*1 634 See, Resources, Ltd., e.g., 611, of fact. United States v. Chelsea 947 F.2d 618 Bedford (2d Cir.1983) (2d Cir.1991) (mere
Associates, 895, presence 713 F.2d 905 of evidence to (statements interrogatories support contrary in answers to an inference to that drawn proposed findings of fact are admissions the trier of fact does not mean that the erroneous). against party findings clearly admissible that made The dis- them); Building Corp. Bertha v. unpersuaded proved National trict court was that BRI (1957). 833, Corp., advances, Theatres 248 F.2d 836 that it the claimed made and we admissions, nonhearsay Such statements are see no error in the court’s allocation of the however, only against, by, when offered proof burden of and no clear error in its party that made them. findings of fact. B. Alleged Potamkin Admission D.Potamkin’s Motion Sanctions pursues
BRI also its contention that decline to award sanctions We Potamkin admitted that BRI against had made the pursuing BRI appeal. this payments advance issue BRI’s counter Though reject arguments we all of its on alleged frivolous, claims when Potamkin in its com appeal, some them are not plaint that we do not conclude that BRI exhibited “vexa tious tactics or manifest bad faith.” Mareno June, 1987, recently ... [a]s as BRI sent Rowe, (2d 1043, Cir.1990), v. 910 F.2d through
invoices to Potamkin the mails for denied, 1028, 681, 112 cert. U.S. S.Ct. premiums allegedly policies on BRI due (1991). L.Ed.2d 673 Home, purportedly placed claiming that Potamkin still owes Home sums due premiums. Such invoices were false CONCLUSION fraudulent, however, in that Potamkin We have considered all of BRI’s conten- previously payments has made all due to appeal tions on and have found them to be Home and Home has confirmed to Potam- without merit. The of the district kin that premium Potamkin has made all court is affirmed.
payments required by Home and does not any premiums owe to Home. ¶ 72.)
(Complaint special plainly master ruling
did not err in allegations that the premium
“Potamkin” had pay- “made all ments” was not a pay- concession that those America, UNITED STATES of ments had been made BRI. Plaintiff-Appellee, Arguments C. Other v. arguments BRI’s other include Mary REM, Syma Lichter, and Nathan contention that even without consideration of Hanfling, as executors of the Estate History, “review of the Record in its Henry Rem, Defendants, entirety (cid:127)... leads to the ineluctable conclu premium sion that BRI made the advances Rem, Defendant-Appellant. Gerard ” on behalf of Potamkin.... This is no more No. Docket 93-6229. argument than weight an of the evidence favored weight BRI. The Appeals, United States Court of argument evidence is a matter for to the Second Circuit. fact, trier of not a basis for reversal See, appeal. e.g., Capital Liqui Argued Schwartz v. March 1994. dators, Inc., (2d Cir.1993) Decided Oct. 1994. curiam); (per Jim Beam Brands Co. v. Ltd., Beamish & Crawford — (2d Cir.1991), denied, U.S.—, cert. (1992); Healey
S.Ct. 117 L.Ed.2d415 v.
