Mary Johnson v. United States

PUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 12-1739

MARY JOHNSON,

Plaintiff - Appellant,

FORD JOHNSON,

Counter Defendant - Appellant,

v.

UNITED STATES OF AMERICA,

Defendant - Appellee.

Appeal from the United States District Court for the District of
Maryland, at Greenbelt. Deborah K. Chasanow, Chief District
Judge. (8:09-cv-00787-DKC)

Argued: September 17, 2013 Decided: November 5, 2013

Before WILKINSON, DUNCAN, and AGEE, Circuit Judges.

Affirmed by published opinion. Judge Agee wrote the opinion, in
which Judge Wilkinson and Judge Duncan joined.

ARGUED: Diana M. Schobel, DMS LAW, LLC, Frederick, Maryland, for
Appellants. Gretchen M. Wolfinger, UNITED STATES DEPARTMENT OF
JUSTICE, Washington, D.C., for Appellee. ON BRIEF: Rod J.
Rosenstein, United States Attorney, OFFICE OF THE UNITED STATES
ATTORNEY, Baltimore, Maryland; Kathryn Keneally, Assistant
Attorney General, Teresa E. McLaughlin, Tax Division, UNITED
STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee.

2
AGEE, Circuit Judge:

Mary Johnson (“Mrs. Johnson”) brought this suit against the

United States seeking a refund of payments on a federal

withholding tax penalty assessed against her under 26 U.S.C.

§ 6672. 1 The Government counterclaimed against both Mrs. Johnson

and her husband, Ford Johnson (“Mr. Johnson”), individually, to

reduce to judgment the remaining balance of the trust fund

recovery penalties assessed against them. The Johnsons now

appeal the district court’s grant of summary judgment to the

Government against each of them. For the reasons that follow,

we affirm the judgment of the district court.

I.

The following facts are either uncontroverted, taken in the

light most favorable to the Johnsons, or have been admitted by

the Johnsons in their pleadings. 2 In 1969, Mr. Johnson formed a

1
The § 6672 assessment was made against Mrs. Johnson for
the following tax quarters ending: December 31, 2001; September
30, 2002; March 31, 2003; June 30, 2003; June 30, 2004;
September 30, 2004; and December 31, 2004. (J.A. 27.)
2
When reviewing the district court’s grant of summary
judgment, we construe the facts in the light most favorable to
the Johnsons, the nonmoving party. Laber v. Harvey, 438 F.3d
404, 415 (4th Cir. 2006) (en banc); see also Bright v. QSP,
Inc., 20 F.3d 1300, 1305 (4th Cir. 1994), cert. denied, 513 U.S.
(1994) (statements in a party’s pleadings are conclusively
binding on that party).

3
non-profit corporation, Koba Institute, Inc. (“Koba Institute”), 3

to perform various government contracts in conjunction with Koba

Associates, Inc. (“Koba Associates”), a for-profit corporation

that he owned and managed. When Koba Associates failed to pay

its payroll taxes in the mid-1990s, the Internal Revenue Service

(“IRS”) assessed trust fund recovery penalties against Mr.

Johnson pursuant to 26 U.S.C. § 6672. 4 The outstanding payroll

taxes, accompanied by the lien subsequently imposed on Mr.

Johnson for the § 6672 trust fund recovery penalties, ultimately

led Mr. Johnson to close Koba Associates. 5 The presence of the

lien severely limited Mr. Johnson’s ability to obtain credit for

Koba Institute.

3
Koba Institute provides residential and educational
services to special needs children in Maryland.
4
Section 6672 provides in pertinent part:

Any person required to collect, truthfully
account for, and pay over any tax imposed by
this title [a “responsible person”] who
willfully fails to . . . 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.

26 U.S.C. § 6672(a).
5
When the IRS assessed trust fund recovery penalties
against Mr. Johnson for the failure of Koba Associates to pay
its payroll taxes, the IRS considered assessing the same
penalties against Mrs. Johnson but ultimately declined to do so.

4
 This fiscal reality led Mr. Johnson to approach Mrs.

Johnson about restructuring Koba Institute so as to facilitate a

continuation of their business. In 1998, Koba Institute

converted to a for-profit corporation under Maryland law, with

Mrs. Johnson as its sole shareholder. Because Mrs. Johnson “was

not encumbered by a lien” like Mr. Johnson, her status as the

corporation’s owner enabled Koba Institute to enter into leases

and other contracts, as well as obtain lines of credit based on

Mrs. Johnson’s endorsement. (J.A. 998.)

As the sole shareholder of Koba Institute, Mrs. Johnson

elected herself as chair of the corporation’s board of directors

in 2001. The corporation’s bylaws require that the chair of the

board “be elected President of the Institute.” (J.A. 615.) 6

6
The bylaws describe the president’s role as follows:

The President [who] shall be chairperson of
the Board of Directors . . . shall preside
at all meetings of the Board and/or
officers. [S]he shall review, approve and
recommend to the Board all proposed projects
and budgets on an annual basis. [S]he shall
be authorized to execute . . . legal papers,
documents and instruments on behalf of the
Institute. [S]he shall have general
authority to manage the business and affairs
of the Institute on a day to day basis,
subject to and in accordance with the
directions of the Board of Directors.

