Trust Fund Handbook page1
Trust Fund Handbook page2
Trust Fund Handbook page3
Tax Fraud
Willfulness - knowledge of non-payment
Statute of Limitations
Assessment p1
Assessment p2
Assessment p3
GCM 33653

Thomas A. Gutherie, Sr., Plaintiff v. United States of America , Defendant.

U.S. District Court, East. Dist. Tenn. ; 1:03-CV-46, January 26, 2005 .

Related DC Tenn. case at 2004-1 USTC ¶50,257.

[ Code Sec. 6672]

Trust fund recovery penalty: Responsible person: Assessment: Employer's payments: IRS obligations. --

The former president of a bankrupt employer was not entitled to a refund of amounts he had paid on a trust fund recovery penalty that was assessed against him personally. Since the taxpayer did not show that the assessment of the penalty was invalid or erroneous, the IRS was entitled to judgment as a matter of law. Moreover, delinquent employment taxes that the employer had paid during its bankruptcy did not relieve the taxpayer of the penalty because the penalty was assessed with respect to employment taxes that remained unpaid after the bankruptcy was concluded. Finally, the taxpayer's claim that the IRS failed to try to collect the taxes from the employer during the bankruptcy was irrelevant because the IRS is not required to attempt to collect from an employer before imposing the penalty on a responsible person.

ORDER

COLLIER, District Judge: In accordance with the accompanying Memorandum, the Court hereby GRANTS Defendant's Motion for Summary Judgment (Court File No. 15), and DENIES Plaintiff's Cross Motion for Summary Judgment (Court File No. 17).

SO ORDERED.

MEMORANDUM

Plaintiff, pro se, Thomas A. Gutherie, Sr. brings this action under 26 U.S.C. §7422 for recovery of sums paid toward civil tax penalties (Court File No. 1). This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. §1346(a)(1) and venue lies in this district pursuant to 28 U.S.C. §1402(a)(1).

Before the Court are a Motion for Summary Judgment filed by Defendant United States of America ("Defendant") (Court File No. 15) and a Cross Motion for Summary Judgment filed by Plaintiff Thomas A. Gutherie, Sr. ("Plaintiff") (Court File No. 17). In resolving these motions, the Court considered Defendant's supporting memorandum and response (Court File No. 15, Exh. 4; Court File No. 20) and Plaintiff's supporting memorandum and response (Court File No. 18). For the following reasons, the Court will GRANT Defendant's Motion for Summary Judgment and DENY Plaintiff's Cross Motion for Summary Judgment.



I. STANDARD OF REVIEW

Summary judgment is proper where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). Initially, the burden is on the moving party to conclusively show no genuine issue of material fact exists, Leary v. Daeschner, 349 F.3d 888, 897 (6th Cir. 2003), and the Court must view the evidence and draw all reasonable inferences therefrom in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). However, the nonmoving party is not entitled to a trial merely on the basis of allegations, but must come forward with some significant probative evidence to support its claim. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). If the nonmoving party fails to make a sufficient showing on an essential element of its case with respect to which it has the burden of proof, the moving party is entitled to summary judgment. Id. at 323, 106 S.Ct. at 2552.

The Court determines whether sufficient evidence has been presented to make the issue of fact a proper jury question, but does not weigh the evidence, judge the credibility of witnesses, or determine the truth of the matter. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986); Weaver v. Shadoan, 340 F.3d 398, 405 (6th Cir. 2003). The standard for summary judgment mirrors the standard for directed verdict. Anderson, 477 U.S. at 250, 106 S.Ct. at 2511. The Court must decide "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Id. at 251-52, 106 S.Ct. at 2512. There must be some probative evidence from which the jury could reasonably find for the nonmoving party. If the Court concludes a fair-minded jury could not return a verdict in favor of the nonmoving party based on the evidence presented, it may enter a summary judgment. Id. ; Lansing Dairy, Inc. v. Espy, 39 F.3d 1339, 1347 (6th Cir. 1994).



II. RELEVANT FACTS

The United States Bankruptcy Code requires most employers to withhold Social Security, Medicare, and federal income taxes from their employees' wages. See 26 U.S.C. §§3102, 3402. This money is held in trust by the employer for the United States until it is paid to the Internal Revenue Service (" IRS ") on a quarterly basis; these monies often are called "trust fund taxes." 26 U.S.C. §7501(a); Bell v. United States [ 2004-1 USTC ¶50,118], 355 F.3d 387, 392 (6th Cir. 2004). Employers who willfully fail to remit the withheld trust fund taxes are personally liable for 100 percent of those taxes, as a civil tax penalty under 26 U.S.C. §6672 ("Section 6672").

