Vinick v. United States

United States Court of Appeals
For the First Circuit

No. 98-2143

ARNOLD W. VINICK,

Plaintiff, Appellant,

v.

UNITED STATES,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Robert E. Keeton, U.S. District Judge]

Before

Stahl, Circuit Judge,
John R. Gibson,* Senior Circuit Judge,
and Lynch, Circuit Judge.

Howard R. Palmer, with whom Lawrence F. O'Donnell and
O'Donnell, O'Donnell and O'Donnell, were on brief, for
appellant.
Teresa E. McLaughlin, Attorney, with whom Loretta C.
Argrett, Assistant Attorney General, and Gilbert S. Rothenberg,
Attorney, were on brief, for appellee.

March 8, 2000
_____________________
*Of the Eighth Circuit, sitting by designation.
 STAHL, Circuit Judge. Plaintiff-appellant Arnold W.

Vinick appeals the district court's determination that he

personally is liable for withholding taxes that Jefferson

Bronze, Inc. (“Jefferson Bronze”) failed to pay. Previously

this court vacated a determination that Vinick was a

“responsible person” within the meaning of section 6672(a) of

the Internal Revenue Code and remanded for further proceedings

consistent with our opinion. See Vinick v. United States, 110

F.3d 168 (1st Cir. 1997) (appeal from summary judgment in the

government's favor) (hereinafter Vinick I). Following a bench

trial, the district court again ruled in the government's favor

by finding Vinick to be a responsible person. We reverse.

I.

A.

To ease the logistical burden on employees and to aid

in the collection of taxes, the Internal Revenue Code requires

employers to withhold from employees' wages social security and

federal income taxes. See 26 U.S.C. §§ 3102, 3402 (1994). The

money withheld is held by the employer in trust for the United

States. See id. § 7501. This system protects from later

recourse the employees who are deemed to have paid their taxes,

even if the employer fails to pay the Internal Revenue Service

(“IRS”) the money it withheld. See Caterino v. United States,

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794 F.2d 1, 3 (1st Cir. 1986) (noting that the IRS “has no

recourse against employees who have had income and social

security taxes withheld from their wages”). The Code renders

liable for the taxes due those it deems to be responsible

persons who willfully have neglected to pay the withheld money.

See 26 U.S.C. § 6672. In pertinent part, § 6672 states:

Any person required to collect, truthfully
account for, and pay over any tax imposed by
this title who willfully fails to collect
such tax, or truthfully 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.

Liability under § 6672 falls upon those persons who

satisfy both prongs of a two-part inquiry. First, the person

must be “responsible” for collecting, accounting for, and paying

over the taxes; second, if, and only if, the person is deemed

responsible, he is liable if he acted “willfully” within the

meaning of this section. See, e.g., Vinick I, 110 F.3d at 170;

Caterino, 794 F.2d at 3; Harrington v. United States, 504 F.2d

1306, 1312-13 (1st Cir. 1974). Because we already have

determined as a matter of law that Vinick acted willfully, see

Vinick I, 110 F.3d at 174, the only issue before us is whether

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the record supports the district court's conclusion that Vinick

was in fact a responsible person. We hold that it does not.

B.

We review the record in the light most favorable to the

government. See United States v. Ven-Fuel, Inc., 758 F.2d 741,

744-45 (1st Cir. 1985) (noting that “we present the facts and

the reasonable inferences therefrom in the manner most

hospitable to the appellee, to the extent consistent with record

support”).

Vinick, a certified public accountant, has been in

private practice since 1962. Prior to that time, he worked for

the IRS for eight years. While in private practice, Vinick

became acquainted with Richard M. Letterman, then a practicing

attorney.1 In 1981, Letterman, Peter Mayer, and Vinick formed

Jefferson Bronze for the purpose of operating a foundry. Norman

Leach, who owned a foundry in Salem, Massachusetts, sold them

the necessary assets. Letterman was Leach's attorney, Vinick

was his accountant, and Mayer was Letterman's brother-in-law.

Jefferson Bronze received from the Small Business

Administration (“SBA”) a loan to acquire the assets from Leach.

1
In 1992, Letterman pled guilty to four counts of larceny
and one count of embezzlement by a fiduciary. He subsequently
was disbarred and received a two-year prison sentence. The
charges were unrelated to his involvement in Jefferson Bronze.

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Letterman, Mayer, and Vinick, who each owned one-third of

Jefferson Bronze's stock, personally guaranteed the SBA loan and

pledged their homes as collateral. Letterman became the

president and clerk. Vinick was the treasurer. Mayer was

neither an officer nor a director, but he was the day-to-day

manager of the foundry.

Throughout the history of his involvement in the

corporation, Vinick never gave up his accounting practice and

never had an office at Jefferson Bronze. Although Letterman and

he both were signatories on the company's checking accounts,

Vinick never signed checks prior to the company's filing of its

Chapter 11 petition. Vinick, however, did prepare the

corporation's quarterly employment tax returns.

Soon after its formation, Jefferson Bronze began what

would become a long period of financial difficulties. Early on,

in 1983, Letterman fired Mayer, and he and Vinick then acquired

Mayer's share of the corporation, obtained his release from

liability on the SBA loan, and each became a half owner of

Jefferson Bronze. Subsequently, Vinick asked Ronald Ouellette,

who had worked in the foundry under Leach, to take over as the

new manager.

Ouellette ran the office and the foundry, and his wife

Diane Ouellette worked part time as the bookkeeper in the office

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and signed the company checks and payroll returns. Vinick

occasionally would visit the Ouellette home to collect

information needed to complete the quarterly returns. After

their preparation, Vinick would return the completed, unsigned

forms to the Ouellette home. Usually once a month, Vinick would

discuss with Ron Ouellette the financial condition of the

corporation and would stress to him the need to pay the taxes.

During Ouellette's tenure as manager, Jefferson

Bronze's financial troubles continued. Often, the corporation

failed timely to pay the withholding taxes due. Regardless, the

corporation always filed its tax returns on time. At some

point, Letterman and Vinick obtained from Leach a $35,000 loan,

which they secured with personal guarantees. In 1985, Vinick

negotiated with an IRS revenue officer a payment plan for the

taxes Jefferson Bronze owed. Vinick relayed to Ouellette the

terms of the plan, and Ouellette complied with the plan's

requirements. After Jefferson Bronze completed payment of these

taxes, it experienced no further tax delinquency until Letterman

took over as manager.

In January 1988, Letterman decided on his own to take

over as the day-to-day financial manager of the corporation.

Letterman moved his law practice to Jefferson Bronze's office

and relieved Ouellette of his financial responsibilities, but

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retained him as the foundry manager. Letterman's wife, Ellen

Letterman, took over as office manager and bookkeeper. Vinick

continued to collect the financial information, to prepare the

tax returns, and to leave them for Letterman to sign. While he

also continued to advise Letterman to pay the corporation's

taxes, the record is undisputed that Vinick became less involved

in the financial affairs of the corporation as Letterman's role

increased.

In May 1988, Jefferson Bronze refinanced its SBA loan

with a $300,000 loan from National Grand Bank. Letterman and

Vinick met with the bank's vice president, Eliot Rothwell, who

negotiated the loan. The bank's practice required all

principals of any closely held corporation to be account

signatories, and it made no exception for Jefferson Bronze.

Letterman and Vinick each signed the note evidencing the loan

twice, once in an individual capacity and once in a corporate

capacity. Each further personally guaranteed the loan by

pledging his house as collateral. Around March 1989, the

corporation became delinquent on its loan from National Grand

Bank, and Letterman and Vinick met with Rothwell to discuss the

financial future of Jefferson Bronze.

By July of 1990, the company's continuing financial

difficulties forced it to file for bankruptcy protection under

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Chapter 11. After doing so, it opened two new bank accounts at

Heritage Cooperative Bank (“Heritage”): a debtor in possession

account and a tax account. Both accounts required two

signatures, Letterman's and Vinick's, on every check, even

though Letterman retained possession of the checkbooks. For the

first time in Jefferson Bronze's existence, Vinick's signature

appeared on Jefferson Bronze checks.

In 1990, during the bankruptcy period, Vinick signed

every check on the Heritage accounts, but it is unclear when he

signed them. On several occasions, Juli Young, the bank

employee who filed all paid checks, called Vinick down to the

bank. Upon arrival, she presented to him for his signature

checks that the bank already had negotiated with only

Letterman's signature.2 On July 26, 1991, National Grand Bank

foreclosed on its loan. Later that year, Jefferson Bronze

finally closed its doors.

