In Uncategorized on 11/07/2019 at 15:06

Judge Gale has a designated hitter for us, dealing with responsibility and bankruptcy. It’s a useful refresher for the Section 6672 TFRP chop when the entity, not the responsible person, is in bankruptcy.

Christopher B. Scott, Docket No. 10487-18L, filed 11/7/19, has double trouble. He has two entities, both of which owe FICA/FUTA/ITW and both of which are in bankruptcy.

Although Chris wants to contest liability, he proffers no evidence to support said contest. And the SO gave him a reasonable time to submit same.

Chris wanted more time to submit two delinquent personal tax returns, but as he proposed no collection alternatives, even had he submitted those returns, it would not avail him.

On to bankruptcy.

Judge Gale: “Petitioner’s position that it was inappropriate for respondent to pursue him personally for collection of the section 6672 penalties while the business entities for which he was being held responsible were in bankruptcy is also unavailing. Respondent ‘is not obligated to collect taxes from an employer’s corporate assets or from its bankruptcy estate before collecting a trust fund recovery penalty from the responsible person.’ Bishay v. Commissioner, T.C. Memo. 2015-105, at *20 (citing Frank v. D’Ambrosi, 4 F.3d 1378, 1386 (6th Cir. 1993)). Although respondent’s general policy is not to pursue collection of trust fund recovery penalties from an individual taxpayer while a liable business entity is in compliance with a bankruptcy plan that provides for full payment of the delinquent taxes, see Internal Revenue Manual pt. (Sept. 29, 2015), the SO confirmed that neither [Entity One] nor [Entity two] was in compliance with its bankruptcy payment obligations. The SO consequently did not abuse her discretion in determining that the collection action against petitioner should be sustained.” Order, at pp. 8-9.


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