Thomas Amodio

United States Tax Court

T.C. Memo. 2026-96

THOMAS AMODIO, Petitioner v. COMMISSIONER OF INTERNAL REVENUE,

Respondent

__________ Docket No. 9959-22L. Filed September 28, 2026.

__________ William I. Talbot, Rivka Teitelbaum, and Berwin Cohen, for petitioner. Massimiliano Valerio and James P.A. Caligure, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION CARLUZZO, Special Trial Judge: In general, “[a]ny person required to collect, truthfully account for, and pay over” any federal tax “who willfully fails” to do so will be held liable for a trust fund recovery penalty (TFRP). See § 6672(a); 1 Kalb v. United States, 505 F.2d 506, 510–11 (2d Cir. 1974); Mason v. Commissioner, 132 T.C. 301, 321 (2009).

Petitioner concedes that he is a “person” described in that statute; he candidly did so in the Petition. See § 6671(b). Furthermore, there is no dispute that a closely held corporation that petitioner organized and controls, Creative Solutions, Inc. (Creative), failed “to collect” and “pay over” to respondent federal employment taxes from the wages of Creative’s employees for various periods, only two of which are now [*2] before the Court. 2 Nevertheless, in this section 6330(d) case petitioner challenges respondent’s determination to proceed with the collection of the TFRPs 3 for those periods because, according to petitioner, he did not “willfully” fail to collect or “pay over” the federal employment taxes to which the TFRPs relate. Respondent disagrees.

Because the parties are familiar enough with (1) the principles that govern the assessment of TFRPs and (2) the facts of this case, which are largely not in dispute, we need to focus only on the dispute between them with respect to (1) petitioner’s “willfulness” and (2) the amount of petitioner’s TFRP liabilities.

Although varying slightly from the statements of the issues as presented by the parties in their briefs, we frame the issues as follows: (1) whether petitioner’s failure to collect and pay over certain of Creative’s employment taxes was willful within the meaning of section 6672 and (2) whether an offer-in-compromise entered into between Creative and respondent affects the amount of the TFRPs that resulted from that failure.

FINDINGS OF FACT

When the Petition was filed, petitioner lived in New York. The TFRPs were assessed against petitioner in due course because Creative failed to collect and pay over to respondent certain employment taxes for various periods.

Before he organized Creative in 2002, petitioner worked as a carpenter. Through Creative, petitioner offered construction services that focused on retail display cases and millwork installation.

At all times relevant, Creative was a “union shop.” Some of its employees were members of trade labor unions covering the New York/New Jersey areas, and in addition to union-based wage scales, Creative was obligated to pay various union benefits for those employees.

On July 28, 2020, Creative and respondent entered into an offer- in-compromise that resulted in the satisfaction, entirely or partially, of Creative’s employment tax liabilities for various periods, including the periods ended December 31, 2015, and December 31, 2016. In a Notice of Determination, issued April 4, 2022 (Notice), respondent determined that a levy is an appropriate collection action with respect to petitioner’s then-outstanding TFRPs for those periods (underlying liabilities).

OPINION

We begin by noting that petitioner’s challenges to the determinations made in the Notice relate primarily, if not exclusively, to a challenge to the existence or the amount of the underlying liabilities. To the extent that petitioner challenges the proposed collection action on other grounds, that other challenge is easily rejected. The evidence shows that respondent has in all respects proceeded as required by section 6330, and nothing petitioner presented establishes otherwise.

That being so, we turn our attention to the parties’ dispute over the existence or the amounts of petitioner’s underlying liabilities and note from the outset that before the assessment of those liabilities the requisite supervisory approval had been obtained. See § 6751(b). We further note that our redetermination of those liabilities is based on a de novo review of the evidence before us. See Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner, 114 T.C. 176, 181–82 (2000).

I. Willfulness

A taxpayer who challenges an underlying liability in a case such as this one bears the burden of proof regarding the correct tax liability. See Rule 142(a); Thompson v. Commissioner, 140 T.C. 173, 178 (2013). [*4] According to petitioner, he is not liable for the underlying liabilities because he did not willfully, as that term is used in section 6672, fail to collect and pay over Creative’s employment taxes for the periods in dispute. Petitioner, who concededly fits within the definition of a “person” for purposes of section 6672, bears the burden of proving that the failure to pay Creative’s employment tax liabilities was not willful. See Malloy v. United States, 17 F.3d 329, 331 (11th Cir. 1994); Hochstein v. United States, 900 F.2d 543, 548 (2d Cir. 1990).

