Joseph F. Purcell, Plaintiff-Counter-Claim-Defendant-Appellant v. United States of America, Defendant-Counter-Claimant-Appellee

We must decide whether a corporate president may be held personally liable for his corporation’s failure to pay over federal withholding taxes to the Internal Revenue Service when he had delegated responsibility for all financial matters to his chief financial officer.

I

Joseph Purcell (“Purcell”) was president and sole shareholder of Purcell Temporaries, Incorporated (the “Company”). From the time he founded the Company in 1978 until February 1980, Purcell also served as its chief financial officer (“CFO”). At that point, however,- Purcell decided to devote more of his energies to sales and promotional activities, and so hired one Lester Hatchard (“Hatchard”) as CFO. This was not a good decision. Hatchard embezzled over $450,000 from the Company during his tenure, using a signature stamp bearing Purcell’s signature to issue Company checks payable to himself. Eventually, Purcell learned that Hatchard had a prior criminal record; confronted with this discovery, Hatchard resigned his position in July 1981.

After Hatchard left the Company, Purcell reassumed control over its financial affairs. He quickly discovered that, contrary to what he had been led to believe, the Company was…