Greensboro Lumber Company (" GLC "), of which Plaintiff was president, failed to pay the trust fund taxes it owed for the first and third quarters of 1990, the taxable periods ending March 31, 1990 and September 30, 1990, respectively. GLC filed a bankruptcy petition for Chapter 11 reorganization on November 5, 1990 (Court File No. 1, Exh. A). In GLC 's bankruptcy proceedings, the IRS asserted a secured claim of $41,925.10 in unpaid trust fund taxes for the first quarter of 1990 and an unsecured claim of $18,477.80 in unpaid trust fund taxes for the third quarter of 1990 (Court File No. 15, Exh. 2). On November 12, 1993, GLC settled the IRS 's secured claim for trust fund taxes for the first quarter of 1990 by paying $64,191.08 in taxes, penalties, and pre- and post-petition interest (Court File No. 15, Exh. 2; see also In re Greensboro Lumber Co. [ 95-1 USTC ¶50,259], 183 B.R. 316, 317 (Bankr. M.D. Ga. 1995)).

After the GLC bankruptcy was complete, on February 20, 1995, Plaintiff personally was assessed a penalty (referred to by parties as the "trust fund recovery penalty") of $26,164.10 under Section 6672 for his failure as president of GLC to pay GLC 's trust fund taxes for the third quarter of 1990 (Court File No. 15, Exh. 1). Plaintiff paid various amounts towards this penalty between 1993 and 2001, totaling $8,039.92 (Court File No. 1). On June 30, 2000, Plaintiff filed a Claim for Refund and Request for Abatement with the IRS , seeking a refund of payments he had made between November 1, 1993 and April 15, 2000 (Court File No. 1, Exh. A). The IRS disallowed Plaintiff's claim for refund on February 12, 2001, and on February 7, 2003, Plaintiff filed this action seeking recovery of the amounts he paid between 1993 and 2001. In response to Defendant's motion to dismiss (Court File No. 4), this Court held Plaintiff had met jurisdictional prerequisites only for payments he made on August 4, 1998 ($816.36) and April 15, 2000 ($273.94), and dismissed his claims for all other payments ( See Court File Nos. 8, 9). Accordingly, Plaintiff proceeds only in his claims for recovery of those two payments, totaling $1,090.30, plus interest, and costs and other relief allowed by law.

Defendant filed an answer and counterclaim against Plaintiff on May 26, 2004, asserting Plaintiff owes $43,292.10 on the trust fund recovery penalty assessed against him, plus statutory interest, penalties, and additions accruing on this amount since March 1, 2004. Defendant seeks this amount, the costs of prosecuting this action, and such other relief as the Court deems just and proper (Court File No. 10).



III . DISCUSSION

A. Plaintiff's Claims

Tax assessments are presumed correct, so a plaintiff filing suit for refund of an assessment he has paid in part has the burden of showing the assessment is inaccurate or erroneous. Collins v. United States [ 88-1 USTC ¶9386], 848 F.2d 740, 742 (6th Cir. 1988), citing Avco Delta Corp. v. United States [ 76-2 USTC ¶9570], 540 F.2d 258, 262 (7th Cir. 1976), cert. denied sub nom. Canadian Parkhill Pipe Stringing Ltd., 429 U.S. 1040, 50 L.Ed.2d 752, 97 S.Ct. 739 (1977). The statute under which Plaintiff was assessed the trust fund recovery penalty states:

Any person required to collect, truthfully account for, and pay over any tax imposed by this title who willfully fails to collect such tax, or truthfully account for and pay over such tax, or willfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall, in addition to other penalties provided by law, be liable to a penalty equal to the total amount of the tax evaded, or not collected, or not accounted for and paid over.

26 U.S.C. §6672. Plaintiff may show the assessment under Section 6672 was inaccurate or erroneous by proving by a preponderance of the evidence he was not a responsible person who willfully failed to pay the trust fund taxes. Bell [ 2004-1 USTC ¶50,118], 355 F.3d at 393.

In his complaint, Plaintiff contests neither his responsibility for paying the trust fund taxes nor his willful failure to pay them (Court File No. 1), and in his cross motion for summary judgment and response, Plaintiff concedes the IRS was proper in assessing this penalty under the statute (Court File No. 18, p. 1). Plaintiff instead focuses on two collateral issues as the reasons the IRS erroneously asserted the trust fund penalty against him, which the Court will address in turn. Because the parties do not contest the propriety of Defendant's assessment of the trust fund recovery penalty against Plaintiff under the statute, the Court only will address Plaintiff's claims the assessment was erroneous for non-statutory reasons.

The Court notes at the outset Plaintiff in his cross motion for summary judgment and response relies on Defendant's statement of undisputed facts in its motion for summary judgment ( see Court File No. 17, p. 1), thus the parties agree there are no genuine disputes of any material facts.

1. Trust Fund Taxes Already Had Been Paid by GLC

Plaintiff in his first claim asserts any trust fund taxes GLC owed were paid in full during GLC 's bankruptcy by GLC 's $64,191.08 payment to the IRS , thus the assessment against him under Section 6672 was improper (Court File No. 1 ¶11). Because the IRS is entitled to only one satisfaction of the trust fund tax liability, once it has obtained that satisfaction from the employer, it must abate all assessments against responsible individuals under Section 6672. Calderone v. United States , 799 F.2d 254, 258 (6th Cir. 1986). Accordingly, Plaintiff may show his assessment was erroneous by proving the IRS already had obtained satisfaction of the trust fund tax liability from GLC .