636 *3 Gaston,
M. Atty., Chinta Asst. U.S. New City White, (Mary York Atty., Jo U.S. S.D.N.Y., Mark, Atty., Richard W. Asst. U.S. brief), plaintiff-appellee. on the Burstein, (Kim City Judd New York P. Bonstrom, brief), defendant-appel- on the lant. KEARSE, PIERCE,
Before: LEVAL, Judges. Circuit KEARSE, Judge: Circuit (“Rem” Defendant Gerard Rem or “Ger- ard”) appeals from a of the United District States Court for the Southern Dis- York, Freeh, trict Judge, of New Louis J. $1,875,- awarding plaintiff United States him, $550,000.08 against comprising 179.41 corporation taxes owed officer, plus which he was an interest of $1,325,179.41. granted The district court summary judgment against Rem on the ground that he was a officer of taxpayer corporation meaning within the Code, Henry provided Princeton with its 26 dent. had Internal Revenue § 6672 of the final (1988). starting capital; until 1978 he retained appeal, Rem con- On § 6672 U.S.C. How- authority over all business decisions. inappro- was summary judgment tends ever, history of credit difficul- because his genuine questions there priate because ties, (a) participation avoided direct Prince- wit, he liability, whether fact as to negotiations. ton’s credit corporation over the control he had sufficient scope bring him within grew quickly, and it continu- (b) scope of that person within the if he was problems. In late ally experienced cash-flow taxes section, to remit the his failure whether Henry’s 1978, Mary (“Mary”), who if is He also contends willful. mother, approxi- invested and Rem’s wife liable, questions to be tried as are there $600,000 Shortly company. mately in the *4 agree that liability. We of his the extent thereafter, of Mary the chairman became on all questions to be tried factual there are Though Hen- of directors. Princeton’s board issues, vacate the we therefore and three maintained control of the ry nonetheless proceed- further remand for time, and soon company’s affairs for a ings. both cancer and transferred diagnosed with ownership control of and his
his 80% stock I. BACKGROUND Mary. she was company to Because wife, Mary, Henry, Henry’s like known as failure of arises out of the present suit any negoti- attempt to conduct did not (“Princeton”), Industries, to Inc. Princeton ations. Revenue Service the Internal remit to (“IRS”) from joined withheld in late at the funds that Princeton Princeton Rem Richard, respect to the to with “as a consultant employees’ paychecks suggestion of its op- security rapidly growing computerize and social Princeton’s income employees’ federal (Affidavit “withholding Richard Rem dated (collectively tax- of obligations erations.” tax ¶3.) (“Richard (1988) Aff.”), es”). (requiring Rem March See 26 U.S.C. (1988) degree computer in tax); an advanced Rem held income id. of years by had worked for several imposed operations and withholding of tax (requiring banking management and as a consultant Act Contributions Federal Insurance firms; in background no accounting he had (“FICA”)). that Princeton IRS contends eventually manufacturing Rem business. all of 1980 the withholding taxes for pay to failed stock, company’s with 1978, 1979, purchased 20% of the 1981. The and parts and for retaining other 80%. Some- father events, in affi- his Rem largely as described computer joining as a Princeton testimony, time after are set out deposition davits and assigned responsibil- also specialist; Rem was below. negotiations on be- ity conducting credit Opera- and Organization company. A. Princeton’s half of the tions variety of had a 1977 to Rem From corpo- in 1976 Rem’s at Princeton. He was founded titles corporate Princeton in until the (“Henry”) engage secretary 1977 or 1978 Henry Rem from father rate in He be- operation of textiles. Until 1981. company and sale ceased the manufacture corporation in 1978 manufac- company had two a director of April came Ware, facility its treasur- knitting period in Mas- of time was turing and for some sites —a addition, sachusetts, finishing plant approval dyeing and and a er. In directors, to vari- Johnsville, corpo- represented York. It had a Rem in New board of St. that he was City, potential creditors York which actual and rate office in New ous signed at least production president; he also managers coordinated company’s Princeton’s “Presi- as Princeton’s agreement one credit and sales. Princeton’s Secretary,” signed and dent and original officers and directors petition as “President.” bankruptcy eventual chairman, Henry as William company were (“Rich- Princeton’s Richard left Thai and Both Richard Rem president, and Thai as left, Rem’s Richard After brother, employ 1978. ard”), presi- vice as executive Rem’s assessment, responsibilities expanded disputed and included After the 1982 “appraised accountant on keeping [sic] negotiations toward a consensual resolu- company happening what was with the [and] failed, government tion commenced the going” (Deposition of where the sales were alia, to, present action inter reduce (“Rem Rem, Dep.”), Gerard March judgment. this assessment 24), negotiating machinery, at contracts for insurance, computers, attempting Summary Judgment Proceedings B. The problems” among “coordinate resolve (id. 44). employees various period discovery, After