Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.


August 29, 1984


The opinion of the court was delivered by: Shadur, District Judge.


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 staff.

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).

Sometime in July 1978 Coalition employed a new accountant, who suggested Coalition should not be responsible for paying FICA taxes because not-for-profit charitable organizations are exempt from such taxes (Latimer Dep. 32-33). That accountant recommended communicating with an IRS agent to ask that the FICA assessments be abated (Latimer Dep. 34). Coalition did request an abatement, but its request was denied.*fn5 Thus wholly apart from the level or extent of their prior knowledge, at least as of July 1978 both Latimer and Van Meter specifically knew the withheld taxes had not been paid over to the United States (Latimer Dep. 32; Van Meter Dep. 7-8).

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.

Section 6672 Liability

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 ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.