Although Plaintiff argued in his complaint the parties involved in GLC 's bankruptcy intended GLC 's $64,191.08 payment to satisfy the unpaid tax liability for the third quarter of 1990 that was later assessed against him under Section 6672 (Court File No. 1, ¶¶12-15), Plaintiff made no such argument and put forth no proof of any such agreement in his cross motion for summary judgment and response ( See Court File Nos. 17, 18). Plaintiff has not put forth any evidence, much less the significant probative evidence required in a response to a motion for summary judgment, to support his claim this payment satisfied the tax liability for the third quarter of 1990, therefore Plaintiff has not shown the trust fund taxes for which he was assessed already had been paid by GLC . Celotex, 477 U.S. at 324, 106 S.Ct. at 2553.

Additionally, Defendant submitted two pieces of evidence refuting Plaintiff's claim of prior satisfaction, the proof of claim it filed during GLC 's bankruptcy showing a secured claim in the amount of $41,925.10 for the first quarter of 1990 and an unsecured claim for $18,477.80 for the third quarter of 1990 (Court File No. 15, Exh. 2), and an opinion issued in GLC 's bankruptcy proceeding showing the $64,191.08 payment applied only to the secured claim for the first quarter of 1990:

The IRS 's secured claim includes $49,500.31 for prepetition taxes, penalties, and interest... [and] $14,690.77 in postpetition interest. In order to stop the accrual of postpetition interest, [ GLC ] issued a check dated November 12, 1993 , in the amount of $64,191.08. The check was payment in full of the amount demanded by the IRS .

In re Greensboro Lumber Co. [ 95-1 USTC ¶50,259], 183 B.R. 316, 317 (Bankr. M.D. Ga. 1995) (emphasis added). This evidence shows the third quarter tax liability was not paid by GLC in its $64,191.08 payment, thus it had not been satisfied when the IRS assessed its penalty for this tax liability against Plaintiff under Section 6672.

Because tax assessments are presumed correct, and Plaintiff has not met his burden of showing GLC 's prior satisfaction of the tax liability rendered this assessment inaccurate or erroneous, Defendant must prevail as a matter of law, and the Court will GRANT Defendant's motion and DENY Plaintiff's cross motion for summary judgment on this claim. See Collins [ 88-1 USTC ¶9386], 848 F.2d at 742.

2. Defendant Permitted GLC 's Assets to be Dissipated and Lost Instead of Applied to the Tax Burden

Plaintiff argues, as an alternative to his first argument, Defendant should be prohibited from pursuing GLC 's unpaid trust fund taxes from him because it failed to make a good faith effort to collect these taxes from GLC 's assets ¹ during its bankruptcy (Court File No. 1, ¶19). Defendant correctly notes the personal liability Section 6672 creates is separate and distinct from the trust fund tax liability imposed on the employer, and the IRS has no obligation to attempt to collect trust fund taxes from the employer before assessing a penalty against an individual under Section 6672. Calderone, 799 F.2d at 257; see also Frank v. D'Ambrosi [ 93-2 USTC ¶50,625], 4 F.3d 1378, 1386 (6th Cir. 1993). Defendant's argument is supported by the plain language of Section 6672, which does not require any effort by the IRS to collect these taxes from the employer before the IRS may assess the penalty against a responsible person. See generally 26 U.S.C. §6672. Therefore, the IRS 's failure, if any, to collect GLC 's assets and apply them to the trust fund tax liability has no bearing on Defendant's ability to assess a penalty against Plaintiff under Section 6672, and Defendant must prevail on this claim as a matter of law.

Plaintiff has not pointed to any statute or relevant caselaw to refute Defendant's argument. The majority of the cases Plaintiff cites in support of his argument are unconvincing on three counts, in that they are not binding precedent on the Court, do not require the rule for which Plaintiff argues, and did not arise in similar factual situations to the one at hand. See In re Greenberg, 105 B.R. 691 (M.D. Fla. 1989) (individuals in bankruptcy sought order requiring IRS to apply tax payments by employer to trust fund liability for which individuals could be held liable; court required IRS to seek payment in manner furthering interest of the government in maximizing revenue and treating taxpayers equitably and fairly, remanded for evidentiary hearing); Kelly v. Lethert [ 66-2 USTC ¶9509], 362 F.2d 629, 635 (8th Cir. 1966) (court denied injunction to individual assessed penalty under Section 6672 because that section makes responsible individuals and employer "equally liable as co-debtors to the Government, and the Government may proceed against either in the order best suited in its judgment to collect the unpaid tax," although, as a matter of fairness, IRS should seek payment of trust fund taxes from employer first); Tozier v. United States [ 65-2 USTC ¶9621], 1965 U.S. Dist. LEXIS 9801 at *26 (W.D. Wash. April 13, 1965) (court held Section 6672 penalty void where, after expressly agreeing to apply employer's tax payments only to trust fund tax liability for which individuals could be held liable under Section 6672, IRS applied employer's tax payments to other liabilities, then assessed Section 6672 penalty against individuals).

