A district court has found that the IRS properly determined that a corporation’s minority shareholder and president was liable for the trust fund recovery penalty under Code Sec. 6672. As president, the individual approved, signed, and submitted a variety of tax forms and documents to Federal and state authorities on behalf of the corporation. Therefore, he was a responsible person, and he failed to ensure the trust fund taxes were being paid.
Anthony Samango, Jr., was the sole shareholder and president of Carson Concrete, a concrete construction company. As president of Carson Concrete, he oversaw all aspects of the business, including reviewing and signing all federal and state tax returns for Carson Concrete. Samango was also a minority shareholder and president of SS Frames. As president of SS Frames, Samango approved, signed, and submitted a variety of tax forms and documents to Federal and state authorities on behalf of SS Frames.
While Samango was president of Carson Concrete and SS Frames, he signed checks from a Carson Concrete account to pay SS Frames' liability for state unemployment compensation insurance. Samango also approved, signed and submitted to the IRS Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, for SS Frames.
On September 12, 2014, the IRS assessed a trust fund recovery penalty under Code Sec. 6672 against Samango. The IRS determined that Samango was a responsible person who failed to collect, account for, and pay over trust fund taxes for four quarters during which SS Frames was working with Carson Concrete as a subcontractor.
Samango paid part of the assessed tax liability and filed a refund claim alleging that he was only a minority shareholder in SS Frames, he had no knowledge of SS Frames' finances, operations, or general decision making, and he had no power or authority to pay SS Frames' taxes.
Samango was a person responsible for paying trust fund taxes who willfully failed to pay such taxes to the government; therefore, he was liable for the trust fund penalty under Code Sec. 6672. The district court rejected Samango's claims that he was not a responsible person because he had no oversight or control of SS Frames' finances.
Samango signed and certified government forms for SS Frames as its "manager" or as its "president." In addition, Samango paid taxes owed by SS Frames using funds from a Carson Concrete account for which he had signatory authority. Thus, Samango clearly had enough authority to be a responsible person for SS Frames under Code Sec. 6672.
The district court also rejected Samango's argument that, even if he was a responsible person, he did not willfully fail to pay over the trust fund taxes to the government. Samango testified that he did not take any steps to ensure that SS Frames' trust fund taxes were, in fact, being paid to the government. Samango's admission, coupled with the fact he was a responsible person, was sufficient to establish that he acted willfully.
Given his position as president of SS Frames, Samango should have known that there was a grave risk that the trust fund taxes were not being paid, he was in a position to very easily find out for certain whether they were being paid, but he did nothing to find out if the trust fund taxes were actually being paid.
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