2These checks were the subject of much dispute during the
trial because testimony about whether Vinick signed the checks
before or after the bank negotiated them was conflicting.
Vinick testified that he signed all checks after the bank had
negotiated them, but bank employees recalled that the bank had
negotiated some of the checks with Vinick's signature already
affixed. The district court did not resolve this dispute; the
judge merely stated that Vinick had signed some before and some
after negotiation, and further found the fact of Vinick's
signing, regardless of when, to be indicative of his authority
and responsibility within the meaning of § 6672.

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 Meantime, from April 1989 to June 1990, during

Letterman's tenure as manager and prior to Vinick's ever having

signed a company check, Jefferson Bronze again fell behind in

its withholding tax obligations. On December 17, 1990, the IRS

assessed against Vinick a penalty pursuant to § 6672 for the

total amount owed, $49,129. The assessment alleged failed

withholding payments for the last three quarters of 1989 and the

first two quarters of 1990. On December 24, 1990, the IRS made

a like assessment against Letterman.

Vinick paid $3,731 and filed a claim for a refund. The

IRS denied that claim, and Vinick commenced this suit. The

government counterclaimed for the balance due and moved for

summary judgment against both men. The district court concluded

that as a matter of law Letterman and Vinick both were

responsible persons who acted willfully under § 6672. The court

thus granted the government's motion for summary judgment.

Vinick alone appealed. In Vinick I, we found a genuine issue of

material fact as to whether Vinick was a responsible person and

remanded for a bench trial on the issue that is the subject of

this appeal.

During a two-day bench trial to determine whether

Vinick was a responsible person, the court heard testimony from

several witnesses about the company's organizational structure

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and about the financial operations at Jefferson Bronze. That

testimony covered the formation of the corporation, the various

management changes, the operation of the company under each

manager, its financial difficulties, and its bankruptcy. The

court received into evidence over Vinick's objection over 200

canceled checks from the two Heritage accounts, which Jefferson

Bronze had opened after the relevant quarters.

After the second day of testimony, the court issued a

bench opinion, finding by a preponderance of the evidence3 that

Vinick was a responsible person within the meaning of § 6672.

The court found that he was the treasurer, prepared the

quarterly tax returns, negotiated with the IRS on behalf of the

corporation, pledged personal assets, had authority to

participate in employment decisions, and possessed throughout

the corporation's existence check-signing authority. The court

also found that he actually exercised this authority only while

the corporation was in bankruptcy. The court weighed each of

these factors to varying degrees in favor of his being a

3
The district court noted upon rendering its findings and
judgment that because the standard of proof is by a
preponderance of the evidence, it is immaterial which side has
the burden of proof. We have held that “[a]lthough the rule
appears harsh, as in other tax litigation a person who
challenges a section 6672 assessment bears the burden of
persuasion to prove lack of control.” Caterino, 794 F.2d at 5.

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responsible person. The court did find him to be uninvolved in

the day-to-day management of the corporation and weighed this

factor against his being a responsible person, noting, however,

that its weight was minimal. Vinick now appeals.

II.

In reviewing factual findings, this court applies the

clear-error standard of review. See Fed. R. Civ. P. 52(a).

Under this standard, we accept the district court's findings of

fact unless we are “'left with the definite and firm conviction

that a mistake has been committed.'” Anderson v. City of

Bessemer City, 470 U.S. 564, 573 (1985) (quoting United States

v. United States Gypsum Co., 333 U.S. 364, 395 (1948)); see also

Brown Daltas & Assoc., Inc. v. General Accident Ins. Co., 48

F.3d 30, 36 (1st Cir. 1995). Moreover, we usually defer to a

trial court's resolution of mixed questions of law and fact.

See, e.g., United States v. Howard (In re Extradition of

Howard), 996 F.2d 1320, 1328 (1st Cir. 1993) (“The standard of

review applicable to mixed questions usually depends upon where

they fall along the degree-of-deference continuum: the more

fact-dominated the question, the more likely it is that the

trier's resolution of it will be accepted unless shown to be

clearly erroneous.”).

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 But, the case for deference vanishes when a court's

ultimate conclusion is infected by legal error. See Inwood

Labs. v. Ives Labs., 456 U.S. 844, 855 n.15 (1982) (“Of course,

if the trial court bases its findings upon a mistaken impression

of applicable legal principles, the reviewing court is not bound

by the clearly erroneous standard.”); Brown Daltas, 48 F.3d at

36 (same); Cumpiano v. Banco Santander Puerto Rico, 902 F.2d

148, 153 (1st Cir. 1990) (“It is settled that one way around the

rigors of the 'clearly erroneous' rule is to show that the trial

court mistook the applicable law.”). As a result, when a trial

court “premise[s] its ultimate finding . . . on an erroneous

interpretation of the standard to be applied,” we do not use

clear-error review. United States v. Parke, Davis & Co., 362

U.S. 29, 44 (1960). Instead, we treat the trial court's

conclusion as a question of law. See United States v. Singer

Mfg. Co., 374 U.S. 174, 194 n.9 (1963) (“Insofar as that

conclusion derived from the court's application of an improper

standard to the facts, it may be corrected as a matter of

law.”); Parke, Davis, 362 U.S. at 44 (noting that in these

circumstances, the appeals court is “reviewing a question of

law, namely, whether the District Court applied the proper

standard to essentially undisputed facts”); Bergersen v.

Commissioner, 109 F.3d 56, 61 (1st Cir. 1997) (noting that with

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mixed questions of law and fact “once the raw facts are

determined (and such determinations are normally reviewed only

for clear error), deciding which legal label to apply to those

facts is a normative decision--strictly speaking, a legal

issue”).

Because the trial court made its findings of fact based

on a misunderstanding of the legal standard for what constitutes

a responsible person under § 6672 in that it considered Vinick's

conduct over the entire period he was involved with Jefferson

Bronze rather than his activities during the quarters in

question, see infra Part III.B, we do not defer to its

conclusion that Vinick was a responsible party within the

meaning of the statute.4

III.

A.

A responsible person5 under § 6672 is anyone within a

company who has a duty to collect, account for, or pay the

4 The dissent argues that we have altered the standard of
review applicable to § 6672 cases as set forth in Caterino. We
have not. We agree that this court ordinarily should review the
trial court's responsible person determination for clear error;
however, when the fact-finder misunderstands the applicable
legal standards, the case for deference disappears.
5This term does not appear in the statute itself, but courts
long have referred to the persons subject to liability under
§ 6672 as “responsible persons.” See, e.g., Slodov v. United
States, 436 U.S. 238, 245 n.7 (1978).

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withheld taxes.6 See Vinick I, 110 F.3d at 172. In determining

who falls within the category of responsible person, the courts

have identified seven typically used, but nonexclusive, indicia.

The inquiry focuses on whether the individual

(1) is an officer or member of the board of
directors, (2) owns shares or possesses an
entrepreneurial stake in the company, (3) is
active in the management of day-to-day
affairs of the company, (4) has the ability
to hire and fire employees, (5) makes
decisions regarding which, when and in what
order outstanding debts or taxes will be
paid, (6) exercises control over daily bank
accounts and disbursement records, and (7)
has check-signing authority.

Fiataruolo v. United States, 8 F.3d 930, 939 (2d Cir. 1993);

accord Barnett v. IRS, 988 F.2d 1449, 1455 (5th Cir. 1993);

Denbo v. United States, 988 F.2d 1029, 1032 (10th Cir. 1993);

Brounstein v. United States, 979 F.2d 952, 954-55 (3d Cir.

1992); Thomsen v. United States, 887 F.2d 12, 16 (1st Cir.

1989); Gephart v. United States, 818 F.2d 469, 473 (6th Cir.

1987). No single factor is determinative of responsibility.

See Barnett, 988 F.2d at 1455. The deciding court must look at

6While the Code defines a responsible person as one who is
“required to collect, truthfully account for, and pay over any
tax,” 26 U.S.C. § 6672(a) (1994), the Supreme Court has
interpreted the statute to apply to any person who has a duty to
do any one of those things, see Slodov, 436 U.S. at 250
(concluding that Congress meant this phrase “to limit § 6672 to
persons responsible for collection of third-party taxes and not
to limit it to those persons in a position to perform all three
of the enumerated duties”).

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the “totality of the circumstances” when making the

determination of responsibility. Fiataruolo, 8 F.3d at 939

(“The question of control over the employer's finances must be

answered in light of the totality of the circumstances; no one

factor is determinative.”).