Plaintiff cites one case that stands for a proposition that would support his argument, McCarty v. United States [ 71-1 USTC ¶9232], 437 F.2d 961 (Ct.Cl. 1971) ( IRS abused its discretion in collecting tax from individual under Section 6672 rather than from employer where it could have foreclosed on tax liens on employer's property to collect tax liability). However, in a fact situation very similar to the one before the Court, the United States Court of Appeals for the Sixth Circuit expressly refused to extend the McCarty holding to void a Section 6672 penalty and limited McCarty to its facts, those unusual circumstances where the government itself prevented the employer from paying the trust fund taxes. See Calderone, 799 F.2d at 257 ( McCarty did not apply where financially distressed employer simply failed to pay trust fund taxes and IRS assessed a penalty under Section 6672 against its president). Plaintiff does not allege the government itself or any of its agencies prevented GLC from paying the trust fund taxes at issue here, thus McCarty does not apply to require the IRS to seek payment from GLC before assessing a Section 6672 penalty against him. Id.

Although in his complaint Plaintiff seems to make an equitable estoppel claim (Court File No. 1 ¶19), he failed to elaborate or even raise any such argument in his brief on summary judgment ( See Court File No. 18). Since tax assessments are presumed correct, and Plaintiff has not met his burden of showing Defendant's failure to collect the tax from GLC rendered this assessment erroneous, Defendant must prevail as a matter of law and the Court will GRANT Defendant's motion and DENY Plaintiff's cross motion for summary judgment on this claim. See Collins [ 88-1 USTC ¶9386], 848 F.2d at 742.

B. Defendant's Counterclaim

Because a tax assessment is presumed correct, the taxpayer has the burden even on Defendant's counterclaim of proving the assessment is inaccurate or erroneous. Collins [ 88-1 USTC ¶9386], 848 F.2d at 742. Since Plaintiff has conceded both that the IRS had a claim against GLC in the amount of $18,477.80 for unpaid trust fund taxes for the third quarter of 1990 and that the IRS has the right to assess a penalty under Section 6672 against him as a principal officer of GLC , and Plaintiff's collateral arguments fail as analyzed supra, Plaintiff has made no showing the assessment was inaccurate or erroneous. Id. As Plaintiff has not overcome the presumption of correctness Defendant enjoys in all its assessments, Defendant must prevail as a matter of law as to its claim for this assessment. Id. Therefore, since no genuine dispute of material fact exists as to whether the assessment of the trust fund recovery penalty against him was proper and Defendant must prevail as a matter of law, the Court will GRANT Defendant's motion and DENY Plaintiff's cross motion for summary judgment on Defendant's counterclaim for the amount due on this penalty.



IV. CONCLUSION

For the reasons stated above, the Court will GRANT Defendant's Motion for Summary Judgment (Court File No. 15), and the Court will DENY Plaintiff's Cross Motion for Summary Judgment. (Court File No. 17).

An Order shall enter.

¹ The Court would note Plaintiff's brief (Court File No. 18) focuses on Rayle Electric capital credits Plaintiff asserts were an asset of GLC 's bankruptcy estate, and Defendant's failure to support the objection Plaintiff filed in GLC 's bankruptcy proceedings regarding these capital credits. Because the Court finds Defendant had no obligation whatsoever to pursue assets from the employer ( GLC ) before assessing the Section 6672 penalty against Plaintiff, the Court need not address Defendant's actions or omissions during GLC 's bankruptcy proceedings.

Michelle Dallin, as Personal Representative of the Estate of Donald Young, Deceased, Plaintiff v. United States , Defendant.

U.S. Court of Federal Claims; 00-767T, October 29, 2004.

[ Code Secs. 6203 and 6672]

Trust fund: Penalty: Assessment: Procedural requirements: Notice. --

The IRS properly assessed a Code Sec. 6672 penalty against an individual for unpaid unemployment taxes. Even though there were irregularities in the assessment notice and proceedings, the assessment was in the proper amount, against the proper reponsible individual, and the individual had adequate notice of all the information he sought prior to enforcement procedures being initiated. Moreover, the IRS 's use of a quick assessment, instead of a computer assessment, even though there was no immediate danger of the statute of limitations expiring, did not prejudice the plaintiff, was not dispositive and did not invalidate the assessment..

Hugh Janow, Janow & Meyer, LLC, for plaintiff. Eileen J. O'Connor, Assistant Attorney General, Mildred L. Seidman, Chief, David Gustafson, Assistant Chief, Sheryl B. Flum, for defendant.

OPINION

HORN, Judge: This case originally was captioned Donald Young v. United States. After Mr. Young died, proceedings in this case were stayed until probate was initiated, an executrix of the estate was appointed, and counsel was employed to continue representing the estate. Michelle Dallin was ultimately appointed as the executrix of Mr. Young's estate and Mr. Janow was hired to continue his representation in the case. Therefore, the case is proceeding under the above caption.

