializing in the interior finish-out of commercial properties. Appellees Crawford and Wills were officers of the Company during the events at issue in this suit. Crawford formed the Company in 1982, and was its president until 2001 when he became the chief executive officer. He had ultimate decision-making authority on all Company matters. Wills joined the Company in 1996, and was its chief financial officer until 2001 when he became the president. He reported solely to Crawford. Crawford and Wills made all financial decisions, had check-writing authority, signed the Company’s sales tax returns, and had the authority to hire and fire employees.
In November 2000, the Texas Comptroller of Public Accounts commenced a sales tax audit of the Company for the period of October 1, 1997, through September 30, 2000. By mid-January 2001, the Comptroller had narrowed its inquiry to two construction jobs, only one of which — the “McCord-Reliant job” — is at issue in this suit.
In its regular course of business, the Company performed jobs that were subject to sales tax and jobs that were not subject to sales tax. Similarly, some of the work performed for the client on the McCord-Reliant job was taxable, and some was non-taxable. The job at issue was taxable, and the Company collected sales tax from the client in the amount of $158,912.27. However, the Company’s bookkeeper, Linda Delgado, incorrectly marked the job as non-taxable in the Company’s monthly sales tax worksheets. As a result of this error, the Company’s sales tax returns and payments to the Comptroller for the months that included the McCord-Reliant job did not include the sales tax collected on the McCord-Reliant job. Thus, the sales tax was collected by the Company but not remitted to the State.
Vernon Wallace, a senior auditor for the Comptroller, conducted the sales tax audit. When the audit began, Wills executed a limited power of attorney authorizing John P. Wade, an outside certified public accountant, to act on behalf of the Company with regard to sales tax matters during the audit period. According to Wills, he “turned everything over” to Wade. During the course of the audit, Wallace dealt only with Wade in obtaining documentation and an explanation of the Company’s sales tax collections and payments.
By letter dated March 7, 2001, Wallace informed Wade that the audit was complete and attached documents showing an unpaid tax amount on the McCord-Reliant job of $179,748.17. Wills was copied on the letter. By letter dated April 2, 2001, Wade formally requested a redetermination hearing on the audit results. Wade did not contest that the McCord-Reliant job was taxable or that the Company had not paid sales tax on the job. Instead, Wade stated the Company’s intention “to submit documentation that would show the sales tax applicable to this job was timely paid by [the Company] with a credit from previous periods.” In response, as part of *536 the Comptroller’s administrative hearings process, the Comptroller informed Wade that he had sixty days in which to submit documentation to support the Company’s claim regarding preexisting credits. Wade did not provide any supporting documentation during the sixty-day period or at any other time. On September 28, 2001, the Comptroller issued a Position Letter regarding the audit, rejecting Wade’s arguments on the McCord-Reliant job because the Company “has presented nothing to identify and to have properly determined any overpayment [or] any period in which the overpayment allegedly occurred.” Pri- or to any hearing before the administrative law judge taking place, Wade announced, by letter dated October 16, 2002, that the Company was withdrawing its petition for redetermination and requested that the hearing be dismissed. By the Comptroller’s order, the dismissal became final on November 15, 2002, and the tax, penalty, and interest amounts were “due and payable within twenty (20) days thereafter.”
The Comptroller sent the Company notice of its order, but sent the notice to the wrong address. The Company had changed addresses at some point in 2001 or earlier in 2002. According to Crawford and Wills, they did not become aware of the final determination (or Wade’s request for dismissal) until they discovered that the Comptroller had frozen the Company’s bank accounts. 1 On that date, they went in person to the Comptroller’s Houston branch office and proposed an initial payment of $70,000 and the remainder to be paid within “the next few months.” On February 11, the Comptroller obtained $70,000 from the Company’s bank account. Before the end of that month, due to the hold on the Company’s accounts and its impact on the Company’s payment capabilities, lines of credit, and customer perception, the Company went out of business.
