Yates v. White

• Decision Date: 04 June 1957
• Docket Number: Civ. No. 2304.
• Citation: 152 F. Supp. 320
• Parties: William W. YATES and Mabel Reed Yates, Petitioners, v. H. J. WHITE, District Director of Internal Revenue of the United States of America at Springfield, Illinois, Respondent.
• Court: U.S. District Court — Southern District of Illinois

152 F. Supp. 320

William W. YATES and Mabel Reed Yates, Petitioners, v. H. J. WHITE, District Director of Internal Revenue of the United States of America at Springfield, Illinois, Respondent.

Civ. No. 2304.

United States District Court S. D. Illinois, S. D.

June 4, 1957.

Costigan, Wollrab & Yoder, Bloomington, Ill., for petitioners.

John B. Stoddart, Jr., U. S. Atty., Springfield, Ill., for respondent.

MERCER, District Judge.

William W. Yates and his wife, Mabel Reed Yates, petitioners herein, are partners in the Reed-Yates farm, a family partnership. William W. Yates was the Secretary and Treasurer of the Corn Belt Motor Company and the Yates Motor Company during the periods ending September 30, 1955 and December 31, 1955. In September, 1956 the Commissioner of Internal Revenue assessed the sum of $2,997.99 against William W. Yates, as the responsible officer of the Corn Belt Motor Company, for failure of that corporation to pay the withholding taxes of their employees for the last two quarters of 1955. The Commissioner also assessed William W. Yates as a responsible officer of the Yates Company, Inc., the sum of $1,863.23 for failure of that corporation to pay the withholding taxes of his employees for the last two quarters of 1955. In January, 1955, assessment of additional income taxes for 1947 was made against William W. Yates in the sum of $8,904.29, plus penalties and interest of which amount the sum of $314.52.86 remains unpaid.

On February 14, 1957 the petitioners as taxpayers received a notice that certain assets were seized by the Director for the nonpayment of delinquent taxes in the sum of $9,967.02. The property distrained upon was the taxpayer's partnership interest in the Reed-Yates farm situated near Towanda, Illinois. The taxpayer was an officer of the Corn Belt Motor Company and the Yates Motor Company which had been previously seized by the Director of Internal Revenue for the nonpayment of taxes. This action is brought to restrain the collection of taxes and penalties assessed against the taxpayer, the penalties resulting from his failure to pay over federal taxes withheld by him from wages of employees.

It is the contention of the taxpayer that he is not personally liable for the taxes and penalties of the Corn Belt Motor Company and the Yates Motor Company, and that even if he were so liable the Director may not distrain upon his partnership interest for the satisfaction of any taxes or penalties.

The questions presented are whether this court has jurisdiction to enjoin the collection for the failure of the taxpayer to collect as a responsible officer of the Corn Belt Motor Company and the Yates Motor Company, certain withholding taxes from the wages of employees of those companies, and secondly, whether the partnership interest of William W. Yates is subject to distraint for the satisfaction of delinquent taxes and penalties. The pertinent statutes involved are Sec. 6671, Internal Revenue Code of 1954, 26 U.S.C.A. § 6671, which provides as follows:

"The penalties and liabilities provided by this subchapter shall be paid upon notice and demand by the Secretary or his delegate, and shall be assessed and collected in the same manner as taxes. Except as otherwise provided, any reference in this title to `tax' imposed by this title shall be deemed also to refer to the penalties and liabilities provided by this subchapter. * * * The term `person', as used in this subchapter, includes an officer or employee of a corporation, or a member or employee of a partnership, who as such officer, employee, or member, is under a duty to perform the act in respect of which the violation occurs."

Section 6672, 26 U.S.C.A. § 6672 provides as follows:

"Any person required to collect, truthfully account for, and pay over any tax imposed by this title who willfully fails to collect such tax, or truthfully account for and pay over such tax, or willfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall, in addition to other penalties provided by law, be liable to a penalty equal to the total amount of the tax evaded, or not collected, or not accounted for and paid over. No penalty shall be imposed under section 6653 for any offense to which this section is applicable."

The other statute involved herein is Section 7421,...