(J.A. 617–18.) The bylaws also authorize the board members to
“approv[e] . . . proposed projects and budgets,” “establish[ ] .
. . banking relations including [the] power to borrow money,”
(Continued)
5
According to the Johnsons, because they had agreed that Mrs.

Johnson would be the primary caregiver of the couple’s children,

Mrs. Johnson “delegated” and “entrusted” her authority in the

corporation to Mr. Johnson, and thereafter elected Mr. Johnson

president of Koba Institute on February 20, 2001,

notwithstanding the contrary bylaw requirement. (See J.A. 16,

478, 480, 1481–82, 1515.) Mrs. Johnson, in turn, served as the

corporation’s vice president.

The same day that Mrs. Johnson appointed herself as board

chair, February 20, 2001, Koba Institute’s board of directors—

comprised of the Johnsons and an unrelated corporate secretary—

unanimously approved the following resolution:

The present holders of the offices of
President, Vice-President, Treasurer and
Secretary are authorized to sign checks,
drafts, instruments, . . . and . . . orders
for the payment of money from [Koba
Institute] accounts, to endorse checks,
instruments, evidences of indebtedness and
orders payable, owned or held by [Koba
Institute], and to . . . sign any
application, deposit agreement, signature
card or other documentation required by the
Bank [of America], with the following
limitation: . . . that either Ford T.
Johnson, Jr. (President of the
Company/Treasurer) or Mary L. Fogg Johnson
(Vice-President of the Company/Chairperson)
may act alone or with any other named
signatory to said accounts in any

and “control and manage[ ] . . . property, including [the] power
to purchase, . . . and dispose of the same.” (J.A. 616–17.)

6
 transactions with the Bank; however, any
transactions . . . which are not signed by
either [of them] must be signed by at least
two of the following people . . . .

(J.A. 612 (emphasis added).) Koba Institute’s payroll account

expressly provided that Mrs. Johnson had the power to “sign

singularly” on that account. (J.A. 647, 651, 670; see also J.A.

537–38, 1486–87.)

Having “delegated” her authority to Mr. Johnson, Mrs.

Johnson’s actual involvement at Koba Institute was limited

during the 2001 through 2004 period. Nonetheless, she had an

office at Koba Institute and received a significant annual

salary ranging from approximately $100,000 to $193,000, as well

as a corporate car and cell phone. In addition, the rent for

Mrs. Johnson’s residence, shared with Mr. Johnson, was provided

by Koba Institute. 7

In the 2001 to 2004 period, Mrs. Johnson only came to work

once per month. When she did so, she would approve any board

resolutions, such as ratification of Mr. Johnson’s acts as

president, or perform tasks in the human resources department.

Thus, while Mrs. Johnson may have given an opinion regarding

7
During the same periods, Mr. Johnson received no direct
salary from the corporation, instead having Koba Institute pay
the rent for the couple’s home. In 2001, 2002, and 2004, these
rent payments totaled between $40,000 and $50,000. (J.A. 468–
69, 473, 556, 594–95.) In 2003, however, Koba Institute did not
make any rent payments on Mr. Johnson’s behalf, and he received
no compensation from the corporation.

7
hiring and firing employees during the relevant time frame, Mr.

Johnson made the ultimate decisions regarding employment. (See

J.A. 1508–09, 1608, 1661.) Indeed, because Mr. Johnson oversaw

the corporation’s day-to-day operations, other employees viewed

him as “the one who decides everything” and went to Mr. Johnson—

rather than Mrs. Johnson—with any questions that arose in the

business, including financial matters such as the payment of

payroll taxes. (J.A. 1605.)

When Mr. Johnson was out of the office, he left explicit

instructions for Mrs. Johnson to follow on Koba Institute

business, including which checks to sign in his absence.

Because of her limited involvement with the corporation’s daily

operations, however, Mrs. Johnson was unaware of “the background

or the context” for these checks and did not feel comfortable

signing any checks that Mr. Johnson had not authorized. (J.A.

1576.) Accordingly, from 2001 through 2004, she never attempted

to write checks that Mr. Johnson had not already approved.

Near the end of 2004, Mrs. Johnson received a notice from

the IRS that Koba Institute had not paid its payroll taxes for

several quarters from 2001 through 2004. Prior to that time,

Mrs. Johnson was unaware that the payroll taxes were unpaid.

Upon receipt of the notice, she had “a serious talk” with Mr.

Johnson and “told him” that the situation was “unacceptable” and

that Koba Institute had “to take steps to make sure that it [did

8
not] happen again.” (J.A. 1501.) Mrs. Johnson then fired the

finance director, who had been tasked with making payroll tax

payments, and “directed Mr. Johnson to personally handle all

future tax payments as of January 2005.” (J.A. 17.) She

“required” Mr. Johnson to provide her with “visual proof” of all

withholding tax payments that Koba Institute subsequently made.