a depo- which April destroyed a fire Princeton’s Mary, sitions were taken of Rem and manufacturing facility Ware and much of the produced, documents were IRS moved for company’s inventory. Delay payment summary judgment on the Princeton assess- insurance claim Princeton’s exacerbated its government parts ment. The relied problem, chronic cash-flow and Princeton de- deposition signed by Rem’s and on checks debts, only newly plan- cided to incurred corporate Rem as evidence that posi- debts, ning including older those tions, corporate responsibilities, and check- IRS, expected out of the fire insurance reim- signing authority him person respon- made *5 bursement. When the insurance company’s nonpayment sible for the of with- eventually payment made an advance in De- holding meaning taxes within the of 26 1980, however, por- cember received no 6672(a). § government U.S.C. The also ar- it; money tion paid of rather that “to gued deposition that Rem’s indicated that he companies banks and finance that held liens knew taxes were to be machinery equipment the of the com- paid and knew other being creditors were pany. company itself did not receive instead, paid and that his failure to have the (Rem 57.) any money.” Dep. at paid taxes was therefore willful. meantime, 1980, In the in November protection Chapter Princeton filed for under opposition In summary judgment, Rem Code, Bankruptcy of the United States 11 argued principally that he had had no actual (1988). seq. U.S.C. 1101 et position responsibility control or of with re- production all in ended December 1980 and First, spect withholding taxes. he assert- remaining inventory. thereafter sold its In that, ed deposition, as indicated in his 1981, Chapter reorganization June the affidavit, by and an affidavit submitted for- proceeding Chapter was converted to a mer Princeton plant manager director and liquidation proceeding, see 11 U.S.C. 701 et Brooks, Robert each of Princeton’s manufac- (1988), seq. appointed with a trustee to over- turing operated by sites was plant a local liquidation. see manager bookkeeper and maintained its own bankruptcy In proceeding, IRS filed Employees sites, and controller. at these unpaid withholding claims for totaling taxes height total of some 400 at the of Princeton’s $105,771.83. 1982, In IRS made an assess- operations, site-specific from bank against ment Rem on account of Princeton’s separate accounts that were from ac- unpaid withholding quarter taxes for the first by office, City counts used the New York quarter of the fourth of all of manufacturing separately each site withheld quarters and the first three of in appropriate employees’ from taxes its $550,000.08: the total amount of paychecks. The bank accounts maintained Ending Unpaid Period Taxes by City pri- the New York office were used 77,690.32 $ 3/31/78 marily company’s general 92,242.57 ex- $ 12/31/79 $130,872.87 3/31/80 penses, charges yarn such as incurred for $111,525.46 6/30/80 purchases, salaries New York 51,562.63 $ 9/30/80 City employees, money and to wire into the 12,620.77 $ 12/31/80 manufacturing accounts of the sites so the 34,170.77 $ 3/31/81 alia, pay, payroll sites could inter their ex- 34,170.77 $ 6/30/81 5,143.92 penses. $ Rem stated that he had had no 9/30/81 December, that com- 1978 until the fire or St. sign checks on Ware authority to April, destroyed plant in pletely the Ware accounts. Johnsville 1980. Mary exer- Second, that had claimed Rem finances. Princeton’s control over
cised total contention, pointed this support of Directors of 6. I was on the Board that of his moth- deposition and parts of his my hiring in Industries from Princeton himself, his er, brother to affidavits July, I attended several mid-1978 to 1980. Brooks, Richard, Princeton man- and former meetings, particular meeting Board example, Rem testi- Anna Lifson. For ager March, Mary per- 1979 where sat in on though he sometimes fied handle credit suaded to let Gerard Rem employees for the potential interviews of Henry poor negotiations due to office, authority to hire he had no York New standing. Mary Rem was the While credit anyone without authorization or fire supervised dai- of Princeton and President at all not involved Mary. He was Mary Rem’s cred- ly operations, because of worked firing employees who hiring or problems Rem was authorized Gerard Rem stated manufacturing facilities. sign applications and the Board to “President” was of the title that his use negotiations as President. handle credit the board sporadic was authorized (Affidavit of Robert Brooks dated March merely to obtain credit as a device directors 6.) (“Brooks Aff.”), ¶¶4, Brooks also that he did not have company and for the hired, “Mary Rem that when he was stated to the president. pointed He powers of a in control clearly informed me that she was Mary, which stated testimony of deposition company,” though in mid-1979 by hiring a Mary reorganized operations new pro gave my son Gerard ... I sales man- officer and new *6 chief executive president, because he was as a forma title that ager, informed Brooks she would she really, finalizing, but negotiating credit and chairman that Brooks was remain as my in case name charge because I was (Id. operations. keep plant informed of her that