This case arises from a penalty assessed by the IRS against Donald Young, as a responsible officer of Southern Jersey Airways, Inc. (SJA). Pursuant to 26 U.S.C. §3102(a), 3402(a), and 7501(a), ¹ employers are required to withhold federal social security and income taxes from their employees' wages and hold these taxes in trust for the government. The withheld taxes (trust fund taxes) must be paid to the United States on a quarterly basis. See 26 C.F.R. §31.6011(a)-4 (1990); Michaud v. United States [ 97-2 USTC ¶50,972], 40 Fed.Cl. 1, 14 (1997), dismissed on other grounds, 152 F.3d 945 (Fed. Cir. 1998). Since the Internal Revenue Service credits employees for the trust fund taxes regardless of whether they are paid by the employer, Congress provided that officers, and specified employees, of such employers can be held personally liable for the trust fund taxes if they are not paid when due. See 26 U.S.C. §6672 ("Any person required to collect, truthfully account for, and pay over any tax imposed by this title who willfully fails to collect such tax, or truthfully account for and pay over such tax ... shall ... be liable to a penalty equal to the total amount of the tax... ."); Shultz v. United States [ 90-2 USTC ¶50,563], 918 F.2d 164, 165 n.1 (Fed. Cir. 1990), cert. denied, 500 U.S. 906 (1991) ("To assure collection when a corporate employer does not pay its employment taxes, section 6672(a) imposes personal liability on persons responsible for seeing that the taxes were paid... ."); Godfrey v. United States [ 84-2 USTC ¶9974], 748 F.2d 1568, 1574 (Fed. Cir. 1984). Thus, any person required to collect, truthfully account for and pay the trust fund taxes imposed by the Internal Revenue Code, and who willfully fails to do so, is liable for a penalty in an amount equal to the tax.

On June 18, 1992, the IRS assessed a penalty pursuant to I.R.C. §6672 in the amount of $122,287.88 against Mr. Young, who was the President and General Manager of SJA during the time period at issue in this case. The IRS issued the assessment based on two grounds: (1) SJA's failure to pay its trust fund taxes relating to a 1988 quarterly federal excise tax ($233.28) and (2) SJA's failure to turn over federal employment taxes withheld from its employees during the first three quarters of tax year 1990 ($122,054.60). In 1994, the IRS abated the penalty relating to tax year 1988 due to existing credits. As a result, the dispute in this case solely concerns the section 6672 penalties associated with SJA's unpaid employment taxes for the first three quarters of 1990. Plaintiff seeks a refund of these penalties in the amount of $118,171.15, plus interest. ²

Plaintiff does not dispute that SJA did not pay all of the trust fund employment taxes for the first three quarters of 1990. In addition, plaintiff does not dispute that, for the purpose of I.R.C. §6672 liability, Mr. Young was a responsible person for SJA during the first three quarters of 1990. Plaintiff alleges, however, that the IRS did not properly assess the section 6672 tax against Mr. Young. Therefore, the issue in this case is only whether the IRS properly assessed an I.R.C. §6672 penalty against the plaintiff for SJA's unpaid employment taxes for the first three quarters of 1990.

FINDINGS OF FACT

In 1992 and 1993, IRS Revenue Officer Barbara Alzner surveyed the administrative records of SJA and concluded that the corporation had failed to pay withheld trust fund taxes relating to its 1988 federal excise tax and federal employment taxes during the first three quarters of 1990. In mid-June, 1992, Ms. Alzner determined that the statutory period for assessing a section 6672 penalty against SJA's responsible persons for failing to pay withheld excise taxes for the period ending December 31, 1988, would expire on June 19, 1992. ³ On June 15, 1992, Revenue Officer Alzner signed a Form 4183, "Recommendation re 100-Percent Penalty Assessment." The form was then signed by a Group Manager on June 18, 1992. The form indicated that a section 6672 penalty assessment was being considered against Donald Young, the responsible officer, in the amount of $122,287.88. Although the document did not list the months and years at which the assessment was directed, the parties agree that the intended amount under consideration for assessment included the excise taxes for the period ending December 31, 1988 and the trust fund taxes for the first three quarters of 1990, despite the fact that the time for assessing a penalty was imminently expiring only for the period ending December 31, 1988. ⁴ Revenue Officer Alzner wrote the following on the Form 4183: "Young is indicated as a potentially responsible person.... Assessment is being made to protect ASED [Assessment Statutory Expiration Date]. Further documentation to establish responsibility and willfulness under I.R.C. 6672 will be gathered and an amended 4183 will be submitted when my investigation has been completed."

"Assessment" refers to a prescribed procedure for officially recording the amount of a taxpayer's administratively determined tax liability. The IRS makes assessments by having an assessment officer fill out and sign a "Summary Record of Assessment," also known as the Form 23-C. The Form 23-C shows all of the assessments for all taxpayers by a particular district, in a particular period, on a particular date, but does not contain information on individual taxpayers. On June 17, 1992, a Form 23-C was generated by the IRS 's Brookhaven Service Center for the assessment date of June 18, 1992. The Form 23-C shows that for June 18, 1992, a total of thirty-two assessments were made. The Form 23-C also states that there were no "Principal Taxpayers" and no amounts "Related to Jeopardy Assessments" for June 18, 1992.