(J.A. 17.) Additionally, at least with regard to the payroll

account, Mrs. Johnson no longer followed the prior procedure for

check authorization; that is, she no longer required instruction

from Mr. Johnson before writing checks herself from the payroll

account for payment of the taxes.

Due to Mrs. Johnson’s “revamped oversight of tax payments,”

Koba Institute began remitting its post-2004 payroll taxes to

the IRS in full and, generally, on time. (J.A. 17.) The

corporation did not, however, pay the outstanding delinquent

payroll taxes for the 2001 through 2004 delinquent periods

although it continued to pay its other business debts, such as

employee wages and Mrs. Johnson’s compensation. Subsequently,

the IRS assessed trust fund recovery penalties (the “100%

penalty”) against Mr. and Mrs. Johnson individually, pursuant to

9
26 U.S.C. § 6672. 8 Mrs. Johnson later paid $351.00 toward her

assessed penalty.

On March 30, 2009, Mrs. Johnson filed suit in the United

States District Court for the District of Maryland seeking a

refund of the penalty she had paid, asserting that the § 6672

assessment against her was erroneous. 9 The Government filed a

counterclaim against both of the Johnsons in order to reduce its

assessments to judgment, seeking to recover the balance of

assessments due, including penalties, interest, and costs.

Based upon transcripts of account showing the balances due as of

August 22, 2011, the Government ultimately sought to recover

$304,355.90 from Mrs. Johnson and $240,071.12 from Mr. Johnson.

The Government filed separate motions for summary judgment

against Mr. and Mrs. Johnson, contending that each was liable

under § 6672 as a “responsible person” who had “willfully”

failed to pay over the withheld payroll taxes. The Government

supported the assessments with Forms 4340—Certificates of

Assessments, Payments, and Other Specified Matters, noting that

the assessments on the Forms 4340 were presumptively correct and

that the burden fell on the Johnsons to demonstrate otherwise.

8
The § 6672 trust fund recovery penalty is commonly termed
the “100% penalty” by tax practitioners and we use that term
here for the § 6672 penalties assessed.
9
Mrs. Johnson initially named the IRS as the defendant in
this action. The parties subsequently agreed that the proper
defendant was the United States, which was substituted as such.

10
The Government also moved to strike the reports and testimony of

an expert witness the Government anticipated the Johnsons would

rely upon in opposing summary judgment.

The Johnsons jointly opposed the Government’s motion to

strike, and separately opposed the Government’s motions for

summary judgment. Mr. Johnson also moved for partial summary

judgment against the Government as to him.

The district court granted the Government’s motions for

summary judgment, denied Mr. Johnson’s motion for partial

summary judgment, and denied the Government’s motion to strike

as moot. With respect to Mr. Johnson, the district court

determined that the assessment against him was valid, rejecting

his argument that the assessment was not made within the three-

year limitations period established by I.R.C. § 6501. The

district court then concluded that no material issue of disputed

fact remained as to Mr. Johnson.

With respect to Mrs. Johnson, the district court held that

she had also failed to show a genuine dispute of material fact

regarding her liability. The court determined that “Mrs.

Johnson was a responsible person at Koba Institute during the

relevant quarters even though her participation in the

corporation’s affairs was minimal,” and that she had acted

“willfully” in failing to see to it that the outstanding tax

liabilities were paid. (J.A. 253, 268.)

11
 The district court also concluded that the judgment entered

against Mrs. Johnson would not result in a double recovery for

the Government. The court noted the Government’s policy of

retaining only one full satisfaction of an underlying tax

liability despite it being able to attempt to collect against

any responsible party, and reasoned that any potential issues

could be avoided through careful drafting of the final judgment

order.

Finally, the district court denied as moot the Government’s

motion to strike the reports of the Johnsons’ expert and to

exclude his testimony at trial, finding that in their opposition

to the Government’s motions for summary judgment, the Johnsons

had “neither relied upon [the expert’s] reports nor produced any

evidence to create an issue of material fact” that would

prohibit the entry of summary judgment against them. (J.A.

271.)

The district court accordingly entered judgment in favor of

the Government and against Mrs. Johnson for $304,955.90 and

against Mr. Johnson for $240,071.12, plus interest in each

instance at the rate specified in I.R.C. § 6601 from August 22,

2011 until payment. The judgment order provided that the

judgment would “be reduced to the extent that the United States

. . . has collected or will collect on those debts pursuant to

the offer in compromise it approved with Koba Institute.” (J.A.

12
274.) The Johnsons filed a joint motion to alter, amend, or

relieve the judgment, which the district court denied.

The Johnsons timely noted this appeal, and we have

jurisdiction pursuant to 28 U.S.C. § 1291.

II.

The Internal Revenue Code (“I.R.C.” or the “Code”) requires

employers to withhold federal social security and income taxes

from the wages of their employees. See 26 U.S.C. §§ 3102(a),

3402(a); Erwin v. United States, 591 F.3d 313, 319 (4th Cir.

