4. RESPONSIBILITY
§ 5:7 In general
The key to liability under § 6672 is control of finances within the employer corporation: the power to control the decision-making process by which the employer corporation allocates funds to other creditors in preference to its withholding tax obligations.
Liability attaches to those with power and responsibility within the corporate, structure for seeing that the taxes withheld from various sources are remitted to the government. This duty is found generally in high corporate officials charged with general control over corporate business affairs who participate in decisions concerning payment of creditors and disbursal of funds.
§ 5:8 Ultimate Control
The Trust Fund Recovery Penalty should only apply to the person or persons who have ultimate control over the company finances. Who decides which bills get paid by the company? Where a person is not “an officer charged with general control over the corporation’s business affairs who participated in decisions concerning payment of creditors and disbursement of funds,” that person should not be held liable for the penalty. In this vein, a corporate officer who was totally dominated by his father was relieved of liability for the Trust Fund Recovery Penalty in the case of Goodick v. United States.
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