president, be listed as would ¶ 7.) Brooks stated that husband, my my name with would link handle Prince- role was to Gerard Rem’s in- in the textile not favorable which was require- computer and information ton’s name, pro reputable so for- as a dustries on cred- negotiations handle ments and to title, ma, just kind of but gave I him some responsible for was also it.... Gerard charge. really, I inwas system would ensuring computer that Rem, Mary April (Deposition of knitting plant with information provide the 34.) Mary also testi- (“Mary Dep.”), at Rem projections. about sales bring “require[d] that she Gerard fied re-organization of part of the As a 9. signed it” every before he [her] contract mid-1979, Gerard Rem Princeton in involved, (id. 38), that “Gerard was at daily Richard on a basis. longer active no and the financing in the credit not in the but Princeton and handled back to Rem came person I who had negotiations, was the but to sales. production coordination report to me. He say final and he had to ¶¶ (Id. 9.) (id. at 32- anything on his own” couldn’t do 33). in his affidavit that stated Richard Rem at in late 1979 to Princeton when he returned Mary that in his affidavit Brooks stated my re- Mary’s request, a condition “[a]s manager for plant as hired him in mid-1978 turn, not be that Rem I insisted Gerard part as fol- facility. He stated the Ware signing as any control —such allowed to have lows: experience had no textile he checks —because knitting of all complete control 4. I had (Richard knowledge about the business.” solely responsi- I operations in Ware. was ¶ 6.) that Richard also stated Aff. Rem firing person- of all hiring and ble for the may at times have Gerard Rem authority [w]hile on complete signing I had nel. President, strictly this was title of used the bank accounts the Princeton Ware reality disputed accommodation to the of Hen- Rem also IRS’s contention that as an his failure to Princeton to ry Mary poor standing. cause First, withholding taxes was willful. he con- daily operations, he control At no time did prior that tended he had known to 1980 supervise bookkeeping department, or any withholding unpaid. that taxes were He any authority regard have to account- responsibility testified that had no he ing payments. Mary matters or tax Rem and, personnel lacking knowledge, matters employees were well aware that could not be considered to have acted willful- computerizing Rem was limited to Gerard ly. As to he testified after operations negotiating Mary credit. fire, Mary he and would review lists of out- signed signed Rem as President she when standing prepared by bookkeeping bills documents that did not credit. involve personnel Mary and that made the final deci- ¶ (Id. 4.) After Richard’s late-1979 return to paid. sions as to which bills would be Princeton, average Rem came to the office an Though they pay Rem recommended that only twice week. taxes, Mary decided that com- paid mercial creditors should be and that that, although Rem stated in his affidavit pro- IRS would be out of the insurance point signatory one had been made a ceeds; Mary Rem stated that him forbade certain of Princeton’s New York bank ac- pay the taxes. Rem also testified that even negotiations, counts to facilitate his credit thought in 1980 he some of the signatory status as a on those accounts was being paid taxes were because those taxes revoked in June 1979. Shown a number of payables “were on a list of that had to be deposition, 1980 checks at his Rem acknowl- (Rem 90.) paid.” Dep. at edged having signed certain of them but Finally, disputed Rem the amount of the signature testified that the on others did not assessment, contending many both that Lifson, appear by Mary to be his. hired quarterly amounts were inflated and promoted an assistant in mid-1979 and payments that Princeton had made that had Payable Manager in Accounts stated in argued been overlooked. He 1979, Mary her affidavit that late “[i]n amounts assessed for 1980 and 1981 were changed the New York office bank accounts April compa- inflated because after 1980 the only sole-signatory.” so that she was the ny Ware, employees had no and had about (Affidavit of Anna Lifson dated March *7 percent prior of its workforce in St. ¶ (“Lifson 4.) Aff.”), Lifson listed the Johnsville. As to his contention that some persons six accounts and the who had been payments tax had in fact been made for time each, given power sign to Mary checks. On assessment, periods by covered the IRS Rem alone; power sign only had the account pointed by a signed to dozen checks him and all, one was Rem listed at and on that he was payable during made quarter to IRS the first required signature. to obtain a second Rem of 1978. Most of these cheeks were attached permission that cosign stated for him to even government’s summary to the judgment mo- merely provision that one account was support tion as for its contention that Rem emergencies my cash “small when mother Princeton, cheek-signing authority had at ¶ (Rem 18.) travelling.” Aff. copies the extent that the in the record are addition, Lifson stated that “[a]ll legible, they $90,- appear to total more than payroll prepared by records were the book- 000, a sum that exceeded Princeton’s as- keeper and submitted to the Af- controller. liability quar- sessed tax for that Controller, approval by ter payroll ter. Rem during also testified that sometime (id. signed by Mary tax returns were Rem” by agent 1980 “we were contacted the ¶ 5); during my employ- “[a]t no time owing, and told there were taxes and we ment with Princeton did Gerard Rem become making payments directly started to the IRS paying taxes, (Rem 55.) involved creditors of [sic ] agent.” Dep. at He also stated any dealings nor did compa- he have with the that bankruptcy IRS had received a dividend ny’s apart $150,771.83 negotiating finances from factor- past for some of the due taxes. ¶ (id. ¶ 8). (Rem 65.) ing and loan terms” Aff. According undisputed August to the rec- dated nances. Opinion and Order