2010). Because the employer holds these taxes as “special

fund[s] in trust for the United States,” 26 U.S.C. § 7501(a)

(emphasis added), the withheld amounts are commonly referred to

as “trust fund taxes,” Slodov v. United States, 436 U.S. 238,

243 (1978) (internal quotation marks omitted).

The Code “assure[s] compliance by the employer with its

obligation . . . to pay” trust fund taxes by imposing personal

liability on officers or agents of the employer responsible for

“the employer’s decisions regarding withholding and payment” of

the taxes. Id. at 247 (interpreting 26 U.S.C. § 6672). To that

end, § 6672(a) of the Code provides that “[a]ny person required

to collect, truthfully account for, and pay over any tax . . .

who willfully fails” to do so shall be personally liable for “a

penalty equal to the amount of the tax evaded, or not . . . paid

13
over,” the 100% penalty. 26 U.S.C. § 6672(a). Although labeled

as a “penalty,” § 6672 is not primarily a punitive provision as

it “brings to the government only the same amount to which it

was entitled by way of the tax.” Turnbull v. United States, 929

F.2d 173, 178 n.6 (5th Cir. 1991) (internal quotation marks

omitted).

Personal liability for a corporation’s unpaid trust fund

taxes extends to any person who (1) is “responsible” for

collection and payment of those taxes; and (2) “willfully

fail[s]” to see that the taxes are paid. Plett v. United

States, 185 F.3d 216, 218 (4th Cir. 1999); O’Connor v. United

States, 956 F.2d 48, 50 (4th Cir. 1992). Once the IRS assesses

a taxpayer for this liability, the taxpayer has the burden of

proof at trial on both elements of § 6672 liability. See

O’Connor, 956 F.2d at 50.

We review de novo a district court’s grant of summary

judgment to the Government, resolving all disputed facts in

favor of the taxpayer. See O’Connor, 956 F.2d at 50. To defeat

summary judgment, however, the taxpayer—like any other litigant—

must identify an error of law or a genuine issue of disputed

material fact. See Fed. R. Civ. P. 56(a); Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 256 (1986); see also Bouchat v. Balt.

Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir. 2003).

“[I]n the absence of disputed material facts, summary judgment

14
represents a favored mechanism to secure the ‘just, speedy, and

inexpensive determination’” of taxpayer liability under § 6672.

Plett, 185 F.3d at 223 (emphasis in original) (quoting Fed. R.

Civ. P. 1).

III.

With the foregoing principles in mind, we turn to the

claims of error raised on appeal. Mr. Johnson contends that the

grant of summary judgment was erroneous because the assessment

of the 100% penalty as to him was time-barred under § 6501 of

the Code. Mrs. Johnson argues that the grant of summary

judgment against her was erroneous because she was neither a

“person responsible” for the payment of Koba Institute’s

withholding taxes nor “willfully” failed to do so. Lastly, the

Johnsons posit that the amounts of their respective tax

liabilities under § 6672 were incorrectly calculated because

disputed issues of material fact remained to be determined. We

consider each argument in turn.

A.

Mr. Johnson contends that the assessment of the 100%

penalty against him was not “made within the limitations period

set forth in 26 U.S.C. § 6672.” (Br. 29.) However, Mr.

Johnson’s one-page “argument” on brief as to this issue gives no

15
description as to the basis at law for his contention. Even

after questioning at oral argument, we are left with no firm

guide as to why Mr. Johnson contends the assessments are time-

barred.

Mr. Johnson has not challenged the basis for the district

court’s decision in any meaningful way. See Fed. R. App. P.

28(a)(9)(A) (requiring argument section of an appellant’s

opening brief to contain “appellant’s contentions and the

reasons for them, with citations to the authorities and parts of

the record on which the appellant relies”). Here, Mr. Johnson

has failed to comply with the dictates of Federal Rule of

Appellate Procedure 28(a)(9)(A), as he offers no argument

explaining how the district court erred; rather, he simply

states the issue he wishes to raise and cites several sections

of the Code, but without analysis of how these statutes would

apply to him. As a result, we consider Mr. Johnson to have

abandoned or waived his challenge to the district court’s

determination that the assessment of the 100% penalty against

him under § 6672 was not timely. See Edwards v. City of

Goldsboro, 178 F.3d 234, 241 n.6 (4th Cir. 1999) (“Failure to

comply with the specific dictates of [Federal Rule of Appellate

Procedure 28(a)(9)(A)] with respect to a particular claim

triggers abandonment of that claim on appeal.”); see also Oken

v. Corcoran, 220 F.3d 259, 274 n.2 (4th Cir. 2000) (Michael, J.,

16
concurring) (“In order to preserve an issue on appeal, however,

it is not enough to simply assert the claim; a party must

provide supporting argument.”).

Accordingly, we affirm the district court’s grant of

summary judgment against Mr. Johnson individually.

B.

We next address the argument that the district court erred

in granting summary judgment against Mrs. Johnson.