On June 2, 2003, the Comptroller issued a jeopardy determination against Crawford and Wills in their individual capacities for $179,743.17, plus penalties and interest. According to Jeremy Davies, an accounts examiner for the Comptroller, the determination to impose individual liability was based on records showing that during the time period at issue both Crawford and Wills were officers of the Company, signed the sales tax returns, and had the authority to sign Company checks. The tax liability was subsequently amended to $158,-912.27 — the amount actually collected by the Company — and then reduced by a portion of the $70,000 already paid.
The State filed suit against Crawford and Wills in district court on January 23, 2004, and the case was tried without a jury on September 10 and 11, 2007. At trial, under the authority of section 111.016 of the Texas Tax Code, the State sought $95,817.75 in unpaid sales tax, plus $25,473.01 in penalties and $62,726.29 in interest. Crawford and Wills conceded at trial that they were “responsible individuals” with the requisite control over the sales tax payments. See Tex. Tax Code Ann. § 111.016(d)(1) (West 2008) (defining “responsible individual”). Appellees also stipulated at trial to the amounts alleged due and that the Company had collected the sales tax at issue. See id. § 111.016(a) (liability applies as to “the full amount collected plus any accrued penalties and *537 interest”). The only issue was whether Crawford and Wills “wilfully” failed to pay or cause to be paid the sales tax from the McCord-Reliant job. See id. § 111.016(b).
The district court entered judgment on October 2, 2007, that the State take nothing by its suit. In its conclusions of law, the district court ruled that the term “wil-fully” requires a higher mental state than reckless disregard and that the State has the burden of proof on the issue of willfulness. The State presents four points on appeal: (1) the willfulness requirement of tax code section 111.016(b) should be construed in accordance with federal law so as to encompass both knowledge and reckless disregard, (2) defendant taxpayers should bear the burden of proof to establish their lack of willfulness, (3) the trial court’s finding that Crawford and Wills had no actual knowledge of their failure to pay collected taxes is not supported by legally or factually sufficient evidence, and (4) the trial court’s finding that Crawford and Wills did not recklessly disregard the risk that collected taxes would not be paid is not supported by legally or factually sufficient evidence.
Applicable Law
Under section 111.016(a) of the tax code, the Company was obligated to remit to the State sales tax collected from its clients on taxable jobs. In addition, the Company held the collected sales tax “in trust” for the State until the taxes were remitted to the State:
(a) Any person who receives or collects a tax or any money represented to be a tax from another person holds the amount so collected in trust for the benefit of the state and is liable to the state for the full amount collected plus any accrued penalties and interest on the amount collected.
Id. § 111.016(a). 2 The State, in this suit, attempts to recover the Company’s sales tax delinquency from Crawford and Wills in their individual capacities, as “responsible individuals” of the Company. Under section 111.016(b) of the tax code, a responsible individual can be held hable for a company’s collected, but unremitted, sales tax if he “wilfully” fails to pay the tax:
(b) With respect to tax or other money subject to the provisions of Subsection (a), an individual who controls or supervises the collection of tax or money from another person, or an individual who controls or supervises the accounting for and paying over of the tax or money, and who wilfully fails to pay or cause to be paid the tax or money is liable as a responsible individual for an amount equal to the tax or money not paid or caused to be paid.
Id. § 111.016(b).
Definition of Willfulness under Section 111.016(b)
The State contends that the district court misconstrued the term “wilfully” in section 111.016(b). In its Conclusions of Law No. 5 and No. 6, the district court held that if the defendants did not have “actual knowledge,” the statute’s willfulness standard was not met. In its first point on appeal, the State asserts that the term “wilfully” encompasses both actual knowledge and a responsible individual’s reckless disregard of the risk that taxes may not be remitted to the government.
Section 111.016(b) was enacted by the legislature in 1995, imposing liability on individuals for a company’s unpaid state taxes.
See
Act of May 3, 1995, 74th Leg., R.S., ch. 87, § 1, 1995 Tex. Gen. Laws 872,
*538
872. This court has not yet addressed the meaning of the term “wilfully” in this statute.
3
The State’s position that willfulness under section 111.016(b) includes both actual knowledge and reckless disregard is based on the assertion that federal tax law defines willfulness in that manner and the legislature modeled section 111.016(b) after the federal tax law. When a Texas statute is modeled after a federal statute, we presume that the legislature intended to adopt the federal courts’ construction of the federal statute.