Because the goal of the statute is to hold liable for

the nonpayment of withholding taxes the party responsible for

such payment, the “crucial inquiry is whether the person had the

'effective power' to pay the taxes--that is, whether he had the

actual authority or ability, in view of his status within the

corporation, to pay the taxes owed.” Barnett, 988 F.2d at 1454;

see also Raba v. United States, 977 F.2d 941, 943 (5th Cir.

1992) (“The crucial examination is whether a person had the

effective power to pay taxes.” (internal quotation marks and

citation omitted)). While these factors largely are self-

explanatory, it is important to elaborate upon them to resolve

whether Vinick was a responsible person in light of the facts as

found. The factors easily divide into the following three

groups: (1) those that identify the taxpayer's status within the

corporation, (2) those that identify his involvement in the

daily affairs of the corporation, and (3) those that identify

his involvement in the financial affairs of the corporation. We

turn now to each of these groups.

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 1.

The first two factors contemplate the taxpayer's status

within the corporate structure. As an initial matter, we note

that titular authority is insufficient to create liability. See

Caterino, 794 F.2d at 5 (noting that courts “have fashioned an

elastic definition predicated upon the function of an individual

in the employer's business, not the level of the office held”);

see also Fiataruolo, 8 F.3d at 939 (“[T]he significant control

test is not meant to ensnare those who have merely technical

authority or titular designation.”). Moreover, “[t]he requisite

exercised authority or duty is particularly lacking in a case

. . . where the taxpayer assumes a title merely for the purpose

of protecting his investment.” O'Connor v. United States, 956

F.2d 48, 51-52 (4th Cir. 1992).

Like corporate title, share ownership is a factor, but

not all shareholders are responsible persons. See id. (“To

ignore [the separation of ownership and authority] would be to

envelop within 'responsible person' all significant investors

with titles in corporations which fail to pay their withholding

taxes.”). Furthermore, share ownership is not a predicate to

finding responsibility. See Donelan Phelps & Co. v. United

States, 876 F.2d 1373, 1376 (8th Cir. 1989) (noting that a

responsible person “need not be an officer or director or

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shareholder or employee or disbursing officer or payroll clerk

of the trustee of the funds deducted from the employees'

wages”).

2.

The next two factors focus on the taxpayer's

involvement in the operation of the corporation. The first

factor is whether the taxpayer is active in the day-to-day

affairs of the company. Day-to-day management in a corporation

involves more than simply having some tangential involvement in

the corporation's business. See Godfrey v. United States, 748

F.2d 1568, 1575 (Fed. Cir. 1984). The Godfrey court described

what day-to-day management means:

[The taxpayer] actively conducted the day-
to-day operations of the business: he came
to the office daily, hired and laid off
employees, ordered materials and supplies,
conducted business correspondence, set the
price of jobs, negotiated all contracts with
customers, prepared invoices, disbursed
corporate checks signed by him and the
secretary-treasurer in payment of supplier's
[sic] bills and other business expenses, and
deposited the business receipts in the
corporation's bank account. His address was
used for receiving most business mail; his
signature was required on all corporate
checks.

Id. (describing activities of the taxpayer in White v. United

States, 372 F.2d 513 (Ct. Cl. 1967)). Given the depth of

involvement required for day-to-day management, occasional

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involvement in business affairs is insufficient to create

liability. See id. at 1575-76.

The next factor is whether the taxpayer has the ability

to hire and fire the employees. In essence, this factor assists

in determining the taxpayer's level of involvement in the daily

operations of the company. Cf. Thibodeau v. United States, 828

F.2d 1499, 1504 (11th Cir. 1987) (“The government claims that,

as president, the taxpayer was responsible for running the

corporation on a daily basis, including the hiring and firing of

all employees.”); White, 372 F.2d at 515 (listing with his other

daily operational duties the taxpayer's responsibility for

hiring and firing all employees). The theory is that a person

with authority to hire and fire the employees likely is involved

substantially in the day-to-day management of the company.

3.

The final three factors assess involvement in the

financial operations of the corporation. This inquiry is the

heart of the matter because it identifies most readily the

person who could have paid the taxes, but chose not to do so.

See Morgan v. United States, 937 F.2d 281, 284 (5th Cir. 1991)

(“The central question is whether an individual had the

effective power to pay taxes.”); Hochstein v. United States, 900

F.2d 543, 547 (2d Cir. 1990) (“The central question, however, is

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whether the individual has significant control over the

enterprise's finances.”). Of the three factors within this

central question, the first, whether the taxpayer has decision-

making authority, is the most important because the goal of

§ 6672 is to fix liability on those persons who could have and

should have remitted taxes to the IRS. See Caterino, 794 F.2d

at 5 (noting that the inquiry for responsibility is “whether the

person had the power to determine whether the taxes should be

remitted or paid or had the final word as to what bills should

or should not be paid and when” (internal quotation marks and

citation omitted)); see also Greenberg v. United States, 46 F.3d

239, 243 (3d Cir. 1994) (finding responsible a taxpayer who

“wrote checks to pay other creditors while knowing that

withholding tax liabilities to the United States remained

unpaid”); Denbo, 988 F.2d at 1032 (“[A] corporate officer or

employee is responsible if he or she has significant, though not

necessarily exclusive, authority in the general management and

fiscal decisionmaking of the corporation.” (internal quotation

marks and citation omitted)); Gephart, 818 F.2d at 473 (noting

that the test focuses “upon the degree of influence and control

which the person exercised over the financial affairs of the

corporation and, specifically, disbursements of funds and the

priority of payments to creditors”); Commonwealth Nat'l Bank v.

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United States, 665 F.2d 743, 757 (5th Cir. 1982) (“A responsible

person is one who has a final or significant--even if not

exclusive--word as to which bills or creditors should be

paid.”); White, 372 F.2d at 517 (noting that a responsible

person usually is one “with ultimate authority over expenditures

of funds since such a person can fairly be said to be

responsible for the corporation's failure to pay over its

taxes”; one with “authority to direct [the] payment of

creditors”).

The second of these factors, whether the taxpayer

exercised control over the daily bank accounts, is significant

because it distinguishes between the officers with general

control and those with financial control. See Hochstein, 900

F.2d at 547 (“[T]he district court incorrectly focused on

[taxpayer's] control over [the company's] operations generally,

rather than his control over the finances of the corporation.”).

Financial involvement indicates that the taxpayer not only was

involved in the daily management of the company, but also knew

the financial circumstances and could have paid the government.

The final factor is whether the taxpayer had check-

signing authority. Again, this factor is significant because it

helps determine whether the taxpayer actually could have paid

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the IRS the due taxes. Importantly, “[c]ase law discloses that

authority to sign checks, without more, is a weak pillar on

which to rest a liability determination that a person is

properly subject to a 100 percent penalty under section 6672.”

Barrett v. United States, 580 F.2d 449, 453 (Ct. Cl. 1978). The

check-signing inquiry goes beyond the simple question whether

the taxpayer was a signatory; rather, the court must look at the

check-signing authority in the context of financial control.

See United States v. Carrigan, 31 F.3d 130, 134 (3d Cir. 1994)

(noting that a president's having and even exercising on

occasion signatory authority, without more involvement in the

company's financial affairs, does not as a matter of law make

him a responsible person). Possession of the authority without

its exercise is not enough. See O'Connor, 956 F.2d at 51 (“The

substance of the circumstances must be such that the officer

exercises and uses his authority over financial affairs or

general management, or is under a duty to do so, before that

officer can be deemed to be a responsible person.”); Morgan, 937

F.2d at 284-85 (“Mere access to corporate funds, however, does

not make one a responsible person.”); Pototzky v. United States,

8 Cl. Ct. 308, 316 (1985) (holding that a corporate officer who

no longer exercised his authority as a signatory even though he

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“technically had the authority to sign” was not a responsible

person).

Having established the background and having explained

the operation of the indicia of responsibility, we turn to

discuss this particular case.

B.

As previously mentioned, our task is not to determine

whether the district court's factual findings were correct given

the weight of the evidence on each factual dispute involved.

Rather, the issue is whether Vinick's level of corporate

involvement suffices to render him a responsible person under

§ 6672. Therefore, our task is to decide whether the district

court understood the legal standard for what is required to be

a responsible person and correctly applied this legal standard

to its findings when making its ultimate conclusion. We hold it

did not and that it should have entered judgment for Vinick.

See Colwell v. Suffolk County Police Dep't, 158 F.3d 635, 647

(2d Cir. 1998) (remanding with instructions to enter judgment

for the appellee when there was insufficient evidence to support

the district court's judgment and no further proceedings were

required).

