dissenting:
Arnold Hochstein was the controller of a company that went out of business. Two years before the end, a financing firm, Rosenthal & Rosenthal (“Rosenthal”), effectively took over financial control of the company, Safelon Corporation (“Safelon”), supplying operating funds in return for a security interest in the company’s receivables and assets. Four months before the end, Rosenthal decided to liquidate the company and keep only enough employees to maximize revenues during the liquidation. All funds disbursed by Hochstein to pay bills came from Rosenthal. Hoch-stein requested sufficient funds to pay the net wages and the withholding taxes of the few remaining employees. Rosenthal refused, providing instead only funds to pay net wages. Hochstein continued with his duties during the final four months of the company’s existence, often working in his overcoat because Rosenthal did not supply enough money for heat. For his trouble, Hochstein, whose annual salary was $35,-000, is now held personally liable for some $30,000 in withholding tax penalties, an amount equal to the taxes due, but uncollected from, Safelon.
I do not believe the Government’s need for taxes or the requirements of federal law justifies the Court’s imposition of “responsible person” liability upon Arnold Hochstein. See 26 U.S.C. § 6672 (1982). The District Court ruled in his favor. From the reversal of that ruling, I respectfully dissent.
As the majority recognizes, the central question in determining whether a person is “responsible” under section 6672 is whether the individual has significant control over the enterprise’s finances. In the waning days of Safelon’s existence, Hoch-stein had no such control. All of Safelon’s revenue was turned over to Rosenthal. All funds for Safelon’s operations had to be requested from Rosenthal. Rosenthal disbursed no money to Safelon unless the purposes for which the money was requested, almost entirely employees’ net wages, was precisely set forth. Though, as the District Court noted, Rosenthal did not formally “earmark” specific purposes for the funds, 713 F.Supp. at 121, its provisions of precise dollar amounts sufficient in the aggregate to pay for only those items of the requested expenses that it chose to fund made it perfectly clear to Hochstein that Rosenthal, not Hochstein, was making the decision as to which bills should be paid. With respect to taxes, the matter could not have been clearer. Hochstein specifically requested enough money to pay to the few remaining employees their net wages and to pay to the I.R.S. the withholding taxes due with respect to those wages. As the District Court found, “In making requests for disbursements from Rosenthal, Hochstein stressed that payment of the employment taxes was of the ‘highest priority.’ ” Id. at 122. In response to this emphatic request, Rosenthal refused to supply the money needed to pay taxes, choosing instead to furnish only enough money to pay net wages and one or two de minimis operating expense bills.
Once this limited amount of cash arrived, Hochstein realistically had no choice except to write checks for the items Rosenthal had decided to supply funds. If taxes were to be paid from those limited funds, a decision would have been required either to pay the employees less than their net wages, which would have resulted in their quitting and would likely have violated state law, or to reduce expenses by discharging some of the employees, thereby accelerating the rate of the company’s shutdown. But those are business decisions that were in the hands of Rosenthal, the financier, and Ernest Eckstein, Safelon’s president and majority shareholder. As the District Court explicitly found, “Hochstein was not, however, involved in any business decisions involving the operation or production aspects of the plant, including whether raw materials were to be purchased or processed, whether the plant would continue to operate in any capacity, or whether employees would be laid off.” Id.
Hochstein can be deemed a “responsible person” only if that phrase covers any em*551ployee authorized to sign checks. The statute is not that broad. It imposes liability on persons who exercise some authority with respect to the decision whether or not to pay taxes. In the final four months of Safelon’s operations, with its financier calling the shots and supplying all its funds, Hochstein’s relationship to the checkbook was solely that of a scribe, not a decision-maker. The Government should collect its taxes from those who made the decision not to pay them.
Hoehstein’s lack of real decision-making authority may usefully be contrasted with that of the defendant in Howard v. United States, 711 F.2d 729 (5th Cir.1983), on which the majority relies. At the end of the period during which the defendant in Howard failed to pay withholding taxes, the company had “a substantia] amount of money on deposit at its bank.” Id. at 732. It is one thing to say that a defendant with check-signing authority for an on-going business with substantial cash in the bank is realistically making choices as to whether taxes should be paid and is “responsible” for not paying withholding taxes when he fails to write checks to the I.R.S. It is quite another to reach the same conclusion where a business is failing and its de facto receiver, while liquidating its assets, is supplying only the funds necessary to pay employees’ net wages, despite the check-signer’s request for sufficient money to pay taxes in full.
I also disagree with the Court’s rejection of the significance of the New York statute that imposes criminal liability on agents of employers who fail to pay wages. See N.Y. Labor L. § 198-a (McKinney 1986). Noting that New York law authorizes withholding of federal taxes, the Court says it is not clear that Hochstein would have been subject to state prosecution had he “prorated the net wages.” In allowing withholding, as it must in view of paramount federal law, New York would have permitted Hochstein to withhold a typical percentage, say 18 percent, from a gross wage payment. Had Rosenthal provided $100 for an employee’s gross wages, Hochstein could have paid the employee $82 net wages and sent $18 to the I.R.S. But when Rosenthal provides Hochstein with only net wages for that employee, i.e., $82, I seriously doubt that New York would consider lawful a payment to that employee of only $64. Yet that is the payment the Court holds that Hochstein should have made. Of course, New York cannot criminalize withholding $18 and paying the employee his true net wages of $82. But New York has the clear right to insist that employees receive their full net wages, i.e., net of just one bite of withholding taxes, not two.
After hearing all the evidence in this bench trial, Judge Leisure concluded that Hochstein was not a “responsible person.” I do not understand in what respect he erred. Because I believe that his findings are fully supported, perhaps even compelled, by the evidence and that his ultimate conclusion is entirely consistent with applicable law, I dissent.