Specifically, Mrs. Johnson contends that she was not (1) a

“person responsible” for the payment of Koba Institute’s

withholding taxes; and (2) did not “willfully” fail to pay over

those taxes. We must disagree with Mrs. Johnson because the

undisputed record shows that she was properly liable for the

100% penalty.

1.

The Code defines a “responsible person” as one “required to

collect, truthfully account for, and pay over any tax,” 26

U.S.C. § 6672(a) (emphasis added). The Supreme Court has

interpreted this statutory language to apply to all “persons

responsible for collection of third-party taxes and not . . .

[only] to those persons in a position to perform all three of

the enumerated duties.” Slodov, 436 U.S. at 250. Thus, the

17
Code deems anyone required to “collect” or “account for” or

“remit” taxes a “responsible person” for purposes of § 6672.

See Plett, 185 F.3d at 219.

In determining whether a person is “responsible” under

§ 6672, we undertake a “pragmatic, substance-over-form inquiry”

focused on the person’s status, duty, and authority within the

corporation. Id. The “crucial inquiry is whether the person

had the ‘effective power’ to pay the taxes—that is, whether he

[or she] had the actual authority or ability, in view of his

status within the corporation, to pay the taxes owed.” Id.

(quoting Barnett v. IRS, 988 F.2d 1449, 1454 (5th Cir. 1993)).

Because this analysis focuses “on substance rather than

form,” holding a corporate title alone does not render a

taxpayer a “responsible person.” O’Connor, 956 F.2d at 51.

While a determination of that status is necessarily fact-based,

summary judgment is nonetheless appropriate where, in the

absence of genuine disputes of material fact, it is clear “as a

matter of law” that the taxpayer satisfies this test and is a

“responsible person.” Barnett, 988 F.2d at 1454 & n.10

(acknowledging that “countless courts have found responsibility

[for purposes of § 6672] as a matter of law” because “extensive

caselaw . . . narrowly constrains a factfinder’s province in

§ 6672 cases”). Our analysis is guided by a list of non-

exclusive factors common in the § 6672 case law, such as whether

18
the taxpayer served as an officer of the corporation or a member

of its board of directors, controlled the corporation’s payroll,

determined which creditors to pay and when to pay them,

participated in the corporation’s day-to-day management, had the

ability to hire and fire employees, and possessed check-writing

authority. Erwin, 591 F.3d at 321; Plett, 185 F.3d at 219.

Although “a party cannot be presumed to be a responsible

person merely from titular authority,” O’Connor, 956 F.2d at 51,

status as an officer or director is “nevertheless material” to

this determination, Teets v. United States, 29 Fed. Cl. 697, 706

(Fed. Cl. 1993). Mrs. Johnson had been the corporation’s sole

shareholder since 1998 and consequently had the effective power

to change the officers and directors as she chose and thereby

direct the business of the corporation. Separately as both vice

president and chair of the board of directors since early 2001,

Mrs. Johnson enjoyed considerable actual authority at Koba

Institute.

The corporation’s bylaws, board resolutions, and banking

documents demonstrate that Mrs. Johnson was a “responsible

person,” as it is clear that she had effective control of the

corporation, including its finances. See Taylor v. IRS, 69 F.3d

411, 416–17 (10th Cir. 1995) (holding corporate director and

officer a “responsible person” as a matter of law because he

“possessed sufficient control over corporate finances, had

19
authority to borrow funds and write checks and thereby had the

‘effective power’ to pay those taxes” (quoting Barnett, 988 F.2d

at 1454)). The foregoing corporate documents indicate that Mrs.

Johnson, while serving as chair of the board, would also serve

as president of the corporation, a role that included authority

to manage Koba Institute’s daily affairs and to execute checks

and other legal documents on its behalf. Although Mrs. Johnson

“delegated” and “entrusted” this authority to Mr. Johnson prior

to 2005, (See J.A. 16, 478, 480, 482, 1481–82, 1515), remaining

only minimally involved in the corporation’s affairs as board

chair and vice president, delegation of such authority does not

relieve a taxpayer of responsibility under § 6672, Purcell v.

United States, 1 F.3d 932, 937 (9th Cir. 1993) (That a

taxpayer’s function in an enterprise “is unconnected to

financial decision making or tax matters is irrelevant where

that individual has the authority to pay or to order the payment

of delinquent taxes.”); Erwin, 591 F.3d at 322. A taxpayer may

be a “responsible person” if she “had the authority required to

exercise significant control over the corporation’s financial

affairs, regardless of whether [s]he exercised such control in

fact.” Purcell, 1 F.3d at 937 (concluding that a president and

sole shareholder, who was also an authorized signatory on the

corporation’s checking account, was a “responsible person” even

though he had fully delegated all financial duties to another

20
employee). Thus, despite delegating her authority to Mr.

Johnson and permitting him to run the corporation’s daily

affairs, Mrs. Johnson remained a “responsible person” because

she had effective control of the corporation and the effective

power to direct the corporation’s business choices, including

the withholding and payment of trust fund taxes.