City of Garland v. Dallas Morning News,
Section 6672 of the Internal Revenue Code (the “Code”) imposes individual liability on a person who is required to collect, truthfully account for, or pay a tax but who “willfully fails” to do so.
See
26 U.S.C. § 6672(a) (2000). According to federal case law, willfulness under section 6672(a) requires “a voluntary, conscious, and intentional act, but not a bad motive or evil intent.”
Morgan v. United States,
To determine whether the Texas Legislature modeled section 111.016(b) of the tax code after section 6672(a) of the Internal Revenue Code, we look at the plain language of the statutes.
See State v. Shumake,
Indeed, Crawford and Wills concede that section 111.016(b) is, as a general matter, modeled after the federal statute, and that the term “willfully” in the federal statute encompasses reckless disregard. However, they argue that the term “wilfully” in section 111.016(b) — unlike the rest of the subsection — was deliberately
not
modeled after federal law. Crawford and Wills point out that the presumption that the Texas Legislature adopted the federal courts’ construction of federal law arises “absent some indication to the contrary.”
See Chiriboga v. State Farm Mut. Auto. Ins. Co.,
For “some indication” that the legislature intended the meaning of the term “wilfully” not to be modeled after federal case law, Crawford and Wills rely on changes made to proposed section 111.016(b) as it was making its way through the legislative process. As originally introduced, Senate Bill 401 set forth section 111.016(b) as follows:
A person required to collect, truthfully account for, or pay over a tax who fails to collect, truthfully account for, or pay over the tax, or who knowingly attempts in any manner to evade or defeat the tax or payment of the tax, is hable for a penalty equal to the total amount of the tax evaded, not cohected, not accounted for, or not paid over.
Tex. S.B. 401, 74th Leg., R.S. (1995) (introduced version) (emphasis and footnote added). Unlike the version of the statute ultimately enacted, which uses the term “wilfully,” the version of the statute originally filed as a bill in the senate used the term “knowingly.” Crawford and Wills present two reasons why this change evidences a contrary legislative intent sufficient to rebut the presumption that the term “wilfully” is to be interpreted consistently with federal case law construing section 6672(a) of the Code.
First, Crawford and Wills assert that two key changes were made to proposed section 111.016(b): (1) the provision’s applicability became limited to “tax or other money subject to the provisions of Subsection (a)”; and (2) “knowingly” was changed to “wilfully.” Compare id., with Tex. Tax Code Ann. § 111.016(b). As to the former change, subsection (a) specifically governs sales tax amounts that a person “receives or collects” and, therefore, holds in trust *540 for the State. See Tex. Tax Code Ann. § 111.016(a). Thus, this change to proposed section 111.016(b) was a narrowing of the statute’s scope — from any taxes owed, to only those amounts actually received or collected. Crawford and Wills contend that because the former change was a narrowing of the statute’s scope, the latter change — “knowingly” changed to “wilfully” — must have been intended as a narrowing of the scope of the statute as well.
However, Crawford and Wills cite to no authority for their contention that the narrowing of one aspect of a proposed statute indicates that other changes to the statutory language in the legislative process must also be intended to have a similar narrowing effect. Without additional guidance in the statutory text or the legislative history, it is just as likely that the legislature intended to narrow the statute’s scope in one regard by effecting the former change, while simultaneously broadening the statute’s scope in another regard via the latter change. We recognize that “when the Legislature looks to another jurisdiction’s statute, but modifies rather than adopts some of its provisions, it does so purposefully.”
Helena Chem. Co. v. Wilkins,
Next, Crawford and Wills rely on Texas case law defining the term “willful” in other contexts. They focus particularly on language in the Texas Supreme Court’s opinion in
Luna v. North Star Dodge Sales, Inc.,
We note, as an initial matter, that the “continuum” language of the Texas Supreme Court is likely dicta as to the term “willful,” given that the court limited its holding to a comparison between the terms “gross negligence” and “knowingly.”
See id.
at 117-18. We also note that the court did not explicitly announce what positions the terms “knowingly” and “willful” hold in relation to each other on the continuum.
