Parr v. U.S.
| Decision Date | 13 March 2002 |
| Docket Number | No. C-01-252.,C-01-252. |
| Citation | 203 F.Supp.2d 726 |
| Parties | Doyle W. PARR Plaintiff, v. UNITED STATES of America, Defendant. |
| Court | U.S. District Court — Southern District of Texas |
William A Roberts, Attorney at Law, Darryl V Pratt, The Roberts Law Firm, Dallas, for Doyle W Parr, plaintiffs.
David B Coffin, Dept of Justice, Tax Division, Dallas, for United States of America, defendants.
ORDER GRANTING UNITED STATES OF AMERICA'S MOTION FOR SUMMARY JUDGMENT
On this day came on to be considered the United States of America's ("Defendant" or "the Government") Motion for Summary Judgment in the above-styled action. For the reasons stated herein, the Court GRANTS the Defendant's Motion. Further, because the Court determines that Plaintiff Doyle W. Parr ("Parr" or "Plaintiff") is a responsible person who acted willfully, the Government is entitled to the assessment it made pursuant to 26 U.S.C. § 6672.
The Court has federal question jurisdiction over this 26 U.S.C. § 6672 suit pursuant to 28 U.S.C. §§ 1340, 1346.
The above-captioned case arises from the failure of Rockport Fabrication, Inc. ("RFI") to pay employment taxes to the IRS for the third and fourth quarters of 1994 and the first, second, and third quarters of 1995. (Pl's. Response to Def's. Motion for Summary Judgment at 5.) This is an action for the Trust Fund Recovery Penalty (also known as the "100% Penalty") pursuant to 26 U.S.C. § 6672.
Doyle W. Parr ("Parr" or "Plaintiff") and James Brown ("Brown") started RFI in 1994. (Pl's. Opposition to Def's) Parr was a 45% shareholder in RFI. He was also RFI's vice president and general manager until RFI's downfall in November 1995. (Def's. Motion for Summary Judgment ¶ 2, 4.) Brown and Cheryl Brown, his wife, owned the remaining RFI shares, with Brown serving as RFI's president and Cheryl Brown serving as the Corporate Treasurer. (Id.; Pl's. Response at 8.) RFI provided oil field services, including oil field work after the drilling of the well and dredge operations for the Island Mooring marina. (Id.¶ 3.) Brown and his wife contributed $40,000 in capital to start RFI and an additional $10,000 later; Parr contributed no money to RFI, instead providing his knowledge and contacts. (Def's. Motion for Summary Judgment ¶ 6; Pl's. Response at 7.) Brown had primary responsibility for the financial matters of RFI, and he drafted and filed RFI's corporate documents. (Def's. Motion for Summary Judgment ¶ 11; Pl's. Response at 8.) Brown also held primary responsibility for managing the payroll process and prepared, reviewed, and signed every payroll tax return filed by RFI with the IRS except the third quarter 1995 return, signed and filed by Cheryl Brown. (Pl's. Response at 8-9.) Brown used his own personal computer to manage the accounting and payroll for RFI; he brought the computer to the RFI offices, which were located at Parr's home. (Def's. Motion for Summary Judgment ¶ 14; Pl's. Response at 9.) Brown was trained on the use of the computer and the accounting software, while Parr did not know how to operate a personal computer. (Pl's. Response at 9.) Parr's primary duties and responsibilities were managing the fabrication and dredging projects in the field (Pl's. Response at 9); however, Plaintiff admitted he also had some responsibility for hiring and firing employees, dealing with major suppliers and customers, negotiating corporate purchases and contracts, signing some checks, and co-signing on corporate bank loans. (Def's. Motion for Summary Judgment ¶ 9, Ex. 1-2.) Though Brown was responsible for paying corporate creditors, Brown, Cheryl Brown, and Plaintiff all had signature authority on the corporate bank accounts. (Pl's. Response at 10.) Plaintiff signed checks when disbursements needed to be made and Brown was not at the office; Plaintiff did not need Brown's authorization to sign checks. (Def's. Motion for Summary Judgment ¶¶ 23-24, Ex.1.)