Although Mrs. Johnson maintains that any authority she held

was merely technical in nature, the undisputed evidence

establishes that she possessed both legal and actual authority

over Koba Institute. See United States v. Landau, 155 F.3d 93,

103 (2d Cir. 1998) (if taxpayer fails to show a genuine dispute

of material fact on nature of authority, the court “may

reasonably conclude that the documentary evidence of authority

reflects the reality”). Mrs. Johnson’s voluntary minimal

involvement in daily corporate affairs before 2005, however, and

assertions that Mr. Johnson exercised all daily operating

authority fail to create a genuine dispute of material fact

regarding limitations on her effective power as to the trust

fund taxes. Any deferral by Mrs. Johnson in the exercise of her

authority never altered the fact that she possessed “effective

power” over Koba Institute at all times. See Barnett, 988 F.2d

at 1454. Indeed, Mrs. Johnson’s actions immediately after

learning of the tax delinquencies in December 2004—a period that

“cast[s] light” on her responsibility from 2001 through 2004—

21
demonstrate that her actual authority was co-extensive with the

legal authority she possessed. Erwin, 591 F.3d at 321.

Mrs. Johnson admits in her pleadings that she “fired the

finance director,” the employee tasked with making payroll tax

payments, as soon as she discovered that Koba Institute had not

remitted these taxes as required by law. (J.A. 17.) She also

“directed Mr. Johnson to personally handle all future tax

payments as of January 2005” and “required” him to provide her

with “visual proof” of all tax payments the corporation made.

(J.A. 17.) These admissions indicate that Mrs. Johnson’s status

in the corporation during the quarters at issue enabled her to

have “substantial input into [its financial] decisions [from

2001 through 2005], had [s]he wished to exert [her] authority.” 10

Barnett, 988 F.2d at 1455 (quotation marks omitted).

10
Although not singly determinative, Mrs. Johnson’s
execution of corporate leases and lines of credit as a guarantor
for Koba Institute offers additional support for the conclusion
that she was a “responsible person” for § 6672 purposes. See
Erwin, 591 F.3d at 322 (discussing a taxpayer’s personal
guarantees of corporate loans in determining his responsibility,
but noting that this fact “[did] not alone establish” his status
as a “responsible person”). Without these acts by Mrs. Johnson,
the corporation’s financial capacity would have been adversely
affected. Because Mrs. Johnson actively intervened to keep the
corporation financially viable, Koba Institute was able to pay
its creditors. The record further reflects that Mrs. Johnson
made more than a dozen loans to Koba Institute between 2001 and
2003, after Mr. Johnson had informed her that the corporation
needed additional funds to cover its operating expenses.

22
 Moreover, the fact that, from 2001 through 2004, Mrs.

Johnson followed the corporation’s internal policy and did not

write checks without knowing that Mr. Johnson had previously

approved them does not negate § 6672 “responsible person”

status. (See J.A. 1484–91, 1576.) Although she followed

corporate procedure without exception during that time, it is

undisputed that Mrs. Johnson ceased following this policy almost

immediately upon learning of the 2001-2004 payroll tax

deficiencies and could have done so at any earlier time.

Following her “revamped oversight of tax payments,” Mrs. Johnson

would write checks from the payroll account without any

instruction from Mr. Johnson. (J.A. 17, 1484–85.) Accordingly,

the fact that Mrs. Johnson previously chose not to write checks

without Mr. Johnson’s approval does not show that she was

prevented earlier from doing so other than by her own choice.

See, e.g., Thosteson v. United States, 331 F.3d 1294, 1299–1300

(11th Cir. 2003) (holding corporate officer and stockholder a

“responsible person” as a matter of law even though he had

“limited check writing authority, up to only $750, without a

countersignature”); Lyon v. United States, 68 F. App’x 461, 469

(4th Cir. 2003) (unpublished) (per curiam) (“The fact that [the

taxpayer] chose not to exercise his legal authority is not

enough to show that he had no actual authority. . . . [He] has

not demonstrated that his father actually prevented him, or that

23
he could have prevented him, from paying the taxes if [he] had

attempted to do so.”). The record also indicates that Koba

Institute opened several operating accounts between 2001 and

2005, and that on each of those accounts, Mrs. Johnson was fully

authorized to write checks and execute other bank documents.

While she may not have been running the day-to-day

operations of the corporation between 2001 and 2004, Mrs.

Johnson had a non-delegable responsibility to monitor Koba

Institute’s financial affairs. See Barnett, 988 F.2d at 1457

(“[W]e believe that not only is it a bad business practice for a

high-level company official such as [Mrs. Johnson] to fail to

monitor [the corporation’s] finances, it also subjects [her] to

being held a responsible party under § 6672.”). Mrs. Johnson

had the effective power to exercise authority when she chose to

do so, even though she chose at times to voluntarily limit her

involvement in corporate affairs. Although Mrs. Johnson often

chose not to exercise the authority which she possessed, such a

decision is insufficient to permit a taxpayer to avoid § 6672

responsibility. See Kinnie v. United States, 994 F.2d 279, 284

(6th Cir. 1993) (stating that a taxpayer need not “always

exercise his powers” to remain responsible for seeing that

withholding taxes are paid, and “may not escape liability by

delegating the task of paying over the taxes to someone else”).

