This article provides an analysis of the recent decision by the United States Court of Federal Claims in Roger T. Richter v. The United States, No. 22-1690 (Filed: September 10, 2025), focusing on the determination of "responsible person" and "willfulness" under 26 U.S.C. § 6672, as well as the timeliness of a tax refund claim. This case offers insights for tax professionals grappling with the complexities of trust fund liabilities and procedural requirements in tax litigation.

Factual Background of the Dispute

The case centers on Roger T. Richter, who, along with business partners Jim and Frank Cutler, owned Mobile Environmental Technologies ("MET"). In 2007, MET merged with COBIT-USA, Inc. ("COBIT"), led by CEO Patrick Garrett, to form MECO Environmental LLC ("MECO"), an environmental cleanup firm. The MECO board of directors included representatives from both former entities, with Richter and Jim Cutler representing MET. Richter held an indirect 5% shareholder interest in MECO and served as its President from as early as 2009. Other key officers included Garrett as CEO and Allen Adams, a CPA, as CFO.

In 2008, MECO established ICI Process Technologies LLC ("ICIPT"), a wholly-owned subsidiary mirroring MECO’s management structure, with Richter also serving as President and holding a 5% indirect shareholder status. Richter oversaw ICIPT’s day-to-day remediation operations, was a co-signer on two ICIPT checking accounts, and was involved in ensuring vendors were paid to prevent shutdowns. However, Richter asserted that his operational oversight did not extend to finances. By February 2010, both MECO and ICIPT faced severe financial distress, nearing bankruptcy, and their boards were fully aware of the situation. Consequently, the companies struggled to pay vendors, with Richter even using personal funds for company purchases when his company debit card was maxed out. Ultimately, MECO and ICIPT failed to pay federal payroll taxes for all four quarters of 2010 and the first quarter of 2011.

Taxpayer’s Requested Relief and Government’s Counterclaims

On November 14, 2022, Plaintiff Roger Richter initiated a complaint seeking a refund of $411.23 plus interest for allegedly overpaid federal income taxes for the four quarters of 2010 and the first quarter of 2011. In response, the government filed an answer and a counterclaim on March 20, 2023, asserting that Richter was liable for unpaid trust fund taxes totaling $212,454.31 plus interest under 26 U.S.C. § 6672 for the same periods. The government moved for summary judgment, contending that Richter was a "responsible person" who "willfully" failed to pay these taxes. Separately, the government sought to dismiss Richter’s refund claim for the first quarter of 2010 for lack of subject matter jurisdiction, arguing it was untimely under 26 U.S.C. § 6511.

Legal Framework for Trust Fund Recovery Penalties and Refund Claims

The Internal Revenue Code mandates employers to withhold income and FICA taxes from employee paychecks, known as "trust fund taxes," and remit them to the IRS. These funds, while permissibly intermingled with an employer’s other funds, are nonetheless credited to the employees regardless of whether the employer remits them. When an employer "willfully fails to collect" or remit these taxes, 26 U.S.C. § 6672 empowers the IRS to impose a penalty equal to the total unremitted amount on "[a]ny person required to collect, truthfully account for, and pay over" such taxes. A "person" for this purpose includes an officer or employee who is under a duty to perform the act of collection, accounting, and payment [26 U.S.C. § 6671(b)].

Two distinct requirements must be met for the Section 6672 penalty to apply: first, the individual must be a "responsible person" who was under a duty to collect, truthfully account for, and pay over taxes; and second, that responsible person must have "willfully" failed to perform this duty [citing Godfrey v. United States, 748 F.2d 1568, 1574 (Fed. Cir. 1984)]. The taxpayer bears the burden of proving by a preponderance of the evidence that at least one of these elements is not met to avoid liability [citing Rosenheim v. United States, 159 Fed. Cl. 559, 565 (2022)]. While the moving party typically bears the initial burden in summary judgment, in tax controversies, once the government establishes a prima facie case (e.g., by introducing an IRS assessment, which is presumed correct), the burden shifts to the plaintiff to go forward with evidence and ultimately persuade the court [citing Michaud v. United States, 40 Fed. Cl. 1, 15 (1997); Pototzky v. United States, 8 Cl. Ct. 308, 315 (1985)].