See id.
at 118. Regardless, we are not persuaded that the court’s placement of the term “willful” in a continuum is to be applied unwaveringly beyond
Luna’s
context of mental anguish damages
*541
under the DTPA. The term “willful” in a statute is “a word of many meanings, its construction often being influenced by its context.”
Paddock v. Siemoneit,
Thus, contrary to Crawford’s and Wills’s position, the continuum introduced in Luna that seems to have placed “willful” between “knowing” and “intentional” has not been universally applied beyond DTPA claims or the imposition of mental anguish damages. We cannot conclude, therefore, that the Texas Supreme Court’s treatment of willfulness in Luna overcomes the presumption that the term “wil-fully” in section 111.016(b) should be interpreted in accordance with federal courts’ interpretation of section 6672(a) of the Code. Consequently, we conclude that because the term “willfully” in section 6672(a) has been consistently interpreted to encompass both knowledge and reckless disregard, the term “wilfully” in section 111.016(b) of the tax code likewise encompasses both knowledge and reckless disregard.
Our conclusion finds support in both the object sought to be attained by section 111.016(b) and the consequences of a construction to the contrary. Tex. Gov’t Code Ann. § 311.023(1), (5) (West 2005);
Helena Chem. Co.,
For purposes of section 111.016(b) of the tax code, we hold that a responsible individual acts “wilfully” if either he has knowledge that taxes are due to the State and yet uses unencumbered funds to pay other creditors, or he recklessly disregards the risk that the taxes may not be remitted to the government.
See Logal,
Burden of Proof on Willfulness under Section 111.016(b)
The district court’s Conclusion of Law No. 7 states, “Under the facts of this case, the Comptroller has failed to carry its statutory burden of proof to show that Defendant ... willfully failed to pay or cause[] to be paid the tax or money, as required by Tax Code § 111.016(b).” In its second point on appeal, the State asserts that the trial court’s placement of the burden of proof for the issue of willfulness on the government rather than on the individual defendants was in error.
The State relies, first, on section 111.013 of the tax code for its assertion. Under section 111.013, in a suit involving the collection of state tax, a certificate of the Comptroller showing the tax delinquency is prima facie evidence of: “(1) the stated tax or amount of the tax ...; (2) the stated amount of penalties and interest; (3) the delinquency of the amounts; and (4) the compliance of the comptroller with the applicable provisions of this code in computing and determining the amount due.” Tex. Tax Code Ann. § 111.013(a) (West 2008). The statute does not, however, make the certificate prima facie evidence on issues other than those stated. In
Parker v. State,
Section 111.016(b) makes a responsible individual liable for non-payment of collect
*543
ed taxes, but only if the non-payment is ■willful.
See
Tex. Tax Code Ann. § 111.016(b). This court’s refusal in
Parker
to shift the burden to the individual taxpayer on the issue of whether taxes were collected applies equally to the issue of whether the individual acted willfully. A tax certificate does not prove the mental state of a responsible individual. When the State litigates, it occupies the same position as any other litigant, except where specific provision is made to the contrary.
Texas Dep’t of Corr. v. Herring,
Next, the State cites to federal case law interpreting section 6672. Under federal case law, once the government offers an assessment into evidence, the burden of proof is on the taxpayer as to both his responsible-person status and his willfulness.
See Barnett,
The placement of the burden of proof on the taxpayer in federal case law stems from the “uniform rule” in federal tax law that the taxpayer must pay the full amount of a tax assessment before he can challenge its validity in court.
See Psaty v. United States,
In contrast, there is no “uniform ride” under Texas law that where the State seeks to impose individual liability under section 111.016(b), the individual must pay the tax delinquency and then seek a refund to contest his liability. See Tex. Tax Code Ann. § 111.010 (West 2008) (attorney general shall bring suit to recover delinquent state taxes). Thus, the original reasoning behind the federal case law’s placement of the burden of proof on taxpayers in a section 6672 action is inapplicable to a tax code section 111.016 action. We decline to extend the federal burden-shifting rule to section 111.016 actions. 5 Regardless of *544 whether the State introduces a certifícate of the Comptroller showing the tax delinquency, and thus establishes prima facie evidence on the matters set forth in section 111.013 of the tax code, we hold that the State retains the burden of proof on the issue of willfulness under section 111.016(b) of the tax code.