Moreover, after 2004, while the prior periods’ payroll taxes

24
remained unpaid, Mrs. Johnson actively exercised her authority

over the affairs of Koba Institute while continuing to receive

substantial compensation and benefits from the corporation. 11

We therefore conclude that the Government presented

undisputed evidence that established as a matter of law that

Mrs. Johnson was a “responsible person” under § 6672 during the

relevant tax periods because she had the effective power to pay

the trust fund taxes of Koba Institute. 12

11
While also relevant to the “willfulness” finding
discussed in the next section, the same evidence of Mrs.
Johnson’s knowing receipt of substantial assets from the
corporation while the payroll taxes remained unpaid also
bolsters the proof of her “responsible person” status. The
record shows that Mrs. Johnson received an annual salary ranging
from approximately $100,000 to $193,000 from 2001 through 2004,
as well as a corporate car and cell phone. Koba Institute also
paid the rent for the Johnsons’ home, totaling between $40,000
and $50,000 in 2001, 2002, and 2004.
12
We note that other courts have reached precisely the same
conclusion in considering similar facts. See, e.g., Jefferson
v. United States, 546 F.3d 477, 481 (7th Cir. 2008) (holding
board president “responsible person” as a matter of law because
he secured loans and directed past payment of taxes for the
corporation, reviewed financial reports, and had check-signing
authority); Thosteson, 331 F.3d at 1299–1300 (holding corporate
officer and stockholder a “responsible person” as a matter of
law even though he had “limited check writing authority, up to
only $750, without a countersignature”); Taylor, 69 F.3d at 417
(holding corporate director and officer a “responsible person”
as a matter of law because he “possessed sufficient control over
corporate finances, had authority to borrow funds and write
checks and thereby had the ‘effective power’ to pay those taxes”
(quoting Barnett, 988 F.2d at 1454)); Greenberg v. United
States, 46 F.3d 239, 243–44 (3d Cir. 1994) (holding in-house
controller a “responsible person” as a matter of law even though
he took instructions from the controlling stockholder and
“feared for his job were he to independently issue a check for
(Continued)
25
 2.

Having found Mrs. Johnson a “responsible person,” we turn

to the other necessary element of § 6672 liability, whether she

“willfully” failed to collect, account for, or remit payroll

taxes to the United States. 26 U.S.C. § 6672(a); Plett, 185

F.3d at 219. This inquiry focuses on whether Mrs. Johnson had

“knowledge of nonpayment or reckless disregard of whether the

payments were being made.” Plett, 185 F.3d at 219 (quoting

Turpin v. United States, 970 F.2d 1344, 1346 (4th Cir. 1992)).

Mrs. Johnson contends that she did not act “willfully” in

failing to remit Koba Institute’s delinquent payroll taxes

because she did not learn of the deficiency until the IRS

notified her in December 2004. This argument, however,

overlooks that a taxpayer may act “willfully” for purposes of §

6672 even though she does not learn about unpaid taxes until

after the corporation has failed to pay them. “[W]hen a

responsible person learns that withholding taxes have gone

unpaid in past quarters for which he [or she] was responsible,

the [tax] delinquency”); Kinnie, 994 F.2d at 284 (holding
corporate vice president and fifty-percent shareholder a
“responsible person” as a matter of law because he had check-
signing authority, hired an accountant to review the books, and
eventually took control of the business); Mazo v. United States,
591 F.2d 1151, 1156 (5th Cir. 1979) (holding corporate
stockholders, officers, and directors “responsible persons” as a
matter of law even though others handled all day-to-day
operations and prepared all corporate checks).

26
he [or she] has a duty to use all current and future

unencumbered funds available to the corporation to pay back

those taxes.” Erwin, 591 F.3d at 326. If the taxpayer

thereafter knowingly permits payments of corporate funds to be

made to other creditors, a finding of willfulness is

appropriate. See id. (“Even assuming . . . that [the taxpayer]

did not act willfully prior to learning of the full extent of

the tax deficiencies . . ., his conduct after that point

unquestionably evidences willfulness as a matter of law.”

(emphasis in original)).

The record demonstrates that Koba Institute continued to

make payments to other creditors using unencumbered funds

following Mrs. Johnson’s receipt of the IRS notice in December

2004. The Government has produced numerous salary checks that

the corporation issued to Mrs. Johnson in 2005, which Mrs.