In an ord, granted charge negotiating the district court he was (“Opinion”) summary judgment. obtaining and factors. banks IRS’s motion respon- a alleges that Rem was that his court first concluded Rem involvement was meaning of person merely only standing within the superficial sible as he was over significant had control parents problems. Rem had credit because his who fo.r Noting Opinion at 5. totally Princeton’s finances. argument this un- The Court finds mother, “in his Rem’s assertion supported by Rem was the the record. company, wanting tighter control over sought person who credit for Princeton authority check-signing so restricted his corporation’s and was for the another’s write checks without he could not stability. financial This establishes that found that Opinion at the court signature,” intimately involved in Princeton’s Rem dis- has submitted evidence “the Government Also, periodically financial Rem affairs. assertion,” id. proving the defense’s by reports prepared financial reviewed the checks submit- court noted that on five of Furthermore, company’s accountant.... signed, only Rem had government, ted a position was not one of mere “em- government’s submis- that the ruled him, an ployee”, but one that Rem, conjunction signed by of checks sion officer, continuously represent Prince- at regarding Rem’s role with the evidence various credi- ton’s financial status its Princeton, signifi- that Rem had established an officer and shareholder of tors. Rem as Princeton’s disbursement cant control over high degree of Princeton exercised a finan- funds. responsibility and there- cial control and for a fail- fore should be held accountable government that the had The court found ure to the IRS. that he successfully Rem’s contention refuted Mary’s major without make no decision could Id. at 8.
approval: that Rem had The court also concluded major includ- that all decisions He asserts genuine issue failed to show that there was more than ing payment of checks for failure to remit the with- as to whether his approved by his moth- had to be $1000.00 willful. It found that Rem held taxes was Rem, er, being Fi- Mary before executed. initial determination of the order “made the nally, argues that determination subject large to be in which bills were dis- necessarily raises a factual this issue and had discretion to approval his mother’s summary judg- ripe for pute is not which bills,” id. that Rem pay smaller ar- counters this ment. The Government knowing in that Princeton was admitted sufficiently demonstrating that gument paying in lieu of taxes paying other creditors merely Mary approval was formalis- court made no reference that were due. The legal impedi- not constitute a tic and did proper controversy regarding the to the *8 ment to the issuance of checks.... of the assessment. amount _ by- possible reluctance to agreed dismiss the parties to After authority pass mother’s for fear issues, final was entered remaining liability enough escape reprisal is not appeal This in favor of IRS. against Rem 6672(a). § under followed. _ Furthermore, although Rem ar- approval gues that he needed his mother’s II. DISCUSSION funds, admits that he did
to disburse payments less authorization for not need 7501(a) the Internal Revenue Section than $1000.00. (“Code”) employer to remit requires an Code Id. at 6-8. 26 U.S.C. withholding taxes IRS. 7501(a) (1988). regulations require § IRS
Also, by joining company in order to quarterly be made on Princeton, Rem, that such remittances a Har- credit for establish 31.6011(a)-4 (income § basis. See 26 C.F.R. graduate, became vard Business School taxes). (FICA 31.6011(a)-! If id. taxes); § company’s fi- in the significantly involved 642 pay employer plaintiff, does not taxes more than and exercised 6672(a) authority, § required, greater of the Code this does not affect find
imposes personal liability
ing
liability against
plaintiff’ (empha
for unremitted tax-
upon any person responsible
remitting
original)).
necessary
es
sis in
And it is not
question
the taxes:
in
the individual
‘“have the final
paid
word as to which
in
creditors should be
collect,
Any
truthfully
person
subject
liability
order to be
under this
for,
any
imposed
account
over
tax
States,
section.’” Hochstein v. United
900
willfully
this title who
fails to collect
(2d Cir.1990) (“Hochstein”)
543,
F.2d
tax,
truthfully
account
such
or
for and
States,
(quoting Gephart v. United
818 F.2d
tax, willfully attempts
any
over such
or
—
475),
denied,
U.S.—,
at
cert.
