Denbo v. United States
In Denbo v. United States, 988 F.2d 1029, 1032 (10th Cir.1993), the Court held:
A person is responsible with the meaning of the statute if that person is required to collect, truthfully account for or pay over any taxes withheld from the wages of a company's employees.... The responsible person generally is, but need not be, a managing officer or employee, and there may be more than one responsible person.... Indicia of responsibility include 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.... Among other things therefore, a corporate officer or employee is responsible if he or she has significant, though not necessarily exclusive, authority in the 'general management and fiscal decision making of the corporation.'
While it is clear that the president exercised greater control over the corporation than Denbo, 'section 6672 does not confine liability for the unpaid taxes only to the single officer with the greatest or the closest control over corporate affairs.' ... It suffices that Denbo had 'significant, as opposed to absolute, control of the corporation's finances.'
A responsible person's failure to investigate or to correct mismanagement after being notified that withholding taxes have not been paid satisfies the section 6672 willfulness requirement. (988 F.2d at 1032-33.)
In Denbo, the Court defined "willfulness" to be:
Willfulness, in the context of section 6672 means a 'voluntary, conscious and intentional decision to prefer other creditors over the government....' Although negligence does not give rise to section 6672 liability, " 'the willfulness requirement is ... met if the responsible officer shows a "reckless disregard of a known or obvious risk that trust funds may not be remitted to the government...." ' " A responsible person's failure to investigate or to correct mismanagement after being notified that withholding taxes have not been paid satisfies the section 6672 willfulness requirement....(788 F.2d at 1033.)