As we have discussed, the central question in

determining whether a taxpayer is a responsible person is

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whether he had the power to pay the taxes during the quarters in

question. See Barnett, 988 F.2d at 1454. In Vinick I, we

limited the inquiry of responsibility to “the relevant

quarters.”7 Vinick I, 110 F.3d at 172 (focusing attention on the

relevant quarters and noting that while Vinick participated in

some business activities, “neither of those incidents occurred

during the quarters in question”). At oral argument, the

government contended that evidence of activities outside the

quarters in question bears on whether Vinick had authority

during the quarters in question. We disagree. Responsibility

during one period does not equate to responsibility in all

periods. See Caterino, 794 F.2d at 4 (finding that the

taxpayer's “involvement with [the company] was insufficient to

make him 'responsible' for 1973 under section 6672, but was

sufficient to make him 'responsible' for the first two quarters

7A review of the district court's Findings and Conclusions
is troubling because of its reliance on Vinick's activities
outside the quarters in question. Indeed, it leaves us with the
impression that the court relied almost entirely on Vinick's
activities before and after the relevant quarters. Twice in
Vinick I we emphasized that an inquiry into liability under
§ 6672 should focus on the taxpayer's activities during the
quarters in question, see Vinick I, 110 F.3d at 172 (dismissing
findings that Vinick engaged in managerial activities because
they did not occur during the quarters in question), and we
reiterate that principle here. When determining whether a
taxpayer is a responsible person under § 6672, the court should
focus its inquiry on the quarters during which the taxes were
unpaid.

-24-
of 1974"). As we review the record, we can identify several

distinct eras of corporate governance. The first followed

Letterman's, Mayer's, and Vinick's initial purchase of Jefferson

Bronze, during which time, 1981 to 1983, Mayer was the day-to-

day manager. The second came with Ouellette's tenure as day-to-

day manager, which was from 1983 to 1987. The third, which

includes the quarters in question, began with Letterman's taking

over the daily operations in 1987 and ended when the company

filed for bankruptcy in July 1990. The final period began with

the filing of bankruptcy, during which time the company had

opened the Heritage accounts, and ended with the company's

failure in 1991. The latter two phases were particularly

significant. Letterman's management of the business was more

concentrated in his hands than it had been in those of his

predecessors. Moreover, when Jefferson Bronze filed for

bankruptcy, not only was Letterman's control a factor, but also

the bankruptcy court's oversight into the company's affairs

would bear upon the degree of control that either Letterman or

Vinick could have had. Because of the differences in the

governance of Jefferson Bronze, it is erroneous to conflate

responsibility during one era with responsibility during

another.

-25-
 All the factors involved in making the legal

determination of responsibility are designed to focus attention

on the central question of power. At no time did Vinick

exercise any decision-making authority over which creditors

Jefferson Bronze paid. Moreover, the government's evidence

indicates that during the quarters in question, Letterman was in

charge of the day-to-day operations. While it is true that more

than one person can be responsible, see Harrington, 504 F.2d at

1312 (noting that we hold responsible “all with responsibility

and authority to avoid the default which constitutes a violation

of the statute”), the government introduced no evidence

indicating that during the relevant quarters, Vinick had any

involvement in the day-to-day operations. Unless titular

authority, being a shareholder, and having unexercised check-

signing authority suffice to render a taxpayer responsible, no

evidence supports holding Vinick as such.

It is with these observations that we discuss the

district court's legal conclusions about Vinick's

responsibility.

Initially, the court found that Vinick was the

corporation's treasurer. In commenting that the fact of title

is determinative, the court concluded that position alone favors

finding Vinick to be a responsible person. Here, the district

-26-
court contravened the message of Vinick I, in which we said that

we “predicate our definition of who is a responsible person on

the function of the employee in the business, and not the level

of the office held.” Vinick I, 110 F.3d at 172; see also

Caterino, 794 F.2d at 5 (noting that courts consider a person's

actual office function rather than his title); White, 372 F.2d

at 516 (“[T]he courts tend to disregard the mechanical functions

of the various corporate officers and instead emphasize where

the ultimate authority for the decision not to pay the tax

lies.”). The court then compounded its error by determining

that being treasurer “gives him authority to do many things that

he does not necessarily have the responsibility to do.” Instead

of focusing on his unexercised authority and his titular

designation, the court should have looked at the substance of

-27-
Vinick's work as treasurer8 to determine what bearing on

responsibility this titular authority should have.

The government contended at oral argument that simply

being an inside director is sufficient to make a person

responsible because directors owe the company a fiduciary duty

to see to it that the taxes are paid. This position is contrary

to the caselaw. See O'Connor, 956 F.2d at 51-52; Godfrey, 748

F.2d at 1576. In O'Connor, the taxpayer was a fifty-percent

shareholder, the vice-president, and a director of a closely

held corporation, but did not exercise any authority. See

O'Connor, 956 F.2d at 51. The court held that, even though he

8Vinick's acting “as treasurer” is important because he was
and is a Certified Public Accountant (“CPA”). The district
court determined that his activities over the years of the
company's existence in preparing the taxes, meeting with the IRS
to negotiate the settlement in the early years, preparing the
quarterly employment tax returns, and recommending that the
withholding taxes be paid were activities within his capacity as
treasurer. These activities are also those that a professional
CPA would undertake to service his client. Indeed, Ellen
Letterman, in her testimony, discussed her relationship with
Vinick: “Well, he was the CPA and I would give him all the money
information he needed.”
The government has suggested that Vinick's telling Letterman
and the other managers to pay the taxes demonstrates his
responsibility. Giving this advice is, after all, typically a
part of the CPA's or attorney's function. But this advice
coupled with an investment interest and a corporate title is
insufficient to render that professional a responsible person
because it does not demonstrate an ability to decide which
creditors are paid. If anything, the rendering of advice would
support a determination of willfulness, but that inquiry begins
only after the determination of responsibility is made. See
Vinick I, 110 F.3d at 170.

-28-
was a director, “O'Connor was a 'silent' investor who did not

exercise authority and was under no duty to do so.” Id.

Similarly, in Godfrey, the taxpayer was the chairman of the

board, had taken the lead in attempting to avoid insolvency, had

negotiated for loans, had sold corporate assets, and otherwise

had participated in the daily operations of the business. See

Godfrey, 748 F.2d at 1576. In deeming these activities

insufficient to render him a responsible person, the Federal

Circuit noted that “[t]o hold Godfrey a 'responsible person' on

the present record would be to hold as a 'responsible person'

every board chairman who took an active interest in the solvency

of the corporation he serves.” Id.

The district court also determined that Vinick's having

check-signing authority weighed heavily in favor of finding

responsibility. The court's affording such weight to the check-

signing factor without regard to whether check-signing authority

was indicative of financial control is contrary to § 6672

precedent. Cf. Denbo, 988 F.2d at 1032 (finding a taxpayer with

check-signing authority responsible because of his regular

involvement in the financial management of the corporation). In

other words, whether the taxpayer had check-signing authority is

relevant, but only insofar as it demonstrates financial control.

The central inquiry is whether Vinick could have paid the taxes.

-29-
See Morgan, 937 F.2d at 284; White, 372 F.2d at 517. While it

is true that he had check-signing authority during the quarters

in question, he at no time had access to the checkbook during

that period, see Vinick I, 110 F.3d at 172, and thus he was not

in a position to exercise his authority, which is determinative.

See Carrigan, 31 F.3d at 134 (noting that the taxpayer's check-

signing authority did not render him a responsible person

because “the corporate books, records and checkbooks were locked

in an office, and [the taxpayer] did not have his own key”);

Dudley v. United States, 428 F.2d 1196, 1202 (9th Cir. 1970)

(noting that the taxpayer “did not have control over the payment

of checks,” which indicated his lack of control over the

finances of the corporation).

The court ignored Vinick I's instructions to focus on

the quarters in question and admitted much evidence about

Vinick's signing of checks post Chapter 11, weighing that fact

heavily in favor of finding responsibility. This evidence does

not bear on the inquiry into responsibility during the relevant

quarters. See Vinick I, 110 F.3d at 172-73. Even if it were

appropriate to consider evidence from later quarters, the

intervention of the Chapter 11 proceeding significantly changed

this equation. Vinick's role, limited before the bankruptcy,

was only slightly more active after it. The fact of the

-30-
bankruptcy renders meaningless any comparison of these two

periods. To the extent the district court considered the

evidence of Vinick's signing checks after the quarters in

question, it erred.

