In Schiffmann v. United States, on appeal, the court noted that Schiffmann, as CEO and president, had access to the company funds and signing power, and as a director and shareholder, was deeply involved in the day-to-day management of the company, making him a “responsible person.”[1] His “deep-seated involvement in the financial affairs of the company, including his power over ICOA’s bank accounts and payroll, and his check-signing authority, gave him “’effective power’ to pay the taxes.”[2] The court found that Schiffmann acted willfully because he was aware of the unpaid trust fund taxes and “did not lift a finger to pay them.”[3] Similarly, Cummings, as CFO, was a signatory to the company’s principal bank accounts and enjoyed check-signing authority, with a power to decide which outstanding bills to pay, and in what order, making him a “responsible person.”[4] The court found that Cummings, too, acted willfully because he was aware of the unpaid trust fund taxes and instead paid other bills, such as rent and operational expenses, over the government—despite the expertise he had gained as an IRS field auditor, which should have made him understand the extent of his fiduciary obligation with respect to these liabilities.… Read the rest
