United States Ninth Circuit

Summary judgment in favor of the government in a tax refund action after the Internal Revenue Service assessed unpaid excise taxes against plaintiff personally pursuant to 26 U.S.C. section 6672, is affirmed, where: 1) plaintiff is the former vice president and chief financial officer of National Airlines, Inc. which filed for bankruptcy; 2) assets are "encumbered" for purposes of section 6672 only if "the taxpayer is legally obligated to use the funds for a purpose other than satisfying the preexisting employment tax liability and if that legal obligation is superior to the interest of the IRS in the funds," a test that is not met here, making plaintiff's failure to pay the taxes "willful"; and 3) the Air Transportation Safety and System Stabilization Act does not "allow the airlines to use the excise taxes as working capital" and does not defeat trust status for unpaid excise taxes for purposes of personal liability under section 6672.

Appellate Information

• Decided 02/18/2014
• Published 02/18/2014

Judges

• GRABER

Court

• United States Ninth Circuit

Counsel