Appeal from the United States District Court for the Northern District of Indiana. No. H 84-428-Andrew P. Rodovich, Magistrate.
Posner, Flaum, Circuit Judges, and Will, Senior District Judge.*fn*
WILL, Senior District Judge
Robert Sawyer appeals from the district court's dismissal, sua sponte of his complaint seeking an income tax refund following a tax assessment under 26 U.S.C. § 6672(a) and grant of summary judgment in favor of the United States' counterclaim for the unpaid balance of the taxes assessed, both issued simultaneously with an order denying Sawyer's motion for summary judgment.*fn1 After careful examination, we find that genuine material issues of fact may be in dispute with respect to Sawyer's complaint and granting summary judgment in favor of the United States on its counterclaim.
Sawyer was the president and sole shareholder of Sawyer Transport, Inc., a Minnesota trucking corporation licensed by the Interstate Commerce Commission to transport commodities in 48 states. While operating during the third and fourth quarters of 1981, Sawyer Transport failed to pay $133,486.90, the applicable employee withholding tax, to the Internal Revenue Service ("IRS"), pursuant to 26 U.S.C. § 3102(a).*fn2 On October 27, 1981, Sawyer Transport filed a Chapter 11 Petition with the United States Bankruptcy Court for the Northern District of Illinois. Sawyer continued as the chief operating officer of Sawyer Transport while the Chapter 11 Petition was pending. On November 15, 1982, the Chapter 11 Petition was converted into a Chapter 7 liquidation proceeding and Nathan Yorke was appointed trustee in bankruptcy for Sawyer Transport.
On October 12, 1982, Yorke filed a petition with the Bankruptcy Court, on behalf of Sawyer Transport, seeking an income tax refund of $73,179.10, as a result of business losses incurred between 1974 and 1980. Sawyer notified Yorke and the IRS that he was opposed to payment of the income tax refund to the bankruptcy estate for the benefit of all creditors rather than applying the refund as a setoff against Sawyer Transport's withholding tax liability, and, concurrently, against Sawyer's possible personal liability for any withholding taxes owed. On or about March 22, 1983, however, the IRS paid the full income tax refund into the bankruptcy estate for the benefit of all Sawyer Transport's creditors.
On August 1, 1983, the IRS issued a 100% penalty and assessment for Sawyer Transport's delinquent withholding taxes ($133,486.90) against Sawyer individually, pursuant to 26 U.S.C. § 6672(a) ("§ 6672"),*fn3 alleging that as a responsible person of Sawyer Transport, Sawyer willfully failed to pay the taxes owed.
Subsequently, the IRS determined that Sawyer and his wife were entitled to a $63,784.13 income tax refund unrelated to Sawyer Transport's withholding tax deficiency. This refund was applied to (and deducted from) the § 6672 assessment against Sawyer.
Sawyer commenced this action on June 26, 1984, seeking a refund in the amount of $100.75, the amount which was paid by him on August 31, 1983 in partial satisfaction of the $133,486.90 assessment. On October 19, 1984, the United States counterclaimed for the unpaid balance of the assessment ($69,702.77) plus accrued interest from August 1, 1983.
On April 30, 1985, Sawyer filed a motion for summary judgment, alleging that the United States was required to credit him individually with the Sawyer Transport income tax refund rather than pay it into the bankruptcy estate for the benefit of Sawyer Transport's creditors and, thus, Sawyer owed no tax liability.*fn4 The district court denied Sawyer's motion for summary judgment and, at the same time, sua sponte dismissed his complaint and granted summary judgment in favor of the United States on its counterclaim. Sawyer appeals for the adverse judgment dismissing his complaint and granting summary judgment in favor of the United States' counterclaim. He does not appeal from the denial of his summary judgment motion which is not a final appealable order.
Sawyer contends on appeal that he was improperly denied an opportunity to establish and present his defense in opposition to the United States' counterclaim. Although he brought a motion for summary judgment with regard to his claim under § 6672, Sawyer's theory in that motion was unrelated to his defense against the United States' counterclaim. Specifically, in his motion for summary judgment, Sawyer claimed that the United States incorrectly credited Sawyer Transport's income tax refund to the bankruptcy estate for the benefit of Sawyer Transport's creditors, rather than crediting the refund against Sawyer Transport's withholding tax liability. If the IRS had credited the refund against Sawyer Transport's withholding tax liability, Sawyer claims his personal liability would have been equally reduced and, together with the unrelated income tax refund credited to him and his wife, he would not have had any withholding tax liability.
In contrast, in his defense against the United States' counterclaim, Sawyer alleges that his responsibility for Sawyer Transport's failure to pay its withholding taxes did not satisfy the willfulness standard required under § 6672. Thus, although Sawyer had claimed that there existed no genuine issues of material fact with respect to his motion for summary judgment, he did not admit that no material facts were in dispute with respect to the United States' counterclaim. Accordingly, Sawyer's ...