The June 18, 1992 assessment was made against Mr. Young when the IRS 's Brookhaven Service Center 's assessing officer signed the Form 23-C. The June 18, 1992, section 6672 penalty against the Mr. Young was then recorded on the IRS computer system. Therefore, on June 18, 1992, the IRS made a section 6672 penalty assessment against the plaintiff in the amount of $122,287.88. This amount included the section 6672 penalty of $233.28, which related to the trust fund portion of SJA's unpaid federal excise tax for the period ending December 31, 1988, and a $122,054.60 penalty associated with the trust fund portion of SJA's unpaid employment taxes for the first three quarters of 1990. ⁵

A Form 3552, Notice of Tax Due on Federal Tax Return, dated June 18, 1992, was prepared by the defendant and received by Mr. Young. The form notified Donald Young that a civil penalty of $122,287.88 for the tax period ending "12/31/88" had been assessed against him and demanded that plaintiff pay that amount. Because the IRS had not determined Mr. Young's willfulness or responsibility, it could not yet enforce payment of the assessment against him. However, pursuant to I.R.C. §6303, the IRS was required to notify Mr. Young, within sixty days, that an assessment had been made. ⁶

After completing her investigation, on January 15, 1993, Revenue Officer Alzner signed a second Form 4183, recommending an assessment of a section 6672 penalty of $201,706.04 against Donald Young, concluding that he was a responsible officer for SJA. This assessment represented the unpaid trust fund portion of SJA's withheld excise taxes for the period ending December 31, 1988, and withheld employment taxes for all four quarters of 1990. ⁷

On January 19, 1993, the IRS sent Donald Young a letter informing him of the Proposed Assessment of 100 Percent Penalty, accompanied by a Form 2751. The cover letter stated that the plaintiff had been identified as a person required to collect, account for, and pay over withheld taxes for SJA, and indicated that he had a right to appeal this determination. The accompanying Form 2751 indicated that plaintiff's section 6672 liability was $201,706.04 for willfully failing to pay SJA's withheld excise taxes for the period ending "12/31/88," and unpaid employment taxes for all four quarters of 1990. This amount included $394.92 for the first quarter of 1990, $71,073.11 for the second quarter of 1990, $50,586.57 for the third quarter of 1990, $79,418.16 for the fourth quarter of 1990, and $233.28 for unpaid excise taxes for the period ending December 31, 1988. Thus, the Form 2751 enumerated the amount of tax and the tax periods related to SJA's unpaid tax liability. Following plaintiff's receipt of the January 19, 1993 letter and the Form 2751, the IRS could enforce collection of the section 6672 penalty.

Plaintiff appealed the IRS 's finding of liability for a section 6672 penalty in the amount of $201,706.04. Subsequently, in 1994, the IRS abated the section 6672 assessment related to SJA's unpaid federal excise tax for the period ending December 31, 1988. The IRS Appeals Division, however, upheld the propriety of assessing a section 6672 penalty against plaintiff for failing to pay over employment taxes withheld by SJA during all four quarters of 1990. In its motion for summary judgment, plaintiff admits that the assessment for the fourth quarter of 1990 is not at issue in the present case. Therefore, this case centers solely upon the June 18, 1992, $122,054.60 penalty assessment that corresponds to the trust fund portion of SJA's unpaid employment taxes for the first three quarters of 1990. In the joint stipulation of facts, the plaintiff and defendant state that the IRS 's determination that plaintiff was a responsible person for SJA for the four calendar quarters of 1990 is not at issue in this case.

By letter dated October 12, 1995, the IRS denied plaintiff's request for abatement of the section 6673 penalty for the second and third quarters of 1990. The October 12, 1995 letter also informed Mr. Young that he could file suit to contest the IRS 's disallowance within two years from the mailing date of the letter. On October 11, 1996, Mr. Young filed a Form 843, requesting a refund of $124,985.00 for the period ending December 31, 1988. On this form, Mr. Young stated that the " IRS improperly assessed [a] miscellaneous penalty of $122,054.00 for the period ending 12/31/88. Form 2751 proposed an assessment for period ending 12/3/88 [sic] in the amount of $233.38." According to the joint stipulation of facts, which referred to an Exhibit 2, on September 18, 2000, the IRS denied plaintiff's refund claim. However, the letter indicated as Exhibit 2 in the joint stipulations is dated August 9, 1999, and refers to the claim for refund and request for abatement dated October 11, 1996.

Paragraph ten of the original joint stipulation of facts submitted by the parties read in pertinent part: "On June 18, 1992 18,1992, the IRS made a jeopardy assessment against plaintiff pursuant to §6862 of a §6672 penalty in the amount of $122,054.60." Subsequently, however, the defendant's attorney filed a motion to be relieved, in part, from paragraph ten of the parties' joint stipulation of facts. According to defendant's counsel, after further research on the case, it became apparent to her that a jeopardy assessment had not been made; rather, the defendant now contends that a quick assessment is actually at issue. The plaintiff initially opposed defendant's motion for relief, asserting that a jeopardy assessment had been made.

After oral argument and discussions on defendant's motion to be relieved in part from paragraph 10 of the parties' joint stipulation of facts, the plaintiff agreed to withdraw its opposition to defendant's motion for relief. Therefore, the court granted defendant's motion to be relieved, in part, from paragraph ten of the parties' joint stipulation of facts, thereby deleting the reference to a jeopardy assessment in paragraph ten of the parties' joint stipulation of facts from the record. Paragraph 10 now reads, in pertinent part, "On June 18, 1992, the IRS made an assessment against plaintiff pursuant to §6672 in the amount of $122,054.60." The granting of this motion resulted in the emergence of a material factual dispute between the parties as to the nature of the penalty that had been assessed in this case. However, as discussed below, the characterization of the assessment the IRS used does not affect plaintiff's tax liability.

