Friday, November 14, 2003

Judge Jones denies summary judgment in withholding tax case

There's nothing short of a criminal conviction that messes up your life like the 100% penalty imposed on a person held responsible for failure to pay over the government the money that is withheld from employee wages. The debt can't be discharged, and the debtor does not have much leverage in bargaining for a compromise with the IRS. That's what made me think Judge Jones' short opinion this week in Layne v. U.S. significant, where he denied the government's summary judgment motion in a case where the government sought to impose the penalty on the wife of a former coal operator who worked for a time as the company's treasurer. The Court concluded that "[w]hether a responsible person has the necessary state of mind to act willfully under § 6672(a) is a 'quintessential jury issue.'"

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