Assuming arguendo that Vinick's signing the Heritage

checks had some relevance, being a countersignatory does not

suffice to make him a responsible person. See Lee v. United

States, 89-2 U.S. Tax Cas. (CCH) ¶ 9393, at 89,018 (D. Haw. Apr.

26, 1989) (noting that even though the taxpayer “had the

authority to countersign checks . . ., she did not have any

authority to decide which creditors were to be paid” and thus

was not a responsible person); Montana v. United States, 76-1

U.S. Tax Cas. (CCH) ¶ 9145, at 83,159 (D. Neb. Nov. 18, 1975)

(noting that in cases finding countersignatories to be

responsible persons, “the taxpayer's power to sign checks was

merely a manifestation of his control over the management and

disbursement of corporate funds”); Last v. United States, 65-1

U.S. Tax Cas. (CCH) ¶ 9244, at 94,926 (E.D.N.Y. Feb. 9, 1965)

(finding the taxpayers not to be responsible persons even though

they “continue[d] to countersign checks” during the period in

question).

The court found that Vinick's previous negotiation with

the IRS and interaction with financial institutions weighed in

-31-
favor of responsibility. Again, the district court should not

have relied on this evidence because Vinick did not engage in

these activities during the quarters in question. See Vinick I,

110 F.3d at 172. And even in the case of the IRS settlement, it

was the manager, not Vinick, who saw to the fulfillment of its

terms. As the government noted in its brief, “[a]fter these

taxes were paid, there was no further delinquency during

Ouellette's tenure.” It is at this point that Letterman took

over management, and Vinick's role, already slight, became

minimal.9

The district court weighed in favor of responsibility

Vinick's investment in the corporation.10 This finding does not

fit within the typical litany of § 6672 factors, see Thomsen,

887 F.2d at 16, and is not relevant. While making a personal

9
A person's decision to become involved in loans and
refinancing but not in the payment of taxes can demonstrate
willfulness, which is the second prong of the § 6672 inquiry,
but does not demonstrate responsibility. See Caterino, 794 F.2d
at 6 (“Any responsible person who knows the taxes are not paid
and allows the business to pay other creditors acts willfully.”
(emphasis added)). For example, in Godfrey, the taxpayer took
an active interest in the company's solvency, but not in the
payment of taxes. The court correctly noted that his “knowledge
of nonpayment may be relevant to the issue of willfulness, but
it is irrelevant in considering the question of whether he was
a 'responsible person.'” Godfrey, 748 F.2d at 1576 (citation
omitted).
10
The court stated that the form of the personal
contribution, that is, whether he pledged personal assets or
made a personal guarantee to secure financing for Jefferson
Bronze, was irrelevant. It was the mere fact of contribution
that the court weighed in the responsibility calculus.

-32-
investment shows a level of involvement in the corporation, it

does not indicate financial control, and determining whether

Vinick has financial control is the aim of the § 6672 inquiry.

Because individual investors in corporations by definition use

their personal assets to make their investment, the court's

conclusion would render any investor in a closely held

corporation a responsible person. Because this finding does not

serve to limit the scope of who could be a responsible person,

it has no bearing on the § 6672 inquiry.

The district court found that Vinick had authority to

participate in the hiring and firing decisions at Jefferson

Bronze. The court weighed this factor in favor of his being a

responsible person and deemed it irrelevant that he never

actually exercised that authority. As discussed above, the

proper inquiry focuses on whether Vinick was involved in the

daily management of the corporation, which routine hiring and

firing of employees would indicate. The court did not find that

Vinick routinely made personnel decisions. The only finding is

that he had “authority to participate” in these decisions

regarding only the general manager. Again, such authority is

insufficient to render him a responsible person, see Godfrey,

748 F.2d at 1576 (noting that the taxpayer who “participated in

the hiring and firing of top corporate management” was not a

responsible person), because it does not demonstrate any

-33-
significant control over the daily operations, especially the

financial operations, of the corporation.

The final finding of the district court is that Vinick

had little involvement in the daily management of the

corporation. The court then gave this determination minimal

weight because it was “so far below the combined weight of the

[other] factors.” The court gave this finding short shrift in

contravention of accepted authority. See O'Connor, 956 F.2d at

51. At the heart of the question whether a taxpayer is a

responsible person lies an analysis of his influence and control

in the corporation and in its financial affairs. See id. That

Vinick did not have any involvement in the daily operation of

the corporation is much more significant than his title, for

example, because it demonstrates his inability to exercise any

degree of significant control over which creditors the company

would pay.

Taking all of these factors together, the findings of

the district court do not support the ultimate conclusion that

Vinick is a responsible person.11

11
The government notes that the Tenth Circuit's Denbo
decision has similar facts to those in this case. While it is
true the Tenth Circuit found there was sufficient evidence to
find Denbo a responsible person, see Denbo, 988 F.2d at 1033,
the case is distinguishable. Denbo was a fifty percent
shareholder, was the secretary-treasurer, was a director, did
not manage the restaurant's daily operations, pledged personal
assets for the corporation, arranged financing for the
corporation, and had check-signing authority, which he never

-34-
 While Vinick may have been more than a mere passive

investor in the corporation, this fact alone is insufficient to

render him a responsible person. See Godfrey, 748 F.2d at 1576

(“Godfrey's activities were not those of a passive 'above the

fray' chairman, but they do not, without more, impose or create

the 'duty' expressly described in the statute.”). Absent a

finding that Vinick possessed actual, exercised authority over

the company's financial matters, including the duty and power to

determine which creditors to pay, as a matter of law he cannot

be a responsible person.

IV.

For the reasons stated, we find that Vinick as a matter

of law was not a responsible person within the meaning of 26

U.S.C. § 6672(a). We therefore reverse and remand the case to

exercised. See id. at 1032. He also “held regular meetings
with [his co-owner] and the accountants.” Id. As the Tenth
Circuit noted, “[Denbo's] financial involvement in the
corporation, along with his check-signing authority, gave him
the effective power to see to it that the taxes were paid.” Id.
at 1033.
In contrast, Vinick's role in the financial activities of
the corporation was largely as its accountant, unlike Denbo who
actively engaged in actual financial management of the
corporation. When Letterman became Jefferson Bronze's manager,
Vinick's role in the corporation substantially lessened.
Moreover, to the extent Vinick, as Jefferson Bronze's
accountant, was involved in the corporation's financial affairs,
such involvement demonstrates only his willfulness because it
shows he knew that on occasion the taxes had not been paid, but
does not demonstrate his power to pay them, which a
determination of responsibility requires.

-35-
the district court with instructions to enter judgement in favor

of Vinick. Reversed and remanded.

Dissent follows.

-36-
 LYNCH, Circuit Judge, dissenting. I dissent in this case,

despite great respect for my brethren, because I believe the

majority opinion is based upon significant errors of law.

A. Inconsistency With Prior Decision

In Vinick v. Commissioner, 110 F.3d 168 (1st Cir. 1997)

("Vinick I"), this court twice stated that the facts presented

in this case would permit a reasonable inference that Arnold W.

Vinick was a "responsible person" for purposes of 26 U.S.C.

§ 6672(a). We said that the record contained sufficient

evidence "from which one could infer Vinick’s responsibility as

a matter of fact." Id. at 173. We also noted, with regard to

evidence limited to the periods during which the taxes were not

paid, "[f]rom these indicia alone, one might infer that Vinick

was a responsible person." Id. at 172. Yet now, after the

trial judge has actually heard the same evidence, including

testimony from Vinick that was contradicted in material respects

by every other witness, the majority concludes that the trial

judge erred in determining that Vinick was a responsible person.

That alone is both passingly odd and at odds with the law of the

case doctrine.

B. Standard of Review

The majority empowers itself to reverse the district

court by treating the question of whether Vinick is a

"responsible person" as a question of law. But the standard of

-37-
review utilized by this court in § 6672 cases is review for

clear error. The majority says it is entitled to decide the

question de novo because the district court committed an error

of law. That error of law, according to the majority, is that

the district court "considered Vinick's conduct over the entire

period he was involved with Jefferson Bronze rather than his

activities during the quarters in question." There was no error

of law, as it was well within the district court's discretion to

admit this evidence and determine what weight to give it. There

is no reason to think the district court gave undue weight to

this evidence. Also, Vinick may not be heard to complain on

these grounds as he introduced much of the evidence in question

and did not object to the evidence the government introduced,

and so has waived this argument. Finally, there was no error,

much less clear error, in the district court's factual

determinations.