DISCUSSION

The parties filed cross-motions for summary judgment on the plaintiff's complaint pursuant to RCFC 56. RCFC 56 is patterned on Rule 56 of the Federal Rules of Civil Procedure (Fed. R. Civ. Plaintiff.) and is similar both in language and effect. Both rules provide that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." RCFC 56(c); Fed. R. Civ. Plaintiff. 56(c); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986); Adickes v. S. H. Kress & Co., 398 U.S. 144, 157 (1970); Telemac Cellular Corp. v. Topp Telecom, Inc., 247 F.3d 1316, 1323 (Fed. Cir. 2001), reh'g denied and reh'g en banc denied (2001); Monon Corp. v. Stoughton Trailers, Inc., 239 F.3d 1253, 1257 (Fed. Cir. 2001); Avenal v. United States , 100 F.3d 933, 936 (Fed. Cir. 1996), reh'g denied (1997); Creppel v. United States , 41 F.3d 627, 630-31 (Fed. Cir. 1994). A fact is material if it will make a difference in the result of a case under the governing law. Irrelevant or unnecessary factual disputes do not preclude the entry of summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. at 247-48; see also Monon Corp. v. Stoughton Trailers, Inc., 239 F.3d at 1257; Curtis v. United States, 144 Court Cl. 194, 199, 168 F.Supp. 213, 216 (1958), cert. denied, 361 U.S. 843 (1959), reh'g denied, 361 U.S. 941 (1960).

When reaching a summary judgment determination, the judge's function is not to weigh the evidence and determine the truth of the case presented, but to determine whether there is a genuine issue for trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. at 249; see, e.g., Ford Motor Co. v. United States, 157 F.3d 849, 854 (Fed. Cir. 1998) (the nature of a summary judgment proceeding is such that the trial judge does not make findings of fact); Johnson v. United States, 49 Fed.Cl. 648, 651 (2001), aff'd, 317 F.3d 1331 (Fed. Cir. 2003); Becho, Inc. v. United States , 47 Fed.Cl. 595, 599 (2000). The judge must determine whether the evidence presents a disagreement sufficient to require submission to fact finding, or whether the issues presented are so one-sided that one party must prevail as a matter of law. See Anderson v. Liberty Lobby, Inc., 477 U.S. at 250-52; Jay v. Sec'y of Dep't of Health and Human Servs., 998 F.2d 979, 982 (Fed. Cir. 1993), reh'g denied and en banc suggestion declined (1993). When the record could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial, and the motion must be granted. See, e.g., Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Hall v. Aqua Queen Mfg., Inc., 93 F.3d 1548, 1553 n.3 (Fed. Cir. 1996). In such a case, there is no need for the parties to undertake the time and expense of a trial, and the moving party should prevail without further proceedings. Summary judgment:

[S]aves the expense and time of a full trial when it is unnecessary. When the material facts are adequately developed in the motion papers, a full trial is useless. "Useless" in this context means that more evidence than is already available in connection with the motion for summary judgment could not reasonably be expected to change the result.

Dehne v. United States , 23 Cl. Court . 606, 614-15 (1991) (citing Pure Gold, Inc. v. Syntex, Inc., 739 F.2d 624, 626 (Fed. Cir. 1984)), vacated on other grounds, 970 F.2d 890 (Fed. Cir. 1992); United States Steel Corp. v. Vasco Metals Corp., 394 F.2d 1009, 1011 (C.C.P.A. 1968).

Summary judgment, however, will not be granted if "the dispute about a material fact is 'genuine,' that is, if the evidence is such that a reasonable [trier of fact] could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. at 248; Eli Lilly & Co. v. Barr Labs., Inc., 251 F.3d 955, 971 (Fed. Cir. 2001), cert. denied, 534 U.S. 1109 (2002); Gen. Elec. Co. v. Nintendo Co., 179 F.3d 1350, 1353 (Fed. Cir. 1999). In other words, if the nonmoving party produces sufficient evidence to raise a question as to the outcome of the case, then the motion for summary judgment should be denied. Any doubt over factual issues must be resolved in favor of the party opposing summary judgment, to whom the benefit of all presumptions and inferences runs. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. at 587-88; Monon Corp. v. Stoughton Trailers, Inc., 239 F.3d at 1257; Wanlass v. Fedders Corp., 145 F.3d 1461, 1463 (Fed. Cir. 1998), reh'g denied and en banc suggestion declined (1998).

