section 6671(b), since he was only a part-time officer.
2. That he did not willfully fail to to collect and remit taxes as required by 26 U.S.C.A. section 6672.
3. Even conceding that he was a responsible person, defined in 26 U.S.C.A. section 6671(b), he was not such on the date for depositing withholding taxes and filing the quarterly return.
His assertion that he was not a responsible person, as defined in 26 U.S.C.A. § 6671(b), he justifies by reliance on the cases of Cushman v. Wood, D.C., 149 F.Supp. 644, and Kellems v. United States, D.C., 97 F.Supp. 681. In neither of these does his confidence seem to be well placed. In the Cushman case there was complete delegation of responsibility by the plaintiffs to an office manager and they participated in no way in the nonpayment action. In the instant case the plaintiff by his own admission exercised full authority with respect to the operation of Fairlawn News, Inc., signed checks for the corporation and in October 1957 replaced the general manager with a new general manager and had continually advanced sums of money to meet the take-home pay of the various employees of Fairlawn News, Inc. It would seem clear, therefore, that the plaintiff, with respect to the business operations during the period in question, was the 'responsible person' in the meaning of the statute. Plaintiff relies on the Cushman and Kellem cases to support his contention that he neither willfully nor without reasonable cause failed to take the action required by the statute, these cases holding, according to his interpretation, that 'willfully' means 'knowingly, deliberately and intentionally with full realization that the law was being violated.'
In response thereto the Government draws attention to the cases of In re Haynes, D.C., 88 F.Supp. 379; Frazier v. United States, 5 Cir., 304 F.2d 528, and Bloom v. United States, 9 Cir., 272 F.2d 215, in which the courts are agreed that there need be no intent to defraud or deprive the United States of the taxes collected or withheld for its account in order to invoke the sanctions of section 2707(a) of the 1939 Internal Revenue Code, predecessor of the section involved herein. The consensus of these cases seems to be that where a responsible officer pays employees their net wage at a time when the corporation had insufficient funds to cover taxes thereon and, when such funds became available, preferred subsequent creditors over the United States, knowing at all times the obligation to pay such taxes, his failure to pay was a voluntary, conscious and intentional act and therefore 'willful' within the meaning of 26 U.S.C.A. § 6672. In the instant case, after the withholding taxes became due, moneys which came into the hands of the company were paid out to suppliers of paper rather than being set aside for the obligations of the United States.
So far as the plaintiff's last argument is concerned, that he is not the person required to pay the taxes, since the receiver was in control of corporate affairs when the taxes were due, it has little merit. In re Serignese, D.C., 214 F.Supp. 917, supports the view that payment to employees made plaintiff inchoately or contingently liable for the penalty before adjudication, since the liability for paying withheld taxes does not accrue on the date for paying them. The taxpayer had eleven days in the early part of December in which to make the monthly deposit without incurring the penalty imposed by 26 U.S.C.A. § 6656. The amount in question is $ 4,850.88.
It is the opinion of this court and so holds that there will be judgment favorable to the Government, dismissing the complaint.
This opinion will serve as findings of fact and conclusions of law.
Let an order be submitted.
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