The follow-up to today’s account of the troubles of Blossom Day Care Centers, Inc., 2021 T. C. Memo. 86, filed 7/13/21, relate to the nonpayment of FICA/FUTA for the two officers of Blossom, Mr. and Mrs. H. Judge Paris has this one as well as the lead; see my blogpost “Headline News?” 7/13/21 for the corporate side.

Proving once again the truth of the headline hereof, “Petitioner has stipulated that the Hs were corporate officers during all of the calendar quarters and years [at issue]. Both provided substantial services far beyond minor services, and both directly and indirectly received remuneration for their services. Mrs. H was petitioner’s 51% shareholder and acted as president of the corporation and director of curriculum and education for all six childcare locations and supervised over 90 employees and students of those centers. Mr. H was 49% shareholder and acted as vice president, secretary, and treasurer; as director of Blossom Day Care Centers; and as director of accounting and finance for petitioner. Both Mr. and Mrs. H had check-signing authority over petitioner’s bank accounts and credit card authorization in their corporate capacity.” 2021 T. C. Memo. 86, at pp. 11-12. (Names omitted).

The Hs claim there was a management agreement with another corporation they owned, but produced no evidence of any agreement with Blossom, or directive from the other corp that would make Mr. or Mrs. H anything other than corporate officers of Blossom.

The Hs claim that what they were paid by the other corp should offset whatever Blossom should have paid them.

“Petitioner’s arguments are misguided in that wages paid by [other corp] do not offset reasonable compensation requirements for the services provided by petitioner’s corporate officers to petitioner. Whatever wages paid for whatever purposes by [other corp] to the Hs as employees of the [other corp] will be better addressed in relation to respondent’s notice of deficiency for the Hs’ individual income tax, in consideration that [other corp] is a wholly owned S corporation.” 2021 T. C. Memo. 86, at p. 14.

And the Hs get hit with what amounts to a competency tax. “Additionally, petitioner contends that the notice of determination is flawed in that the determined compensation reflects requirements of higher educational qualifications than either Mr. H or Mrs. H has achieved, since Mr. H did not graduate from college and Mrs. H has only an associate’s degree in child development. While petitioner has not further developed this contention in its briefs and there was limited trial testimony on the topic, whatever higher educational qualifications might be required have been far eclipsed by the Hs’ practical experience, professional qualifications, success in running daycare centers, and ownership prerogatives.” 2021 T. C. Memo. 86, at p. 15.

There’s Boss Hossery enough to satisfy Judge Paris, as the Hs’ attorneys raise the Section 6751(b) issue too late (on brief) and put in nothing on the trial about when the Section 6656 nonfiling and Section 6662 negligence chops were first on the menu.