It is settled law in this circuit that a trier of

fact's determination of whether a taxpayer had sufficient

control over a corporation to be deemed a responsible person is

subject to clear error review. In Caterino v. United States,

794 F.2d 1 (1st Cir. 1986), we said,

This court cannot reverse merely because it
is convinced that it would have decided the
question differently; we must ascertain
whether the finding of fact is clearly
erroneous. We must affirm if the finding is
reasonably supported by the record as a

-38-
 whole. We must reverse when a review of the
entire evidence leaves this court with the
definite and firm conviction that a mistake
has been committed.

Id. at 5 (internal quotation marks and citations omitted);

accord Harrington v. United States, 504 F.2d 1306, 1313 (1st

Cir. 1974) (affirming jury finding of responsibility "[s]ince

the jury could properly have found that [the taxpayer] was the

person with responsibility for the taxes"). We have viewed this

as a fact dominated determination and so give deference to the

trial judge. See Caterino, 794 F.2d at 6 ("We conclude that the

district court's finding that Caterino had sufficient power . .

. to control what creditors [the corporation] would pay is not

clearly erroneous. Therefore, its conclusion that Caterino is

'responsible' within the meaning of section 6672 is not

incorrect.").

The majority of circuits review the responsible person

determination for clear error as well. See Ghandour v. United

States, No. 97-5062, 1997 WL 716143, at *1 (Fed. Cir. Nov. 17,

1997) (unpublished); United States v. Jones, 33 F.3d 1137, 1139

(9th Cir. 1994); United States v. Running, 7 F.3d 1293, 1297

(7th Cir. 1993); Raba v. United States, 977 F.2d 941, 943 (5th

Cir. 1992); Donelan Phelps & Co. v. United States, 876 F.2d

1373, 1374 n.2 (8th Cir. 1989); Williams Indus. v. United

States, No. 87-2630, 1988 WL 92869, at *1 (4th Cir. Sept. 6,

1988) (unpublished); Sinder v. United States, 655 F.2d 729, 731

-39-
(6th Cir. 1981). Two circuits approach the issue differently.

See Bradshaw v. United States, 83 F.3d 1175, 1178 (10th Cir.

1995) (stating that determination of responsible person status

presents mixed question of law and fact, subject to de novo

review); United States v. McCombs, 30 F.3d 310, 319 (2d Cir.

1994) (reviewing findings regarding the taxpayer's role in the

company for clear error, but giving plenary review to conclusion

that taxpayer's role made her responsible under § 6672). In

addition, the other circuits have correctly viewed this court's

standard of review as being the clearly erroneous standard.

See, e.g., Bradshaw, 83 F.3d at 1178 n.4; Running, 7 F.3d at

1297; Hochstein v. United States, 900 F.2d 543, 546 (2d Cir

1990).

To support its departure from clear error review, the

majority cites to a number of Supreme Court and First Circuit

cases for the unremarkable proposition that a reviewing court is

not bound by the clearly erroneous standard where the trial

court has committed an error of law. In the two Supreme Court

cases and the First Circuit case cited by the majority in which

there was departure from the clear error standard of review, the

trial courts had committed obvious and important errors of law.

In United States v. Parke, Davis, & Co., 362 U.S. 29, 43-44

(1960), the trial court had erroneously found that the lack of

-40-
an express or implied agreement to suppress competition

precluded finding a violation of the Sherman Act. In United

States v. Singer Manufacturing Co., 374 U.S. 174, 193-95 (1963),

the trial court similarly misunderstood the nature of what would

suffice to constitute a violation of the Sherman Act. In Brown

Daltas & Associates, Inc. v. General Accident Insurance Company

of America, 48 F.3d 30, 37 (1st Cir. 1995), the trial court had

an erroneous view of which party bore the burden of proving a

material element in the case.1

The majority opinion is simply wrong when it says that

there was legal error on the part of the district court in this

case. The record demonstrates that the district court

understood both the nature of the inquiry into responsibility

under § 6672 and the factors that were relevant to this inquiry.2

1
Furthermore, Brown Daltas does not state that a reviewing
court should apply de novo review when a trial court's factual
finding has been affected by legal error. The language is more
modest, noting that in this situation a "reviewing court is not
bound by the clearly erroneous standard" and that the trial
court's findings should be "accorded diminished respect on
appeal." Brown Daltas, 48 F.3d at 36 (internal quotation marks
and citation omitted).
2The majority's departure from the clear error standard will
cause problems in a related area: the taxpayer's right to a jury
trial. Is the majority contending that a jury must be
instructed it cannot consider any evidence from outside the
period in question?
While the First Circuit has not specifically ruled on the
question of whether the Seventh Amendment right to a jury trial
obtains in proceedings in which the government seeks to recover
unpaid taxes, cases have routinely come to us after jury

-41-
C. Standards Guiding the Determination

The majority opinion is based upon errors of law both

as to the rules it states and as to the application of otherwise

correct rules. The majority thrice errs. First, the majority

opinion creates a new and erroneous legal rule: that evidence

from tax quarters outside of the quarters at issue may not be

considered. There is no support given for this new rule, and it

is contrary to the law. Second, the majority opinion pays lip

service to the rule that the burden of proof is on the taxpayer

and then ignores that principle. Third, the majority departs

from circuit precedent by moving from a flexible, multi-factored

approach to a single focus of decisive weight. Instead of

regarding the individual factors as elements contributing to an

overall picture of Vinick's status, the majority opinion notes

for each factor that weighs in favor of responsibility that such

an individual factor, alone, is insufficient to create

determinations of whether a party is a responsible person. Both
Thomsen v. United States, 887 F.2d 12, 13 (1st Cir. 1989)
(involving a § 6672 action), and Harrington involved appeals
from jury trials. We have applied clear error review to the
responsible person determination in both bench and jury trials.
Other circuits have addressed the question and have found
that the Seventh Amendment right to a jury trial does exist in
this situation. See United States v. McMahan, 569 F.2d 889, 892
(5th Cir. 1978) (holding right to jury trial exists in § 6672
recovery suit brought by government); cf. Damsky v. Zavatt, 289
F.2d 46, 51 (2d Cir. 1961) (holding, in part, that right to jury
trial exists in action by government to recover federal income
taxes).

-42-
responsibility. But factors do not stand alone, and the

district court correctly considered them in aggregate.

1. Consideration of Evidence from Outside the Tax Quarters at

Issue

The district court properly considered evidence from

outside of the quarters at issue so that it could determine

Vinick's status, authority, and control during the pertinent

quarters. No court, to my knowledge, has ever before held that

it is error for a trier of fact to admit evidence from quarters

other than the quarters during which the taxes were not paid and

then to consider what weight to give to this evidence.

The district court acted in accord with the Federal

Rules of Evidence in admitting evidence that has a tendency to

prove or disprove a material fact (and thus is relevant). See

Fed. R. Evid. 401-402. Courts regularly admit evidence of prior

or later transactions, occurrences, and statements to prove

material elements of cases. In corporate veil-piercing cases,

which are analogous to the present case, courts consider

evidence from outside of the period at issue to determine

whether the principal should be held personally liable to the

corporation's creditors. In Crane v. Green & Freedman Baking

Co., 134 F.3d 17 (1st Cir. 1998), a union benefits plan sought

to pierce the veil of a corporation to recover unpaid sums from

the corporation's principals. In reversing summary judgment for

-43-
the defendants, this court found "[p]articularly flagrant . . .

the evidence of a personal vacation that the [principals]

financed with corporate funds." Id. at 24. The court weighed

the evidence of this vacation, which took place in January 1991,

against the principals, even though the corporation failed to

make payments to the benefits plan more than a year later, in

April 1992. See id. at 20, 24. The court also considered

evidence of checks from the corporate account that were made to

the defendants beginning in January 1991. See id. at 24.

Similarly, in Pepsi-Cola Metropolitan Bottling Co. v. Checkers,

Inc., 754 F.2d 10, 16 (1st Cir. 1985) -- another veil piercing

case -- this court held that summaries of corporate checks made

to the defendants were admissible as proof of the lack of

separate corporate and individual identities even though the

checks were made after the debt sued upon had been incurred.

Courts consider this type of temporally removed

evidence in other situations as well. In fraud or

misrepresentation cases, "proof that the defendant perpetrated

similar deceptions frequently is received in evidence." 1

McCormick on Evidence § 197, at 695 (John W. Strong ed., 5th ed.

