Conklin Brothers of Santa Rosa, Inc. v. United States

Conklin Brothers of Santa Rosa, Inc. (“Conklin”) failed timely to file, pay, and deposit employment taxes. The Internal Revenue Service (“IRS”) assessed a $40,-262.89 penalty. Conklin paid the penalty and sought a refund from the IRS. The IRS denied Conklin’s refund request, and Conklin filed suit in the district court. The district court granted the Government’s motion for summary judgment. On appeal, Conklin argues that the district court improperly applied a strict liability standard. Conklin further argues that the district court erred in granting summary judgment because there are material issues of fact in dispute. We affirm.

BACKGROUND

Conklin is a California corporation engaged in the floor covering business. Conklin hired Diana Stornetta (“Stornetta”) as an accounts payable clerk, and her work was closely supervised and reviewed by Pisenti & Brinker (“Pisenti”), Conklin’s outside accountants. One year later, Stornetta was promoted to office manager/controller.

As controller, Stornetta was in charge of Conklin’s employment tax obligations: she prepared and filed the quarterly employment tax returns, paid the employment taxes, and made the employment tax deposits. She…