112 S.Ct.
any
manner to evade or
such
defeat
tax or
(1992).
2967,
ful[
whether all of the amounts
(2)
directors,
possesses
owns shares or
an
(a)
(b)
assessed
unpaid.
IRS were
due and
(3)
entrepreneurial
company,
stake in the
management
is active in
day-to-day
6672(a)
Requirements
§
A. The
(4)
company,
ability
affairs of the
has the
“[a]ny person required
The term
per-
to”
(5)
employees,
to hire and fire
makes deci-
collection, accounting,
form the
payment
which,
regarding
sions
when and in what
6672(a)
§
functions
described
has been
outstanding
order
debts or taxes will be
any
construed to include
individual
(6)
who is a
paid,
daily
exercises control over
bank
“ ‘responsible person’
pay-
for collection and
records,
accounts and disbursement
employer’s
ment of the
taxes.” Fiataruolo v.
(7)
cheek-signing authority.
has
(2d
States,
Cir.1993)
930,
United
8 F.3d
939;
Hochstein,
Id. at
see also
900 F.2d at
(“Fiataruolo ”) (quoting Godfrey v. United
547;
IRS,
(5th
1449, 1455
Barnett v.
988 F.2d
States,
1568,
(Fed.Cir.1984));
—
Cir.),
denied,
U.S.—,
cert.
114 S.Ct.
States,
see also Slodov v. United
643
—
(8th
denied,
U.S.—,
Cir.),
willful,
cert.
113
not stem 89
conduct need
To be
ful[ ].”
defraud,”
676,
(1992);
to
Heyman
Industry
v. Commerce &
Insurance
grant
credit,
company
probing
Co.,
(2d
Cir.1975).
524 F.2d
1319-20
title,
of the substance of that
and we con-
credibility
of
Resolutions
conflicts and
clude that the
analysis
district court’s
did not
conflicting
choices between
versions of the
jury,
facts are matters for
view
light
not for
the'evidence
most favorable
See,
summary judgment.
court on
e.g., Fed.
to Rem.
56(e),
Advisory
R.Civ.P.
1963
Committee
example,
For
contrary to the district
Note;
INS,
Agosto
748, 756,
v.
436 U.S.
98
court’s conclusion that Rem’s contention that
2081, 2086,
(1978);
S.Ct.
control in the there CONCLUSION genuine to can be no issue be tried as to his arguments We have considered all of IRS’s failure, during period; that in willfulness support in summary judg- of the award of circumstances, pay to whatever with- those ment and have found them to be without holding respect that taxes were due with to merit. The of the district court is period a must be ruled willful as matter of proceed- vacated and remanded for further ings law. opinion. not inconsistent with this LEVAL, Judge, concurring. Circuit Rem also that in testified 1980 he company paying Judge believed the was in fact I concur in Kearse’s excellent and thorough opinion, separately but write un- withholding testimony taxes. That to view, importance, my derline the of certain vague part was somewhat as to the of that disputed facts. Rem testified that his moth- year in which he claimed to that have held er, who chaired the board of directors and referring belief. If period he was to the controlling Princeton, was the shareholder of April after such a belief would have complete exercised control and him forbade light been unreasonable as a matter of law paying from withholding the overdue taxes. testimony of his that his mother exercised might importantly These facts bear on total control and pay forbade the current “responsible whether Rem should be found a ment of those taxes. person.” Nonetheless, giving Rem the benefit of all While it is true that 6672 concerns itself favorable inferences the context of a mo- important goal with the protecting trust summary judgment against him, tion for we by funds owed to the providing United States testimony conclude that his was sufficient to alternate sources from which to collect un- permit prior the inference that to 1980 he corporation remitted taxes owed a on company had no idea that the was in arrears employees, Congress account of its refrained taxes; on imposing liability that he learned of the on all available tar- not, 1980; gets. deficiency early example, impose It did liability for and that he believed officers, on all directors and stockholders of making weekly payments delinquent corporation; it limited fully satisfying withholding obligations its tax liability persons to corporation those in the prior April to the 1980fire. We are aware of responsibility who seeing bore for to squarely no evidence that so contradicts this payments the tax were made. The statute scenario professed as to make his pre-April provides, relevant, thus insofar as here 1980 belief a unreasonable as matter of law. liability persons would fall on “required Accordingly, depending on whether and dur- tax, ... delinquent over” the who ing periods what time Rem is found have willfully failed to do so. 26 U.S.C. person, been may there be a (1988). question of fact to be tried as to his willful- In defining respect determining ness with the standards