Regarding tax refund claims, 26 U.S.C. § 6511(a) requires a claim for credit or refund of an overpayment to be filed within two years from the time the tax was paid [citing RadioShack Corp. v. United States, 566 F.3d 1358, 1361 (Fed. Cir. 2009)]. This provision is jurisdictional, meaning a claim that fails to satisfy it must be dismissed for lack of subject matter jurisdiction [citing Orlova v. United States, 347 Fed. App’x 578, 580 (Fed. Cir. 2009)].

Court’s Analysis of "Responsible Person" Status

To determine if an individual is a responsible person, courts examine "the power to control the decision-making process by which the employer corporation allocates funds to other creditors in preference to its . . . tax obligations" [quoting Godfrey, 748 F.2d at 1575]. This is a "test of substance, not form," focusing on who "in fact responsible for controlling corporate disbursements" or who had "the final word as to what bills should or should not be paid, and when" [quoting Godfrey, 748 F.2d at 1575]. "Final word" implies "significant rather than exclusive control," as multiple individuals can be deemed responsible persons [citing Adams v. United States, 504 F.2d 73, 75 (7th Cir. 1974)]. The key inquiry is "whether [the person] possessed the effective power to pay the taxes or, at least, to force that action on the part of others" [citing Jenkins v. United States, 101 Fed. Cl. 122, 133 (2011)]. Indicia of responsibility include check signing authority, day-to-day fiscal management, ability to pay or not pay creditors, and control over payroll, determined by the totality of the circumstances [citing Godfrey, 748 F.2d at 1576; Gann v. United States, 121 Fed. Cl. 482, 488 (2015)].

The government presented several facts suggesting Richter was a responsible person, including his titles as President and shareholder of MECO and ICIPT, his signatory authority on company bank accounts, and his ability to hire employees, direct payments, use a company debit card without preauthorization, and negotiate contracts.

Richter, however, disputed or qualified these facts. While he didn’t contest his title, he denied having "actual authority over any executive decisions of ICIPT". He conceded signatory power but stated he signed only 43 checks out of thousands, primarily as a co-signer when CEO Garrett was traveling, with CFO Adams preparing the checks. Crucially, two signatures were required for a company check to be valid, and Richter asserted he had no authority to originate payments. His hiring authority was limited to the Louisiana plant, not personnel management at the Oregon headquarters. Any direction of payments above a certain amount required authorization from other officers, and his company debit card use depended on Garrett’s or Adams’ approval. Contract negotiation also needed Garrett’s approval.

The Court found that while many indicia of a responsible person were present, a genuine dispute of material fact existed regarding Richter’s "effective power to direct company funds to other creditors in preference to the company’s payroll tax obligations". This dispute largely stemmed from the corporate structure established during the MECO merger, which required dual signatures from both former entities to obligate company funds. The core question became whether CFO Adams needed Jim Cutler’s approval to countersign checks signed by Richter. If Adams could countersign without Cutler’s approval, Richter would likely be a responsible person. However, if Cutler’s approval was necessary, Richter’s signature, though necessary for the bank, might be "meaningless" internally without Cutler’s authorization.

Richter’s deposition testimony supported his argument that Adams required Jim Cutler’s and Patrick Garrett’s approval for significant fund movements, and that Richter himself lacked the authority to even reimburse personal expenses. Adams’ deposition testimony further corroborated this, indicating that even if Richter requested a payment, Jim Cutler would still need to approve it, and Adams explicitly stated he could not execute a wire without Jim Cutler’s authorization. The government’s argument that there can be multiple responsible persons did not fully address Richter’s contention that he lacked independent authority to direct funds. The Court, drawing parallels to Rosenheim v. United States, 159 Fed. Cl. 559 (2022), determined that the conflicting evidence precluded a summary judgment determination on Richter’s actual power to direct payments. Therefore, the Court denied the government’s motion for summary judgment on the "responsible person" element.

