Shotgun Delivery, Inc. v. United States
Opinion
Lead Opinion
Berzon, J.
Shotgun Delivery, Inc. (“Shotgun”) appeals the district court’s grant of summary judgment in favor of the United States. The district court upheld the Internal Revenue Service’s (IRS’) assessment of more than $450,000 in delinquent employment taxes, plus interest and penalties, based on the determination that Shotgun should have paid such taxes on compensation paid to its delivery employees. Instead, Shotgun treated the amounts in question for tax purposes as reimbursement for employees’ use of their own vehicles. We agree with the district court that Shotgun’s method of mileage reimbursement does not qualify as a tax-exempt “accountable plan,” within the meaning of Treasury Regulation § 1.62-2, and that the contested payments should therefore have been treated as wages, not as job-related cost reimbursements. Accordingly, we affirm the summary judgnent as to Shotgun’s tax liability. We conclude, however, that the question whether Shotgun reasonably relied on its accountant’s advice should have gone to trial, and therefore reverse the district court’s summary judgment as to the penalty assessment.