for taxes owed statutory definition, who falls within this period prior April to the 1980 fire. developed “responsible per courts the term sum, record, In we conclude that the sons” and concluded that their identification all reasonable credibility inferences and as- depends they “signifi whether exercised favor, sessments made in Rem’s revealed cant corporation’s control” over the finances. genuine issues to be tried as to both the States, Fiataruolo v. United 8 F.3d “responsible person” and willfulness issues. (2d Cir.1993); States, Hochstein v. United addition, assuming that both of those is- (2d Cir.1990); 900 F.2d Ruth v. Rem, sues are adversely decided there States, (7th United Cir. appear to be respect be tried with 1987); States, Gephart issues.to v. United proper assessment, amount of the IRS (6th Cir.1987). point previously matter not addressed “significant inquiry control” is to determine district court. effectively whether the individual exercised of) (or pains Judge to refute Newman’s ble took in the exercise sufficient participated had delinquent taxes to be contention that Hochstein been forbid- cause the power to so, noted, using It Ro- to do the Govern- den to the tax. “Because paid, failed but purposes. money specify purposes instead for other senthal did not ment’s *13 Fiataruolo, they at 939. which the funds were to be used once See Safelon, given to is unclear how great importance of the Acknowledging the payment Hochstein’s of taxes could have ability to collect its reve- of the Government noncompliance with Rosenthal’s amounted funds, recognize the we must also nue trust Hochstein, 900 F.2d at n. instructions.” inappropriate harshness of the potentially Although majority opinion not 2. the does remedy, applied if it person” is “responsible expressly assert how the would to insure that overbroadly and care without have been affected had Hochstein received type power person truly possessed the the pay clear orders not to use the funds to the in a necessary justify it. The defendant tax, point refuting the fact that it made a (as employee § 6672 is often an suit under Judge suggestion strongly Newman’s rather owner) personally opposed to an who has majority implies that the would have consid- the misdirection of the Gov- benefitted from pertinent. ered such orders further- funds. If the defendant ernment’s decision as to more had no influence over the question” “significant control.” The “core is made, imposi- payments would be what Fiataruolo, power 939. liability huge can be both potentially tion of a holding sign corporate and the cheeks harsh and unfair. are indeed factors that courts have office States, 90 Civ. Unger v. United No. deciding an indi- helpful listed as whether LEXIS 1994 WL 1994 U.S.Dist. necessary power, possessed vidual but (S.D.N.Y. 1994), Unger, who Feb. they only factors. Either can exist are officer, by although corporate was likened reality circumstances where the individual sinking judge boy on a district to “a cabin significant control cor- possess does not over corporate for his em- ship,” was found liable so, poten- porate finances. When this is million dollars. ployer’s tax debt of over one tially devastating “responsible person” liabili- summary judg- granted The district court Neither, however, ty imposed. should not be despite favor Un- in the Government’s ment truly participates in the may person who testimony company’s sole ger’s decisionmaking power hide of that exercise officer, shareholder, pres- chief executive responsibility. to avoid behind technicalities exclusively made all decisions as to the ident title, If, despite corporate his Rem estab- funds, rejected corporate payment totally subordinate lishes at trial that he was owing. Al- Unger’s urging the taxes mother, who chaired to the orders of judge deplored imposing though the district principle share- and was Princeton’s board liability, to make irrele- he read Hochstein holder, complete con- exercised she by was barred vant whether defendant payments and directed that trol over paying the superior of a the orders might satisfy the paid, Rem taxes not be taxes. significant have that he did not factfinder holding I that to be the do not understand not a control and is therefore employer, Hochstein’s Safel- of Hochstein. 6672. person under Section on, operating under the was insolvent Rosenthal, periodi- factor which control of its
cally operating funds for necessities. supplied controller; he received
Hochstein was factor, infused out the funds liable for his failure
and was held Newman, Judge in dis-
them to the IRS.
sent, argued that Hochstein had been forbid- payment. the tax
den the factor to make holding Hochstein lia- majority opinion