Evidentiary Sufficiency
In its final two points on appeal, the State challenges the district court’s holding that Crawford’s and Wills’s failure to pay the collected sales tax on the McCord-Reliant job was not willful. The State bases its challenges on both legal and factual sufficiency of the evidence. Findings of fact in a bench trial are reviewable for legal and factual sufficiency by the same standards as applied in reviewing a jury’s findings.
Catalina v. Blasdel,
In reviewing a legal sufficiency challenge, we review the evidence in the light favorable to the verdict, crediting favorable evidence if reasonable jurors could and disregarding contrary evidence unless reasonable jurors could not.
City of Keller v. Wilson,
In reviewing a factual sufficiency challenge, we must consider and weigh all the evidence in the record, both supporting and against the finding, to decide whether the judgment should be set aside.
Pool v. Ford Motor Co.,
“Knowledge” prong of willfulness
Under the “knowledge” prong of willfulness, according to federal ease law interpreting section 6672 of the Internal Revenue Code, willfulness is proven by evidence that the responsible person had knowledge that taxes were due and yet paid other creditors.
See Barnett,
In its findings of fact, the district court stated, “During the audit period and through the time the Company ceased operations in March 2003, neither Mr. Crawford nor Mr. Wills knew that sales tax had actually been charged to and collected ... on the McCord-Reliant job.” (Emphasis added). In its third point on appeal, the State challenges this finding based on legal and factual sufficiency. Wills testified that he did not know tax was collected on the McCord-Reliant job until after the Company ceased operations. Crawford testified that he first learned there was a tax issue on the McCord-Reliant job when the Company’s assets were frozen. The State questions the credibility of the defendants’ statements, but presented no evidence di *545 rectly controverting their disavowment of actual knowledge. The trial court is the sole judge of witness credibility and the weight to be given to testimony. Navas ci-ta Res., Ltd. v. Heep Petroleum, Inc., 212 5.W.3d 463, 468 (Tex.App.-Austin 2006, no pet.).
Wallace, testifying for the State, admitted that all his contact regarding the tax audit was with Wade. The State asserts that Wade’s knowledge that tax was “collected and not remitted” on the McCord-Reliant job was made known to Crawford and Wills, either by an actual communication or by imputed knowledge. Regarding an actual communication of the information, Wills testified that he and Crawford had discussions with Wade regarding the audit. However, there is no evidence that these discussions included the particular issue alleged by the State. Wills testified that the discussions focused on the other tax matter at issue in the audit, and that Wade never informed him or Crawford that the Company had actually collected the tax on the McCord-Reliant job. Crawford’s testimony was to the same effect.
The State contends that even if Wade did not communicate the specifics of the McCord-Reliant tax delinquency, his knowledge should be imputed to Crawford and Wills under principles of agency. Wade’s power of attorney authorized him to act on behalf of the Company’s interests as a taxpayer. However, assuming that Wade’s knowledge can be imputed to the Company under agency principles, the State provides no authority for the proposition that the Company’s imputed knowledge can, in turn, be imputed to Crawford and Wills as the Company’s officers.
See
Restatement (Third) of Agency § 5.03 cmt. g (2006) (“Notice of facts that a principal knows or has reason to know is not imputed downward to an agent.”). It appears the State is conflating the “responsible person” and “willfulness” elements for liability under section 6672 of the Code. Whether an individual is a responsible person may involve agency principles.
See Gustin v. United States,
Next, the State points to the information contained in the Comptroller’s March 7, 2001, sales tax audit, a copy of which was sent to Wills. Wills admitted in his testimony that because of his receipt of the audit, he and Crawford knew there was a tax delinquency. The State argues that this conclusively establishes willfulness because the evidence showed vendors and employees were paid with Company funds after that date. Crawford and Wills argue in response that while the audit showed a tax delinquency, neither knew that the tax had actually been collected. In fact, Wallace admitted in his testimony that nothing in the audit communicated that tax on the McCord-Reliant job had been collected but not remitted. The audit report had a “zero” on its “Tax Collected not Remitted” line. Thus, there was sufficient evidence to support a finding that Crawford and Wills never obtained actual knowledge that tax had been collected until the Company went out of business. 6
*546
In addition to the evidence being sufficient to support the district court’s finding that Crawford and Wills had no knowledge that the tax was actually collected, there was sufficient evidence that Crawford and Wills did not have knowledge that the tax delinquency on the McCord-Reliant job had become due.
