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PINTO v. U.S.

October 17, 2002

RICHARD PINTO PLAINTIFF
V.
UNITED STATES OF AMERICA, DEFENDANT.



The opinion of the court was delivered by: Elaine E. Bucklo, United States District Judge

MEMORANDUM OPINION AND ORDER

Richard Pinto was the owner of Pinto Brothers Construction, Inc. ("Pinto Brothers"). Pinto Brothers failed to pay employment taxes out of money withheld from employee wages and was assessed hundreds of thousands of dollars in trust fund tax penalties by the Internal Revenue Service ("IRS") Richard Pinto was assessed personal liability us a "responsible person" for the trust fund tax penalty under 26 U.S.C. § 6672 in the amount of $214,702.77. Mr. Pinto is also the 60 percent owner of a company called Pinto Construction Group, Inc. ("Pinto Construction"), which has made payments on the trust fund liability of Pinto Brothers, Believing that he has overpaid on his individual trust fund liability, Mr. Pinto sues the United States for an accounting and a refund of an unspecified amount. The United States filed an answer and counterclaim for a trust fund liability balance of $39,464.11. The United States moves for summary judgment, and Mr. Pinto filed a cross-motion for summary judgment. I grant the government's motion and deny Mr. Pinto's motion.

I.

Both the government and Mr. Pinto move for summary judgment, which is proper only when the record "show[s] 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." Fed.R.Civ.P. 56(c) In determining whether a genuine issue of material fact exist, I must construe all facts in the light most favorable to the non-moving party and draw all reasonable and justifiable inferences in its favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). On cross-motions for summary judgment, I give separate consideration to the evidence of each party and the inferences to be drawn from it. See Hendricks-Robinson v. Excel Corp., 154 F.3d 685, 692 (7th Cir. 1998).

However, I dispose of Mr. Pinto's motion without reaching its merits. Local General Rule 56.1(a) requires any party moving for summary judgment to submit "a statement of material facts as to which the moving party contends there is no genuine issue and that entitle the moving party to a judgment as a matter of law." The statement of material facts "shall consist of short numbered paragraphs, including within each paragraph specific references to the affidavits, parts of the record, and other supporting materials relied upon to support the facts set forth in that paragraph. Failure to submit such a statement constitutes grounds for denial of the motion." Id. Failure to comply with the local rules is not merely a "harmless technicality," but can be a "fatal" mistake. See Waldridge v. American Hoechst Corp., 24 F.3d 918, 924 (7th Cir. 1994). The Seventh Circuit has repeatedly upheld the strict application of Local Rule 56.1. See Servin v. GATX Logistics, Inc., 187 F.R.D. 561, 562-63 (N.D. Ill. 1999) (Gettleman, J.) (citing cases).

Although Mr. Pinto includes a statement of facts in his motion that consists of numbered paragraphs, and he attaches evidence to it, he does not provide any citations to the record in the statement of facts. The Rule 56.1(a) statement is a "roadmap" to these facts, without which I "should not have to proceed further, regardless of how readily [I] might be able to distill the relevant information from the record on [my] own." Waldridge, 24 F.3d at 923. Mr. Pinto's statement of facts does not comply with Rule 56.1, so his motion is denied. See Servin, 187 F.R.D. at 563; see also Prudential Ins. Co. of America v. Tomaszek, No. 90 C 6892, 1992 WL 26734, at *2 (N.D. Ill. Feb. 7, 1992) (Shadur, J.) (noting that predecessor to Rule 56.1(a) "expressly permits the denial of a summary judgment motion for non-compliance with its terms").

II.

Employers are required to withhold federal taxes from employee wages in trust for the United States government. 26 U.S.C. § 3102 (a), 3402(a). These taxes are commonly referred to as "trust fund taxes." See United States v. Energy resources Co., Inc., 495 (U.S. 545, 546-47 (1990). If an employer fails to pay trust fund taxes, § 6672 of the Internal Revenue Code, known as the "responsible person penalty provision," see Buffalow v. United States, 109 F.3d 570, 573 (9th Cir. 1997), allows the government to collect a sum equal to the amount owed "directly from the officers or employees of the employer who are responsible for collecting the tax." >Energy Resources, 495 U.S. at 547; 26 U.S.C. § 6672 (a)

Richard Pinto was the president and 100 percent owner of Pinto Brothers. Pinto Brothers tailed to pay trust fund taxes for, inter alia, the second quarter of 1991 and all four quarters of 1994. When Pinto Brothers went out of business, it assigned its assets for the benefit of its creditors. Eight days before the scheduled sale of assets in June 1994, Mr. Pinto formed a new business, Pinto Construction, of which he is a 60 percent owner and his wife, Doris Pinto, is a 40 percent owner. The government, says that the assets of Pinto Brothers were assigned to Pinto Construction, based on a statement of intent to assign the assets to Mrs. Pinto in an IRS report. Mr. Pinto denies that Pinto Construction is the assignee of Pinto Brothers (though he provides no evidence to support the denial),*fn1 but any dispute is immaterial for reason I explain below.

On August 6, 1995, Mr. Pinto was assessed personal liability in the amount of $214,702.77*fn2 for the trust fund tax penalties of Pinto Brothers from the third and fourth quarters of 1993 as a "responsible person" under § 6672. Beginning in August 1994, Pinto Construction made monthly payments of $5,000 toward the trust fund tax liability of Pinto Brothers. Each check from Pinto Construction bore the following endorsement:

We hereby tender payment of $5,000.00 and specifically demand that such funds be applied to the trust fund tax liability of Pinto Bros. Construction, Inc., FEIN #36-3641466.

Def. Ex. 5. None of the $5,000 payments was designated for a particular quarter of trust fund tax liability. Pinto Construction made a total of thirty-seven monthly payments of $5,000.*fn3 The IRS allocated these payments among all four quarters of tax liability for 1993. Mr. Pinto's civil penalty account, for his personal liability, received cross-reference credit for the twenty-nine monthly payments made after his assessment on April 6, 1995. A total of $124,500 of the monthly payments were originally allocated to the third and fourth quarters of 1993. Def. Ex. 5, ¶ 14.

Mr. Pinto also made payments personally, both voluntarily and in response to a levy, against his civil liability in the amount of $143,238.66. Def. Ex. 5, ¶ 10. The government does not say whether Mr. Pinto specifically designated any of his individual payments, but all of them were allocated to the trust fetid tax liability for the fourth quarter of 1993, and Mr. Pinto does not object to this allocation.


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