1999); see, e.g., Whittaker Corp. v. Execuair Corp., 736 F.2d

1341, 1347 (9th Cir. 1984). Also, "when the authority of an

agent is in question, other similar transactions that the agent

has carried out on behalf of the principal are freely admitted."

-44-
1 McCormick on Evidence § 198, at 698; see also 2 Wigmore on

Evidence § 377, at 392-93 (James H. Chadbourn rev. 1979).

In the context of prosecutions for conspiracy to

deceive immigration authorities through phony marriage

ceremonies, the Supreme Court has held that evidence from the

period after the conspiracy has ended is admissible to prove the

spuriousness of the marriage and the intent of the parties. See

Lutwak v. United States, 344 U.S. 604, 617 (1953). This court

has allowed admission of post-conspiracy evidence in a criminal

conspiracy case to prove the existence of the conspiracy and the

defendant's participation. See United States v. Fields, 871

F.2d 188, 197 (1st Cir. 1989).3

Finally, in torts cases, evidence from before or after

an accident has occurred is admissible for a number of purposes.

See, e.g., Espeaignnette v. Gene Tierney Co., 43 F.3d 1, 5-10

(1st Cir. 1994) (holding that district court abused its

3
Similarly, Federal Rule of Evidence 404(b) specifically
enumerates a list of purposes for which evidence of other
"crimes, wrongs, or acts" is admissible. See, e.g., United
States v. Tse, 135 F.3d 200, 208 & n.6 (1st Cir. 1998) (holding
that evidence of a subsequent crime was admissible to show that
defendant was "constantly trying to maintain his dominance" as
leader of a gang); United States v. Fulmer, 108 F.3d 1486, 1501-
02 (1st Cir. 1997) (holding that statements by defendant made
prior to conduct for which he was charged was admissible to
prove motive and intent); United States v. Spinosa, 982 F.2d
620, 628-29 (1st Cir. 1992) (holding that evidence of prior
possession of cocaine was admissible to prove knowledge and
intent); see generally 2 Weinstein's Federal Evidence § 404.20
(Joseph M. McLaughlin ed., 2d ed. 1999).

-45-
discretion in refusing to admit evidence of modification of saw

to prove feasibility in design defect case and holding that

evidence of lack of prior accidents was properly admitted to

prove absence of defect and lack of causation); Clausen v. Sea-

3, Inc., 21 F.3d 1181, 1189-92 (1st Cir. 1994) (holding that it

was not plain error for district court to admit evidence of

remedial measure taken three years after accident to prove

defendant's control over area in which accident occurred).

In this case, Vinick's exercise of authority outside

of the quarters in question sheds light upon the authority he

had during the quarters in question. That he helped negotiate

refinancing before the quarters in question suggests that he

would have done so during the quarters in question. That he

previously took steps to remedy the company's non-payment of

taxes is also relevant to his authority and control during the

pertinent quarters, as is the fact that he helped take the

company into and through bankruptcy proceedings. Such evidence

is relevant and, therefore, admissible. The trial court

correctly concluded that it could admit, in this bench trial,

evidence from outside the quarters in question, appropriately

adjusting the weight such evidence would be given. There was no

error.

Evidence from outside of the quarters in question

serves an especially important role where, as here, taxes were

-46-
not paid for a relatively short period. It could easily be the

case that a person with significant authority and control in a

company has no occasion to exercise that authority and control

during a short period -- for example, when no major decisions

need to be made and no significant events occur. Although this

may be purely a matter of luck, the majority opinion renders it

potentially impossible in this type of situation to find that a

person who actually has the authority to pay the taxes is a

responsible person.

Further, Vinick has waived the issue of the district

court's consideration of evidence from outside the quarters in

question. Where an appropriate, contemporaneous objection has

been made, this court reviews admissions of evidence for abuse

of discretion. See Varano v. Jabar, 197 F.3d 1, 4 (1st Cir.

1999). While Vinick made a motion in limine requesting that the

government's evidence be limited "to the periods at Issue in the

case at Bar," it was Vinick who introduced much of the evidence

from outside of the quarters in question and thus waived the

objection. See Gill v. Thomas, 83 F.3d 537, 541 (1st Cir.

1996). Moreover, Vinick never objected to the government's

introduction of such evidence. Therefore, review of the

district courts evidence determinations is for plain error. See

Varano, 197 F.3d at 4; Clausen, 21 F.3d at 1190.

-47-
 Vinick testified on direct examination regarding his

involvement in hiring Ron Ouellette, signing Heritage Bank

checks, the initial $165,000 financing, the $300,000

refinancing, and Jefferson Bronze's bankruptcy. Vinick also

introduced evidence of Jefferson Bronze checks from before the

quarters in question -- checks that lacked his signature -- to

prove that he never exercised his check signing authority before

the bankruptcy. On cross-examination, Vinick was questioned

without objection regarding his negotiating a payment plan with

the IRS during Ouellette's tenure. Vinick called two employees

from Heritage Bank as witnesses and questioned them about the

checks he had signed after the quarters in question. Vinick

made no objection to the government's questioning of Elliot

Rothwell, a National Grand Bank employee, regarding Vinick's

involvement in the $300,000 refinancing. Vinick made no

objection to the government's questioning of Ouellette regarding

the frequency and amount of information Vinick received about

Jefferson Bronze during Ouellette's tenure. Vinick made no

objection to the government's questioning of Richard Letterman

as to Vinick's role in the original $165,000 financing and in

the $300,000 refinancing. Vinick made no objection to the

government's questioning of Letterman regarding Vinick's role in

-48-
negotiating with the IRS during Ouellette's tenure, Vinick's

involvement in hiring and firing decisions, and Vinick's

involvement in the company's bankruptcy. Nor did Vinick object

to the questioning of Letterman's wife regarding the frequency

and amount of information Vinick received during her husband's

tenure and the number of Heritage Bank checks Vinick signed.

It was not an abuse of discretion, much less plain

error, for the district court to admit this evidence, which

clearly had a tendency to prove Vinick's authority and control.

2. The Burden of Proof

As to the burden of proof, these cases usually involve

a company that has withheld taxes from employees' wages and has

then failed to pay the taxes to the government. In the

meantime, the company has typically used the withheld funds to

pay other creditors. Because the employees are held harmless

and credited with the amounts withheld, the U.S. taxpayer often

makes up the difference. In order to deter this behavior and

lessen the costs imposed on other taxpayers, Congress has

imposed a duty on persons whom the law deems responsible to

collect, account for, and pay the taxes. Thus, the question is

not who in the company ordinarily pays the taxes, but upon whom

the law imposes a duty to see that the taxes are paid.

-49-
 In keeping with the social policy objectives of § 6672,

the burden of proof is on a taxpayer whom the IRS believes is a

responsible person to prove that he is not a responsible person.

See Caterino, 794 F.2d at 5. We have said that this may be a

harsh rule, see id., but it is designed to protect the

government and our nation's taxpayers from tax scofflaws, see

Harrington, 504 F.2d at 1311. The district court, not the

majority, has it right. Under the relevant tests, Vinick did

not carry his burden of proof to show that he was not a

responsible person.4

3. The Responsible Person Factors Should be Viewed in Aggregate

In keeping with the social policy objectives, "[c]ourts

have explicitly given the word 'responsible' a broad

interpretation." Caterino, 794 F.2d at 5. Since the term

"responsible" is far from self-defining, we have generally

looked to indicia of responsibility such as "the holding of

corporate office, control over financial affairs, the authority

to disburse corporate funds, stock ownership, and the ability to

hire and fire employees." Thomsen v. United States, 887 F.2d

12, 16 (1st Cir. 1989). This was the standard the district

court applied, and correctly so.

4
The majority opinion even suggests that it viewed the
burden of proof as the government's, stating that "the
government introduced no evidence indicating that during the
relevant quarters, Vinick had any involvement in the day-to-day
operations."

-50-
 Until now, this court has never suggested that the

factors fell into an exclusive trinity or that the factor of

day-to-day decision-making authority over company operations was

the dispositive factor. The majority's suggestion that control

over the company's day-to-day affairs is central to the

responsible person determination conflicts with circuit

precedent. In Harrington, this court held there was "no error

in the court's charge [to the jury] that an individual need not

be in day to day control of the administrative and financial

aspects of the business in order to be [a] responsible person

within the meaning of Section 6672." Harrington, 504 F.2d at

1315.