A “willful” failure is “a voluntary, conscious and intentional failure to collect, truthfully account for, and pay” employment taxes. Mason, 132 T.C. at 324–25 (quoting Newsome v. United States, 431 F.2d 742, 745 (5th Cir. 1970)); see Winter v. United States, 196 F.3d 339, 345 (2d Cir. 1999); see also Kalb, 505 F.2d at 511. Quite simply for purposes of section 6672, willfulness is demonstrated if a “person,” after becoming aware of a corporation’s outstanding employment taxes, uses unencumbered corporate funds for purposes other than paying the corporation’s outstanding employment taxes. See United States v. Rem, 38 F.3d 634, 643 (2d Cir. 1994); Mason, 132 T.C. at 325 (citing Gustin v. United States, 876 F.2d 485, 492 (5th Cir. 1989)).

Such is the case here. Petitioner became aware of Creative’s outstanding employment tax liabilities shortly after the liabilities were assessed but continued to cause Creative to operate and pay other creditors, including employee net wages and union benefits, rather than Creative’s outstanding employment tax liabilities. Had Creative failed to satisfy its employee wage and union benefit obligations, the unions would have withdrawn their members from Creative’s jobsites, thereby jeopardizing Creative’s ongoing operations and creating a situation that petitioner was constrained to avoid. While working around cashflow disruptions to ensure timely payment to employees is understandable, for purposes of determining willfulness, “an employee to whom the corporate employer owes wages is simply another creditor.” Hochstein, 900 F.2d at 548 (“Hochstein’s payment of net wages to himself and other employees . . . amounted to a willful failure to pay taxes.”). It follows, and we find, that petitioner’s actions fit within the definition of “willful” for purposes of section 6672. Petitioner’s arguments to the contrary are rejected.

II. Creative’s Offer-in-Compromise

Penalties contemplated by section 6672(a) are, by nature, derivative of a different taxpayer’s failure to satisfy its employment tax [*5] obligations. The employment tax liability of the other taxpayer and the person described in section 6671 is joint and several, like the income tax liability that results from the election to file a joint federal income tax return by married individuals. It almost goes without saying that the Commissioner can collect a joint and several tax liability only once, a point so fundamental it is not even discussed in the brief of either party. See Brown v. United States, 591 F.2d 1136, 1142 (5th Cir. 1979). The Commissioner, of course, has the discretion to collect a joint and several federal tax liability from any of the joint and severally liable taxpayers that he chooses. Mason, 132 T.C. at 329.

As noted, Creative’s employment tax liabilities for the periods before the Court, and apparently other liabilities as well, were adjusted through agreement reflected in an offer-in-compromise. According to petitioner, his TFRPs for the periods here in dispute should likewise be adjusted. Although less than clear, it appears that Creative’s employment tax liabilities for the periods ended December 31, 2015, and December 31, 2016, were satisfied or extinguished by the offer-in- compromise. If so, common sense suggests that petitioner’s derivative, joint and several TFRP liabilities for those periods have likewise been satisfied or extinguished.

Not so fast, according to respondent. As respondent views the matter, the excess of petitioner’s TFRP for each of those periods over Creative’s offer-in-compromise-reduced employment tax liability remains due and collectable by levy. Yet another reason this Opinion is being written.

There is, as acknowledged in the briefs, scant authority on the treatment of the excess of a responsible person’s TFRP liability over an offer-in-compromise-reduced employment tax liability of a different taxpayer.

Relying on Internal Revenue Manual (IRM) provisions, respondent argues that he is entitled to collect from petitioner the difference between Creative’s liabilities as originally assessed and its liabilities as agreed upon as reflected in the offer-in-compromise. IRM 5.8.4.22.1(2) (May 10, 2013) 4 states that the settlement of an outstanding liability by an offer-in-compromise with a corporation does not eliminate the TFRP liability of a responsible person and may still be

There might be circumstances that “may” support respondent’s decision to collect from a responsible person a TFRP liability that exceeds a corporation’s related employment tax liability that has been adjusted by an offer-in-compromise, but in the absence of a specific reason for doing so in this case we are more persuaded to proceed by applying common sense and the general principles that govern joint and several federal tax liabilities.

In so doing, it follows and we hold that respondent may proceed with collection as determined in the Notice but only in amounts that do not exceed the amount of Creative’s employment tax liability for each period in dispute, as adjusted by the offer-in-compromise.

To reflect the foregoing, and because we cannot determine from the record the extent of Creative’s remaining employment tax liability, if any, for each of those periods,

Decision will be entered under Rule 155.