RFI failed to make sufficient payroll tax deposits such that at the time the company filed its payroll tax returns for the quarters ending September 30, 1994 through September 30, 1995, the following taxes were unpaid: (1) September 30, 1994: $17,705.35; (2) December 30, 1994: $17,958.45; (3) March 31, 1995: $10,129.62; (4) June 30, 1995: $8,728.90; and (5) September 20, 1995 $6,175.89. (Def's. Motion for Summary Judgment ¶ 29, Ex. 7.) Plaintiff acknowledges that Brown advised him of the payroll tax problem in February or March of 1995. (Pl's. Response at 11.) During the time period from March through October of 1995, substantial amounts of money were deposited into company accounts. Specifically, a total of $159,730.84 was deposited into RFI's Victoria (now Wells Fargo) Bank account, and $131,802.58 was deposited into RFI's Frost Bank account. (Def's. Motion for Summary Judgment ¶ 34, Exs. 8-9.) Despite having knowledge of the tax deficiency, and after substantial deposits were made into company accounts post-deficiency, both Brown and Parr continued to sign company checks and pay other company creditors and expenditures during the March 1995 through October 1995 time period. (Def's. Motion for Summary Judgment ¶ 33, Exs. 3-5.) Parr also borrowed money to pay the payroll in or around June or July 1995; he paid the money back with a company check. (Def's. Motion for Summary Judgment ¶ 36., Exs. 1, 5.)
On August 30, 1995, Parr met with Brown and with T. Hardie Bowman, CPA, in Corpus Christi, to discuss the payroll tax problem, and Brown and Bowman advised Parr that the company could resolve the tax problem by entering into an installment plan with the Internal Revenue Service ("IRS"). (Def's. Motion for Summary Judgment ¶ 40-41, Ex. 1.) Parr and Brown met with an Internal Revenue Service Officer, Mr. Jasso, and proposed an installment payment plan. (Id.) Parr admitted in his deposition that he believed at the time he spoke with Mr. Jasso that RFI could not make the payments according to the installment payment plan set up; instead, Parr believed that RFI was "going to get deeper in the hole." (Id. at ¶ 42, Ex. 1.) RFI eventually defaulted on its installment payment plan. (Id. at ¶ 45.)
After a meeting with Mr. Jasso held on March 31, 1996, Plaintiff was assessed the Trust Fund Recovery Penalty in the amount of $38,483.44 for the aforementioned tax periods on October 28, 1996. (Def's. Motion for Summary Judgment ¶ 48.) The IRS collected the following amounts from Parr, each of which was applied toward the Trust Fund Recovery Penalty: (1) $449.20 on January 13, 1998; (2) $449.20 on February 17, 1998; (3) $449.20 on March 15, 1998; and (4) $100.00 on January 30, 2001. (Def's. Motion for Summary Judgment ¶¶ 49-52.) On or about April 19, 2001, Parr submitted to the IRS an administrative claim for refund for the Trust Fund Recovery Penalty; the IRS denied this claim on May 15, 2001. (Pl's. Complaint ¶¶ 6-7.) On June 7, 2001, Parr filed the Complaint in the instant action, alleging he was not responsible for collecting, accounting for, and paying over employment and withholding taxes and that his actions were not willful. (Pl's.Compl.¶ 8.) On August 28, 2001, Defendant filed its Original Answer and Counterclaim to Plaintiff's Complaint, asserting in pertinent part that (1) Plaintiff was barred by the statute of limitations from claiming entitlement to a refund with regard to portions of the money paid towards the Trust Fund Recovery Penalty; and (2) Plaintiff was a responsible person under the provisions of 26 U.S.C. § 6672 who willfully failed to pay over the trust fund taxes of RFI owed the IRS.
On January 14, 2002, Defendant timely filed the instant Motion for Summary Judgment, asserting entitlement to dismissal of Plaintiff's claims1 and recovery of the entire remaining balance of the assessed Trust Fund Recovery Penalty.2 On February 5, 2002, Plaintiff filed an Agreed Motion to Extend Time to Respond to Defendant's Motion for Summary Judgment. The Court, in accordance with its General Order stating that the dispositive motion deadlines are not extendable, even by agreement, denied Plaintiff's Motion.3 On February 14, 2002, Plaintiff filed (1) a Motion to Reconsider Order Denying Unopposed Motion to Extend Time for Plaintiff to Respond to Defendant's Motion for Summary Judgment; (2) an Unopposed Motion for Leave to File Out of Time Response to Defendant's Motion for Summary Judgment; (3) a thirty-page Brief in Support of Plaintiff's Opposition to United States of America's Motion for Summary Judgment; and (4) an Unopposed Motion for Leave to File Memorandum Greater than 25 Pages. Though this Court reiterates that Plaintiff had a duty to comply (and failed to so comply) with the Court's General Order and with the Federal Rules of Civil Procedure, the Court will consider Plaintiff's Opposition to Defendant's Motion for Summary Judgment.
The Court now considers Defendant's Motion and Plaintiff's Response.
Summary judgment is proper if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show 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). A dispute about a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986); Judwin Properties, Inc. v. U.S. Fire Ins. Co., 973 F.2d 432, 435 (5th Cir.1992). The substantive law identifies which facts are material. Anderson, 477 U.S. at 248, 106 S.Ct. at 2510; Ellison v. Software Spectrum, Inc., 85 F.3d 187, 189 (5th Cir.1996).
The "party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its...
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