The opinion of the court was delivered by: Matthew F. Kennelly, District Judge
MEMORANDUM OPINION AND ORDER
This case arises out of a $544,951.50 tax assessment against Frederick C. Cappetta imposed by the Internal Revenue Service (IRS) under Section 6672 of the Internal Revenue Code. Cappetta originally filed this suit seeking a refund of $1,150 in taxes he purportedly overpaid in April 2003. The United States responded by filing a counterclaim alleging that Cappetta, as chairman of the board of directors of Wisconsin Color Press, Inc. (WCP), willfully failed to pay $544,951.50 in taxes withheld from the wages of his employees during the fourth quarter of 2001. The United States has moved for summary judgment on all claims. For the following reasons, the Court grants the motion.
During 2001 and 2002, Cappetta was the chairman of the board of directors and chief executive officer of WCP, a printing company located in Milwaukee, Wisconsin that once employed over 500 employees. In his role as CEO, Cappetta was the "principal executive officer of the corporation[,] and the day to day operation of the corporation [was] his duty and responsibility." See Def. Ex. 21. Consistent with the mandates of the board of directors, Cappetta was authorized to "execute for the corporation certificates for its shares, and any contracts, deeds, mortgages, bonds, or other instruments which the board of directors . . . authorized to be executed." Id.
Throughout 2001, particularly in the last quarter of that year, WCP experienced financial difficulties due to a substantial drop in printing sales. As a result, it had difficulty paying off creditors and neglected to pay to the government federal income, Social Security, and Medicare taxes withheld from the wages of WCP employees. According to an IRS Form 941 filed by the company on January 31, 2002, WCP owed $781,613.72 in unpaid employment taxes during the fourth quarter of 2001. Cappetta learned of the unpaid taxes, at the latest, on February 7, 2002.
On February 8, 2002, Internal Revenue Officer Lillie Johnson called Jeff Wilcott, WCP's Chief Accountant, to set up an appointment to discuss a resolution of the company's non-payment. On March 6, 2002, Johnson met with Cappetta, Wilcott, and Ken Maynor, WCP's vice president of finance, and the parties agreed that WCP would pay its unpaid taxes in weekly installments of $20,500 over a period of nine months. As it happened, WCP only made one payment of $20,500 before it filed a bankruptcy petition, signed by Cappetta as CEO of WCP, on March 15, 2002.
After WCP filed for bankruptcy, the IRS took no further action against the company with respect to the unpaid balance for the fourth quarter of 2001. It did, however, attempt to recoup the taxes by assessing a "trust fund recovery penalty" against Cappetta individually. He received a letter from the IRS on or around April 8, 2002 advising him that, as a person who was required to collect, account for, and pay employment taxes for WCP, the IRS planned to assess a $619,241.03 penalty against him, recoverable as though he himself owed the tax.
Cappetta responded to the April 8, 2002 letter by contesting the amount of tax assessed. He argued that the IRS should reduce his individual tax liability by $74,289.44 because WCP made several payments toward its fourth quarter of 2001 tax liability for which the IRS did not properly account. After considering Cappetta's response, the IRS agreed that it had over-assessed Cappetta's liability and, by letter dated August 18, 2004, notified Cappetta of a partial abatement of the penalty. His adjusted liability was thus lowered to $544,951.50.
Cappetta maintains that he should not be held responsible for this adjusted figure because, among other reasons, he suffered from serious health problems during the sixth months prior to the company's bankruptcy filing and was minimally involved in WCP's operations. He submits the affidavit of his treating physician, Michael F. Vosicky, who says that in January 2002, Cappetta weighed over 360 pounds; suffered from abnormally high blood pressure, diabetes, and sleep deprivation; and complained of being overwhelmed by his infirmities. Dr. Vosicky also says that between November 1999 and August 2002, Cappetta "was progressively losing physical stamina and mental acuity." Vosicky Aff. ¶10.
The Internal Revenue Code requires employers to withhold sums from their employees' paychecks to pay various federal taxes. The employers hold the collected amounts in trust for the United States and must pay them quarterly to the IRS. See United States v. Kim, 111 F.3d 1351, 1356 (7th Cir. 1997). Under 26 U.S.C. § 6672(a), responsible individuals who willfully fail to pay such taxes may be held personally liable for any unpaid amounts. Once the government assesses a penalty under this statute, the individual against whom the penalty was assessed bears the burden of proving either that he was not a responsible person or that the failure to remit the withheld taxes was not willful. See Thomas v. United States, 41 F.3d 1109, 1113 (7th Cir. 1994).
Summary judgment may be granted only when there are no genuine issues of material fact in dispute and the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c). In considering a motion for summary judgment, the Court views the facts in the light most favorable to the nonmoving party and draws reasonable inferences in his favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). In this case, the government argues that it is entitled to judgment as a matter of law because Cappetta has not shown the existence of a genuine issue of material fact with respect to his status as a responsible person or his willful failure to pay the taxes in question. In response, Cappetta denies that he was a responsible person and denies that he acted willfully. He also argues that the IRS violated his federal and state constitutional rights; that the IRS incorrectly calculated the amount of assessed taxes and failed to give him proper notice of his potential liability; that the IRS improperly "forced corporate payment for the quarter ended December 31, 2001"; and that by ignoring his protest letter, the IRS deprived him of his right to have his actions reviewed within the IRS.*fn1
The Court begins by considering whether Cappetta has presented evidence from which a jury reasonably could find that he was not a responsible person as defined by § 6672. A person is responsible under this section if he is "so connected with a corporation as to have responsibility and authority to avoid the default which constitutes a violation of [§ 6672]." See Monday v. United States, 421 F.2d 1210, 1214 (7th Cir. 1970). In making this evaluation, courts consider whether the individual held corporate office, owned stock in the company, served on the board of directors, was authorized to sign checks, and controlled corporate financial affairs. See Kim, 111 F.3d at 1362. As the Fifth Circuit discussed in Gustin v. United States, 875 F.2d 485, 492 (5th Cir. 1989), the touchstone of responsible person liability under § 6672 is the common law concept of actual authority: a responsible person is someone the corporation entrusts to pay the taxes in question.
To avoid summary judgment, then, Cappetta must offer some evidence suggesting that he did not have the "responsibility and authority" to avoid this default. See Monday, 421 F.2d at 1214. It is undisputed that during the fourth quarter of 2001, Cappetta held a corporate office, owned substantial stock in Mid Continent Inc. (the holding company that owned ninety-nine percent of the stock in WCP), was one of two directors, possessed authority to sign checks, and, under the powers outlined ...