7
Following receipt of the audit results in March 2001, the Company, through its agent Wade, disputed its obligation to pay the tax delinquency and sought resolution through the Comptroller’s administrative hearings process. Consequently, the tax amount did not become “due and payable” until after the Comptroller’s decision in the redetermination hearing became final.
See
Tex. Tax Code Ann. § 111.0081(c) (West 2008). Knowledge of the March 7, 2001, audit report, therefore, was insufficient to conclusively establish that Crawford or Wills “wilfully fail[ed] to pay or cause to be paid the tax,” because the tax amount had not yet become due.
See Logal,
In accordance with the Comptroller’s order, the tax became “due and payable” within 20 days after November 15, 2002. However, the Comptroller’s notice was sent to the wrong address.
8
The earliest date on which any evidence shows either Crawford or Wills had actual knowledge of a final determination of tax due on the McCord-Reliant job is January 15, 2003, when apparently Wills received a faxed letter from the Comptroller.
9
Once a responsible individual becomes aware of a past due tax liability, he is considered to act willfully if “he fails to use all unencumbered funds that come into his possession thereafter to pay the delinquent taxes.”
Huizinga,
The evidence is sufficient to support the district court’s finding that Crawford and Wills did not have the requisite knowledge to satisfy the “wilfully” requirement of section 111.016(b). The evidence at trial would enable reasonable and fair-minded people to reach the district court’s conclusion, and the evidence that supports the district court’s finding of lack of knowledge is not so against the great weight and preponderance of the evidence as to be clearly wrong and unjust.
“Reckless disregard” prong of willfulness
Willfulness can also be proven if the responsible individual acted with reckless disregard of a known or obvious risk that tax would not be paid over to the government.
Morgan,
Although the district court incorrectly concluded that willfulness under section 111.016(b) does not encompass reckless disregard, the court made a finding of no reckless disregard in its Conclusion of Law No. 3: “Mr. Crawford and Mr. Wills did not act recklessly in relying on Ms. Delgado and Mr. Wade with regard to the sales tax responsibilities of the Company.” In its fourth point on appeal, the State challenges the legal and factual sufficiency of the district court’s finding of a lack of reckless disregard. Regarding Delgado, the bookkeeper who made the error that resulted in the tax nonpayment, Wills testified that she routinely allocated sales as taxable or nontaxable during the four years she had been at the Company, and that she had fifteen years of experience in construction accounting prior to her employment with the Company. She had been with the Company during the previous audit, during which period the Company paid over four million dollars in sales tax to the Comptroller, and the audit showed an error rate of only one-half of one percent. As for Crawford’s and Wills’s reliance on Wade, Wills testified that in addition to handling an IRS audit “100 percent clean,” Wade properly handled the “federal tax returns and the franchise tax returns and the information returns.” The State, in response, presented no evidence that prior to its freezing the Company’s bank account, Crawford or Wills had reason to suspect that reliance on Delgado or Wade would be reckless.
The State argues that Crawford and Wills acted recklessly by not doing their own research into the tax delinquency upon obtaining knowledge of the 2001 audit. The cases the State cites, to support its argument, that conclude the responsible person under section 6672 of the Code acted willfully under the “reckless disregard” prong are distinguishable.
10
In
Mazo,
the responsible individuals contended that they relied on a company employee who misled them by asserting that he would “take care” of the tax delinquencies, even though that employee had been originally responsible for the tax delinquencies in the first place.
See Mazo,
To satisfy the reckless disregard prong, there must be a “known or obvious risk” that tax is owed but not paid.
See Morgan,
The evidence is sufficient to establish that Crawford and Wills did not have the requisite reckless disregard to satisfy the “wilfully” requirement of section 111.016(b). The evidence at trial would enable reasonable and fair-minded people to reach the district court’s conclusion, and the evidence that supports the district court’s finding of lack of recklessness is not so against the great weight and preponderance of the evidence as to be clearly wrong and unjust.
