The opinion of the court was delivered by: Shadur, District Judge.
MEMORANDUM OPINION AND ORDER
Carl Latimer ("Latimer") originally sued the United States
under 26 U.S.C. § 7422 ("Section 7422"*fn1) for refund of
withholding taxes assessed against, and paid by, him. As is
typical in these cases,*fn2 the United States counterclaimed
against Latimer and Frederick Van Meter ("Van Meter") for taxes
assessed under Section 6672.
Now the United States has moved under Fed.R.Civ.P. ("Rule")
56 for summary judgment against each individual. For the
reasons set forth in this memorandum opinion and order, its
motion is granted.
During the tax periods in question*fn4 Latimer was
President and Executive Director, and Van Meter was Secretary,
of the Coalition for United Community Action ("Coalition")
(Latimer Dep. 5-6; Van Meter Dep. 5). Coalition received its
funds from several agencies (ultimately deriving their funds
from the federal government) for use in hiring disadvantaged
minority youth ("trainees") and purchasing abandoned
buildings. Coalition then put the trainees to work
rehabilitating the abandoned buildings (Latimer Dep. 6-7).
Coalition also used its funds to maintain an office space and
To receive a funding allotment, Coalition submitted a
proposed budget to each funding agency, which then approved a
grant to Coalition for that fiscal year (Latimer Dep. 7-10).
Coalition's budgets included amounts necessary to pay its
office staff payroll, including amounts necessary to pay the
withheld federal income and social security ("FICA") taxes for
that staff. As for the trainees, however, each budget
requested only an amount necessary to cover net payroll
— the wages actually paid out to trainees — without any
provision for federal income taxes or FICA taxes withheld on
their behalf (Latimer Dep. 20-21).
Once a funding agency had approved a grant to Coalition, the
actual draw down of funds required Coalition to submit
vouchers to the agency detailing the expense. Each funding
agency would audit the voucher and the later payments by
Coalition to make sure monies were being spent in accordance
with the budget approved by the agency (Latimer Dep. 23-27).
Latimer testified his job as Executive Director was to
oversee everything, but he mainly involved himself with making
sure the work with the trainees went smoothly (Latimer Dep.
26-27). Van Meter was responsible for keeping up on all
corporate matters (Van Meter Dep. 6). Although Latimer kept
physical custody of the Coalition's checkbooks, both Latimer
and Van Meter were required to sign all Coalition checks
(Latimer Dep. 29). Either Latimer or Van Meter could sign tax
returns on Coalition's behalf (Latimer Dep. 12). Both Latimer
and Van Meter participated in and were responsible for working
on the budgets submitted to the funding agencies (Latimer Dep.
17-18). Either had the authority to submit vouchers to the
funding agencies (Latimer Dep. 27).
In March 1981 the United States' Internal Revenue Service
("IRS") assessed each of Latimer and Van Meter $74,011.97*fn6
under Section 6672 for failure to pay over income and FICA
taxes withheld from employees' salaries. Latimer paid $798.04
and filed a claim for refund with the IRS, which was denied.
Employers are required to withhold FICA taxes and federal
income taxes from their employees' wages (Sections 3102 and
3402). Those amounts are then held in trust for the benefit of
the United States (Section 7501(a)). If an employer fails to
collect, account for or pay over such trust funds to the
United States, Section 6672 allows the IRS to assess a 100%,
penalty against those responsible for such failure. That
penalty is separate from and in addition to the employer's
liability for the tax due and owing. Howard v. United States,
711 F.2d 729, 733 (5th Cir. 1983).
Section 6672(a) provides:
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 ...