The majority opinion also skews normal appellate

review, dismissing each factor pertaining to responsible person

status by saying that that factor alone cannot support a

responsible person determination. For example, the majority

opinion states: "titular authority is insufficient," "not all

shareholders are responsible persons," "occasional involvement

in business affairs is insufficient," "[p]ossession of [check

signing] authority . . . is not enough." But factors in

combination can describe sufficient authority or control to

render someone a responsible person.

D. Record Support for the Determination

-51-
 This case comes to us after trial, and we are required

to draw all inferences from the evidence in favor of upholding

the verdict. See United States v. Ven-Fuel, Inc., 758 F.2d 741,

744-45 (1st Cir. 1985). Although the majority opinion

recognizes this principle, it does not follow it; it could not

do so and reach the result it does.

This picture emerges from the evidence: Vinick owned

half the company and was one of its incorporators. He was,

throughout, its treasurer and one of only two directors. During

the periods in question, there were only two corporate officers,

Vinick and Letterman. When Letterman, Vinick, and Peter Mayer

bought the company in 1981, Vinick agreed, both personally and

in his capacity as treasurer, to reimburse the former owner for

any taxes owed. Vinick signed the note and pledged his house as

security for the original financing of $165,000 with the Small

Business Administration ("SBA"). This gave him a strong

incentive to stay involved in what the company was doing, and

Vinick did keep abreast of the company's financial situation.

He prepared all of the tax returns, including returns when the

company lacked funds to pay the taxes. In order to prepare the

taxes, he was given regular information about income and

expenses. Indeed, throughout his relationship with the company

he received more information than that. He was regularly given

copies of the check registers and reviewed information on a

-52-
weekly basis from those actually operating the company. His

activities went beyond those of a mere accountant.5

Although the district court did not decide the issue,

Vinick appears to have played a significant role in hiring and

firing. In 1983, after the SBA complained to Vinick about

Mayer, the first operations manager, Vinick and Letterman

decided to remove Mayer. Vinick then asked Ouellette to run the

company. In 1988, when Ouellette had problems, Letterman moved

into the position, doing so with Vinick’s tacit approval.

In 1985, when the company could not pay its withholding

taxes, Vinick and Letterman (but not Ouellette, the company's

day-to-day manager) went to see the IRS, and Vinick worked out

a settlement agreement and payment schedule that Ouellette

followed. This effort belies the majority opinion's suggestion

that Vinick was merely a passive investor. The fact that Vinick

did not keep the checkbook or write the checks did not stop him

from exercising his authority to correct this problem with the

IRS, and there is nothing to indicate that, having exercised

this authority in 1985, he did not have such authority in 1989

and 1990.

Throughout, Vinick had check-signing authority. He

chose not to exercise any such authority until the company went

5
Vinick denied he acted as the company’s accountant; this
was contradicted by other witnesses.

-53-
into bankruptcy in mid-1990. If he had regularly signed checks,

the IRS would have had a stronger case. But that he chose not

to sign checks until later does not negate his authority to do

so during the quarters in question. Indeed, when he did

exercise check-signing authority during the bankruptcy period,

he even went to the bank to complain that it was letting checks

go through without his signature on them.

The quarters when the taxes were not paid were the last

three quarters of 1989 and the first two quarters of 1990. The

majority opinion asserts that there was a sea change in the

operations of the company during those quarters. That is not

so. It is true that Letterman took control of day-to-day

operations of the company in 1988, and his wife acted as the

bookkeeper. It is also true that Vinick then reduced his

involvement in the day-to-day operations. But it is not true

that he reduced his involvement in the financial affairs of the

company.

The majority opinion is simply incorrect when it states

that "the record is undisputed that Vinick became less involved

in the financial affairs of the corporation as Letterman's role

increased." When Ouellette ran the day-to-day operations,

Vinick discussed the company's financial condition with him "on

a monthly basis." In contrast, when Letterman ran the day-to-

day operations, Vinick reviewed the company's financial

-54-
condition at least weekly, and often more frequently. Letterman

testified that he and Vinick had weekly conversations about how

the company was doing, that Vinick saw the weekly receipts from

customers, and that Mrs. Letterman "brought him everything

[they] did." Mrs. Letterman testified that she brought Vinick

the company’s income and expense information at least weekly,

and more frequently at the end of the month. The judge was

entitled to accept the Lettermans' testimony over Vinick’s

contradictory testimony that he got such information at most

once a month. In fact, Richard Letterman testified that Vinick

was privy to all information about what was happening at all

times. Nor did Vinick's other financial activities lessen.

Just as before, Vinick prepared the tax returns and the profit

and loss statements. Just as before, he refused to sign the

returns and told others to do so.

When there were major decisions to be made, Vinick made

them together with Letterman. The two of them decided in mid-

July of 1990 that the company had to be put into bankruptcy.

Vinick went to the bankruptcy court, and he started signing

company checks that he had always had the authority to sign. At

trial, Vinick attempted to minimize his role in the running of

the company at this stage, but his testimony was contradicted by

others. For example, Vinick claimed he signed the vast majority

of checks only after they had been negotiated with only

-55-
Letterman's signature. Two bank officials and Letterman's wife

all said he signed most checks before negotiation.

But it is what happened during and around the quarters

in question that reinforces that the district court’s conclusion

was not error. The district court quite properly weighed in

Vinick’s favor the fact that he did not run the company day-to-

day. But it is also true that when the company ran into

financial problems, Vinick played a considerable role. In May

of 1988, the company secured a $300,000 loan from National Grand

Bank, refinancing its earlier $165,000 loan and obtaining

additional operating capital. Vinick and Letterman met with

Eliot Rothwell, a bank official, two or three times to secure

the loan. Rothwell found Vinick to be familiar with the

company’s financial condition. Vinick signed the loan

application and then signed the note both in his individual and

corporate capacities. Vinick and Letterman each personally

guaranteed the loan, and there is evidence that each pledged his

home. The bank encouraged them to open an account there for the

company; Vinick and Letterman were the signatories. Vinick said

there was a separate $300,000 loan from Bank of New England that

was made personally to him and to Letterman, that the money was

put into the company, and that he gave a mortgage on his home

for this loan. In any event, if the obligations to National

Grand Bank were not met, Vinick was personally in jeopardy. In

-56-
fact, Vinick's interest in being involved in the company's

financial affairs had now become even greater than it was

originally, as the amount for which he was personally liable had

almost doubled. This helps explain his weekly review of the

company's finances during Letterman's tenure.

In early 1989, just before it stopped paying its taxes,

the company became delinquent on the National Grand Bank loan.

Vinick and Letterman then met several times with Rothwell to try

to work out the problem. Again, Rothwell found Vinick

knowledgeable about the company’s financial affairs. Vinick was

well aware during this period that the company was not paying

the taxes withheld from employees. Vinick did not do what he

had done in 1985, which was to try to work out matters with the

IRS and negotiate a plan to pay the taxes owed. In essence, it

is fair to infer that he and Letterman together decided to treat

the IRS as a second-best creditor and put their efforts and the

company's payments toward the bank, to which they had immediate

personal liability. But that is not what the law permits. See

Donelan Phelps, 876 F.2d at 1377. The record amply supports a

finding that Vinick was a responsible person.

This is not a case, as the majority would have it, of

a passive investor unfairly being saddled with § 6672 liability.

Such investors do need protection, a fact that was amply

demonstrated by the government’s aggressive and overreaching

-57-
posture at oral argument. The evidence in this case, however,

showed that Vinick was not merely a passive investor. On the

evidence presented, Vinick could have been, and was, deemed a

responsible person. As such he had a duty to ensure that the

taxes were paid. Given the degree of his involvement and

control over financial and other matters in the company, Vinick

could not avoid that duty by refusing to write checks to the IRS

that he had the authority to write, by refusing to sign tax

returns that he had the authority to sign, and by failing to

meet with the IRS when he had the authority to do so.

E. Disposition on Appeal

Even if the majority opinion were correct in asserting

that the district court had a mistaken impression of applicable

legal principles, then the proper disposition would be to remand

the case to the district court, not to decide the case

ourselves. Where the evidence "does not compel a ruling for

either side," the proper course is to remand the case to the

trial court. TEC Eng. Corp. v. Budget Molders Supply, Inc., 82

F.3d 542, 545 (1st Cir. 1996). It cannot be said that the

record compels a finding that Vinick was not a responsible

person.

But for his dissembling at trial, there is a temptation

to feel sorry for Vinick. His investment in this small company

has led to a nightmare for him. Yet, it was not his investment

-58-
alone that led to his being a responsible person, nor was it

merely his title as treasurer. Crediting the entire record,

there was no error in the trial judge’s decision, and I dissent.

-59-