Conclusion
We conclude that willfulness under section 111.016(b) of the tax code encompasses both actual knowledge and reckless disregard, and we, therefore, vacate the district court’s Conclusions of Law No. 5 and No. 6. We also conclude that the State bears the burden to establish a responsible individual’s willfulness under section 111.016(b). Finally, we conclude that the evidence was legally and factually sufficient to establish that Crawford and Wills did not willfully fail to pay or cause to be paid the delinquent tax on the McCord-Reliant job. We affirm the judgment of the district court.
Notes
. There is some confusion in the record as to when Crawford and Wills discovered that the Company's accounts were frozen. Crawford testified that he and Wills discovered that the accounts were frozen on February 3, 2003. According to the trial court's findings of fact, Crawford and Wills learned the Company’s accounts were frozen in mid-January. The State has not challenged the trial court’s findings of fact regarding this issue on appeal, and argues based on the discovery occurring in mid-January.
. The term “person” is generally defined to cover business entities. See Tex. Tax Code Ann. § 101.002(a) (West 2008); Tex. Gov’t Code Ann. § 311.005(2) (West 2005).
. “The district courts of Travis County have exclusive, original jurisdiction of a suit arising under this section.” Tex. Tax Code Ann. § 111.016(c) (West 2008).
.
See, e.g., In the Matter of Humphreys,
. According to the Third Circuit, the public policy behind the taxpayer bearing the burden
*544
of proof-on the issue of willfulness specifically-is that "the presumption appropriately requires that corporate officers explain their failure to perform duties imposed upon them by law."
Psaty v. United States,
. The State also points to two admissions by Wills to argue that he knew the tax was collected. Wills admitted in his deposition to being aware the audit showed "there was tax not remitted to the State for the McCord project.” However, this admission did not demonstrate knowledge that the tax was collected. Also, Wills admitted at trial that the *546 $158,912.27 amount was included on invoices and monthly sales tax reports and was deposited into the Company’s operating account. However, Wills did not admit to his having knowledge of these facts prior to the State’s filing of the lawsuit below.
. It is not clear from the plain language of section 111.016 that knowledge that tax was collected constitutes willfulness, or that a lack of such knowledge proves a lack of willfulness. See Tex. Tax Code Ann. § 111.016(a), (b). However, the State has not challenged on appeal the district court’s conclusion that the defendants’ lack of willfulness regarding whether the tax had been collected was sufficient to refute their willfulness under section 111.016(b), and, because we find the evidence sufficient to show that Crawford and Wills had no knowledge (and did not recklessly disregard) that the tax was due, we decline to reach the issue.
. The State does not dispute this fact.
. Crawford testified that the hold on the Company’s accounts occurred on February 3, 2003, which, he alleges, is the first time he received any notification that tax on the McCord-Reliant job was due. Although there is no evidence in the record before us of another date on which the hold may have occurred, the district court found that it occurred in mid-January 2003. The court may have based its finding on (1) Wills’s testimony that until he "got the letter of freeze on the accounts,” he had not heard or seen anything to notify him that the Comptroller’s determination was final, and (2) Wills's letter to the Comptroller, dated January 22, 2003, that proposes a payment plan "in response to my conversations with Kim Bridges of your office and following guidelines described to me in her faxed letter of 1/15/03.” We need not consider Crawford’s testimony of a February 3 hold because the State has not challenged the district court’s findings on this issue on appeal. Even if we were to determine that Wills learned of the tax due on January 15 and yet the hold did not occur until February 3, we would still find the evidence sufficient to show Wills’s lack of willfulness under section 111.016(b) because the State presented no evidence that, during the time period subsequent to January 15, 2003, the Company paid unencumbered funds to creditors other than the State.
. We note that federal case law may not always be ideal authority on the issue of willfulness, since under section 6672 of the Internal Revenue Code the taxpayer bears the burden to establish lack of willfulness, and, as we concluded above, for purposes of section 111.016(b) the State has the burden of proof on willfulness.