Johnson readily cashed. Yet it is undisputed that Mrs. Johnson,

a “responsible person,” knew that payroll taxes for numerous

quarters from 2001 through 2004 remained unpaid. Mrs. Johnson’s

failure to remedy the payroll tax deficiencies upon learning of

their existence in December 2004, while directing corporate

payments elsewhere, including to herself, constitutes “willful”

conduct under § 6672. This is particularly so given that, at

Mrs. Johnson’s direction, Koba Institute paid other creditors

during this period. And, as noted earlier, during the 2001 to

27
2004 delinquent tax periods, Mrs. Johnson received well in

excess of $500,000 in compensation and benefits from the

corporation while the payroll taxes went unpaid. Cf. Turpin,

970 F.2d at 1347 (“The intentional preference of other creditors

over the United States is sufficient to establish the element of

willfulness under section 6672(a).” (internal quotation marks

omitted)). Even viewing the evidence in the light most

favorable to Mrs. Johnson, we conclude that the record allows no

conclusion other than that the failure to pay the payroll taxes

was willful on Mrs. Johnson’s part.

3.

In sum, we conclude that the Government has presented

undisputed evidence sufficient to establish as a matter of law

that Mrs. Johnson was a “responsible person” under § 6672 during

the relevant tax periods, and that she “willfully” failed to see

that the withholding taxes were paid. No genuine dispute as to

any material fact remains to be decided which would alter this

conclusion. Accordingly, we hold that the district court did

not err in granting summary judgment against Mrs. Johnson

individually.

28
 C.

Finally, we briefly address the claims raised by the

Johnsons with respect to the district court’s determination of

the amounts of their respective 100% penalty liabilities.

Relying on the reports of their expert witness, Leo Bruette

(“Bruette”), the Johnsons assert that there is a genuine issue

of material fact as to the amounts of that liability. They

allege that Bruette identified “numerous errors, omissions[,]

and inconsistencies” in the tax assessments made against them,

which therefore undermined the Government’s proof of the amounts

owed. (Br. 26.)

The district court, however, found that the Johnsons

“neither relied upon Bruette’s reports nor produced any evidence

to create an issue of material fact” that would preclude summary

judgment. (J.A. 271.) Indeed, the Johnsons did not discuss or

cite Bruette’s reports in either of their opposition briefs to

the Government’s summary judgment motions, in Mr. Johnson’s

motion for partial summary judgment, or even as exhibits in

opposing summary judgment. Further, the Johnsons do not contest

the district court’s factual conclusion in this regard on

appeal. The reports, therefore, could not—and did not—create a

genuine issue of material fact.

29
 We also find that Mrs. Johnson’s concerns regarding double

recovery are without merit. 13 Mrs. Johnson asserts that entering

judgment against her could result in double recovery for the

Government because it may collect a significant portion of the

unpaid trust fund taxes through an offer in compromise that Koba

Institute negotiated with the IRS. We note that Mr. Johnson

raised a similar argument when the Government previously sought

judgment against him for trust fund recovery penalties at Koba

Associates, which was clearly rejected by the district court.

See Johnson v. United States, 203 F. Supp. 2d 416, 425 (D. Md.

2002), aff’d, 50 F. App’x 113 (4th Cir. 2002) (unpublished) (per

curiam), cert. denied, 540 U.S. (2003). In that case, Mr.

Johnson argued that the Government “might attempt to obtain some

sort of double recovery from both Koba [Associates] and [him] in

excess of the established amount of withholding taxes due.” Id.

After explaining that the Government may attempt to satisfy a

debt for unpaid payroll taxes against the business or the

taxpayer, the district court clarified that the IRS follows an

“established administrative policy” of only collecting such tax

delinquencies once. Id.; see also id. at 425–26 (“[T]he mere

fact that the [Government] is attempting to secure a second

13
This issue was raised, although obliquely, by Mrs.
Johnson in her opposition to the Government’s motion for summary
judgment, and therefore can only affect her liability. Mr.
Johnson did not raise a double recovery argument.

30
source for the payment of taxes owed does not necessarily mean

that it will attempt to exhaust both sources in excess of the

debt.”). The court reasoned that “any lingering concerns of

double recovery” could be allayed “by a carefully drafted

judgment order of the district court.” Id. at 425. We agree

with the district court’s reasoning in the prior case, and note

that similar precautions were taken in this case. The district

court’s judgment order specifically provides that the judgments

against the Johnsons will “be reduced to the extent that the

United States . . . has collected or will collect on those debts

pursuant to the offer in compromise it approved with Koba

Institute.” (J.A. 274.)

Mrs. Johnson further asserts that the Government might

succeed in obtaining a double recovery because certain voluntary

payments made by Koba Institute were not properly credited. She

does not, however, develop this argument or cite any evidence to

corroborate it. See Fed. R. App. P. 28(a)(9)(A) (requiring

argument section of an appellant’s opening brief to contain

“appellant’s contentions and the reasons for them, with

citations to the authorities and parts of the record on which

the appellant relies”). As a result, we consider her to have

abandoned this claim. See Edwards, 178 F.3d at 241 n.6.

Moreover, while Koba Institute did designate some payments,

those applied to the second quarter of 2001 (ending June 30,

31
2001), which is not a quarter for which Mrs. Johnson was found

liable.

Accordingly, we conclude that the district court correctly

determined the amounts of the Johnsons’ respective tax

liabilities under § 6672.

IV.

For all of the foregoing reasons, we affirm the judgment of

the district court.

AFFIRMED

32