The initial burden on the party moving for summary judgment to produce evidence showing the absence of a genuine issue of material fact may be discharged if the moving party can demonstrate that there is an absence of evidence to support the nonmoving party's case. See Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986); see also Trilogy Communications, Inc. v. Times Fiber Communications, Inc., 109 F.3d 739, 741 (Fed. Cir. 1997) (quoting Conroy v. Reebok Int'l, Ltd., 14 F.3d 1570, 1575 (Fed. Cir. 1994), reh'g denied and en banc suggestion declined (1995)), reh'g denied and en banc suggestion declined (1997); Lockwood v. Am. Airlines, Inc., 107 F.3d 1565, 1569 (Fed. Cir. 1997). If the moving party makes such a showing, the burden shifts to the nonmoving party to demonstrate that a genuine dispute regarding a material fact exists by presenting evidence which establishes the existence of an element essential to its case upon which it bears the burden of proof. See Celotex Corp. v. Catrett, 477 U.S. at 322; Am. Airlines v. United States [ 2000-1 USTC ¶50,236], 204 F.3d 1103, 1108 (Fed. Cir. 2000); see also Schoell v. Regal Marine Indus., Inc., 247 F.3d 1202, 1207 (Fed. Cir. 2001).

Pursuant to RCFC 56, a motion for summary judgment may succeed whether or not accompanied by affidavits and/or other documentary evidence in addition to the pleadings already on file. See Celotex CorD Corp. v. Catrett, 477 U.S. at 324. Generally, however, in order to prevail by demonstrating that a genuine issue for trial exists, the nonmoving party must go beyond the pleadings by use of evidence such as affidavits, depositions, answers to interrogatories and admissions. Id.

Even if both parties argue in favor of summary judgment and allege an absence of genuine issues of material fact, however, the court is not relieved of its responsibility to determine the appropriateness of summary disposition in a particular case. See Chevron USA, Inc. v. Cayetano, 224 F.3d 1030, 1037 n.5 (9th Cir. 2000), cert. denied, 532 U.S. 942 (2001); Prineville Sawmill Co. v. United States, 859 F.2d 905, 911 (Fed. Cir. 1988) (citing Mingus Constructors, Inc. v. United States, 812 F.2d 1387, 1391 (Fed. Cir. 1987)). "[S]imply because both parties moved for summary judgment, it does not follow that summary judgment should be granted one or the other." LewRon Television, Inc. v. D.H. Overmyer Leasing Co., 401 F.2d 689, 692 (4th Cir. 1968), cert. denied, 393 U.S. 1083 (1969); see also B.F. Goodrich Co. v. U.S. Filter Corp., 245 F.3d 587, 593 (6th Cir. 2001); Massey v. Del Labs., Inc., 118 F.3d 1568, 1573 (Fed. Cir. 1997).

Cross-motions are no more than a claim by each party that it alone is entitled to summary judgment. The making of such inherently contradictory claims, however, does not establish that if one is rejected the other necessarily is justified. See B.F. Goodrich Co. v. U.S. Filter Corp., 245 F.3d at 593; Atl. Richfield Co. v. Farm Form Credit Bank of Wichita, 226 F.3d 1138, 1148 (10th Cir. 2000); Allstate Ins. Co. v. Occidental Int'l., Inc., 140 F.3d 1, 2 (1st Cir. 1998); Reading & Bates Corp. v. United States [ 98-1 USTC ¶50,290], 40 Fed.Cl. 737, 748 (1998). The court must evaluate each party's motion on its own merits, taking care to draw all reasonable inferences against the party whose motion is under consideration. See DeMarini Sports, Inc. v. Worth, Inc., 239 F.3d 1314, 1322 (Fed. Cir. 2001); Gart v. Logitech, Inc., 254 F.3d 1334, 1338-39 (Fed. Cir. 2001), reh'g and reh'g en banc denied (2001), cert. denied, 534 U.S. 1114 (2002).

The issue in this case is whether the IRS properly assessed a section 6672 penalty against the plaintiff for SJA's unpaid employment taxes for the first, second, and third quarters of 1990. The plaintiff argues that the IRS did not follow proper procedures when assessing this penalty and, thus, summary judgment should be granted in favor of the plaintiff and the plaintiff should be refunded the penalty amounts. The defendant disagrees and asks for summary judgment in its favor. The parties have stipulated that "the propriety of the June 18, 1992 jeopardy assessment made against plaintiff is not at issue in this case." ⁸ In addition, the parties have stipulated that: "For purposes of 26 U.S.C. §6672 liability, plaintiff was a responsible person for Southern Jersey Airways, Inc. for the three quarters of 1990 at issue in this case," and have not argued that the taxes at issue were due.

The plaintiff asserts that there is no evidence in the existing supporting IRS documents showing that an assessment was made for the first three quarters of 1990. The summary record of assessments, the Form 23-C, states that no jeopardy assessments were made on the assessment date of June 18, 1992, while the plaintiff's Form 4340 states that a jeopardy assessment was completed, and places the entire assessment under the period ending December 31, 1988. The plaintiff also argues that, even if the penalty assessment for the period ending December 31, 1988 was valid, the assessment and the supporting documents failed to comply with I.R.C. §6203 and its implementing regulation, 26 C.F.R. §301.6203-1(1990), such that the defendant was not permitted to include the section 6672 penalties for the subsequent quarters, the first three quarters of 1990, in that assessment.

The IRS Properly Assessed a Section 6623 Tax Against the Plaintiff.