Pacific National Insurance Company v. United States

• Pacific National Insurance Company, as surety, wrote payment and performance bonds on six government construction contracts awarded to Central States Construction and Equipment Company. Central exhausted its operating funds and requested Pacific’s assistance. Arrangements were made to finance Central’s operating expenses from May to September 8, 1955, when Central formally defaulted. During this period Central filed quarterly returns of income and social security taxes withheld from the wages of its employees, but the taxes were not paid over to the United States.

The district court held that Pacific was liable to the United States for an amount equal to the taxes reported as withheld from Central’s employees because, in the circumstances of this case, Pacific was a “person required to collect, truthfully account for, and pay over” the taxes and “willfully” failed to do so, within the meaning of 26 U.S.C. § 6672 . . 270 F.Supp. 165 (N.D.Cal.1967). We affirm.

We recognize that this interpretation of section 6672 is disputable. It is therefore advisable to note that the problem with which we deal is of no importance so far as wages paid on or after January 1, 1967, are…