Dan O. Davis, Plaintiff-Counter-Claim-Defendant-Appellant v. United States of America, Defendant-Counter-Claimant-Appellee

Dan Davis, the president and major shareholder of ITAC Corporation, appeals a jury verdict finding him liable for willfully failing to pay withholding and social security taxes for ITAC’s employees for the last quarter of 1981 and the first two quarters of 1982. Davis had argued that he was not a responsible officer and that his subsequent preference of other creditors over the Internal Revenue Service (“IRS”) did not evince “willfulness.” The district court refused to instruct the jury on Davis’s definition of willfulness. The jury subsequently found Davis liable for the employee taxes owed the government. The district court also denied Davis’s motion to reduce the assessment for the last quarter of 1981. Davis appeals. We affirm.

BACKGROUND

A. Statutory Framework

The Internal Revenue Code requires employers such as ITAC Corporation (“ITAC”) to withhold federal social security and individual income taxes from the wages of their employees. 26 U.S.C. §§ 3102 (a), 3402(a). Although an employer collects this money each salary period, payment to the federal government takes place on a quarterly basis. In the interim, the employer holds the collected taxes in trust for the…