Preview:

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND JANET M. NESSE, Trustee, Appellant vs. * * * * * *

Case No. RWT 03-CV-2223

THE INTERNAL REVENUE SERVICE OF * THE UNITED STATES OF AMERICA, * * Appellee * MEMORANDUM OPINION This is an appeal from a decision of United States Bankruptcy Judge Duncan W. Keir in case 9915568, issued on July 1, 2003, denying the objection by Appellant, Janet M. Nesse, Trustee ("the Trustee) to "Claim No. 62." The decision of the Bankruptcy Court upheld the assessment of penalties by the Internal Revenue Service (the "IRS") on the Debtor, Blair Temporaries and Staffing, Inc. ("Blair"), for its failure to file, deposit and pay employment related taxes, as required under the Internal Revenue Code ("the Code"). This Court held a hearing on the appeal on February 10, 2004. For the reasons that follow, the court will affirm the decision of the Bankruptcy Court. BACKGROUND Blair is a temporary employment agency. In July of 1997, Blair entered into an agreement with Classical Financial Services, LLC ("Classical") through which Classical, as lender, advanced monies to Blair, as borrower. See Tr., June 23, 2003 at 21. Under the agreement, Classical obtained a lien on Blair's receivables, and Blair claimed that Classical was responsible, in relevant part, for Blair's payroll and for the filing, depositing, and paying Blair's employer-related taxes, i.e., tax withholding, Federal Insurance

Contributions Act ("FICA") taxes, and Federal Unemployment Tax Act ("FUTA") taxes.1 Blair's employer-related taxes were not filed, deposited or paid from June 30, 1998 through March 31, 1999. Tr., June 23, 2003, at 15. In May of 1999, Blair filed a petition for Chapter 11 Bankruptcy protection. In that proceeding, the IRS filed "Claim No. 62," seeking penalties and interest for Blair's failed tax obligations. The Trustee objected to the claim. The Trustee did not dispute the assessment of the taxes, but challenged the assessment of late filing penalties and related interest. Id. The Trustee argued that the penalties were excused by "reasonable cause" under 26 U.S.C.

Download Janet Nesse v. The Internal Revenue Service of the USA (Opinion).pdf

Maryland Law