Court’s Analysis of "Willful Failure to Pay"

"Willfulness" under Section 6672 requires "proof of a voluntary, intentional, and conscious decision not to collect and remit taxes," rather than an intent to defraud [quoting Godfrey, 748 F.2d at 1577]. This can be established by a "deliberate choice . . . to pay other creditors instead of paying the Government," or by a "reckless disregard of an ‘obvious and known risk’ that taxes might not be being remitted," including a failure to investigate or correct mismanagement after notification of unpaid taxes [quoting Godfrey, 748 F.2d at 1577-78]. Knowledge of payments to other creditors after awareness of the failure to pay withholding tax is sufficient for summary judgment on willfulness [Mazo v. United States, 591 F.2d 1151, 1157 (5th Cir. 1979)].

The government argued for summary judgment on willfulness, asserting that Richter knew of ICIPT’s tax liabilities but failed to remit them. Critically, Richter failed to directly respond to the government’s willfulness argument in his thirty-nine-paragraph statement of disputed facts. His responses primarily addressed whether he was a "responsible person" with authority to approve payments, not whether he had knowledge of the unpaid taxes or consciously prioritized other creditors. Furthermore, Richter also failed to address willfulness during oral argument, despite the Court explicitly giving him the opportunity to do so.

The Court concluded that Richter’s failure to address willfulness in his briefs or at oral argument constituted a waiver of any argument on this point [citing Sarro & Assocs., Inc. v. United States, 152 Fed. Cl. 44, 58–59 (2021)]. Consequently, the Court granted summary judgment on the willfulness issue in the government’s favor.

Even if not waived, the Court highlighted that the undisputed facts clearly demonstrated Richter’s knowledge of the tax responsibility and that other creditors were being paid in preference to the IRS, or at minimum, that he exhibited a reckless disregard for this risk. Evidence presented included:

An email from CFO Adams to Garrett and Richter on March 17, 2010, advising prioritizing other bills over payroll taxes.
An April 19, 2010, email from administrative assistant Sandy Maciel to Richter (copying Adams) reporting $34,387.14 in outstanding payroll taxes.
A May 14, 2010, email from Maciel to Jim Cutler (copying Garrett, Adams, and Richter) detailing ICIPT’s payroll tax liabilities for multiple pay periods.
A June 3, 2010, email from Adams to Richter, Garrett, and Maciel warning of losing payroll processor services due to being "far behind on all payrolls (taxes and net paychecks)".
A July 20, 2010, email from Jim Cutler to Frank Cutler, Richter, Garrett, and Adams outlining the use of a $1 million bridge loan, explicitly allocating funds for "Past due payroll taxes at ICIPT and Meco".
A November 10, 2010, email from Adams to Richter noting that summarized expense amounts "does not include the payroll taxes withheld and employers [sic] portion of payroll taxes all of which have not as yet been paid".
A January 3, 2011, email from Adams to Richter confirming that "payroll taxes for the year 2010 are owing by MECO and [ICIPT]".

Furthermore, Richter signed multiple checks authorizing payments to creditors other than the United States, after being aware of the tax delinquency. This action alone is sufficient to establish willfulness [citing Jenkins v. United States, 484 F. App’x 511, 516 (Fed. Cir. 2012); Mazo, 591 F.2d at 1157]. Even with limited funds, a responsible person has a duty to prorate available funds between the government and employees [citing Sorenson v. United States, 521 F.2d 325, 328 (9th Cir. 1975)].

Timeliness of Taxpayer’s Refund Claim

The government moved to dismiss Richter’s tax refund claim for the quarter ending March 31, 2010, arguing it was untimely under 26 U.S.C. § 6511(a). This statute mandates that a claim for refund must be filed within two years from the time the tax was paid. The government demonstrated that Richter made his final payment for this quarter on June 18, 2018, thus requiring any refund claim to be filed by June 18, 2020. Richter, however, filed his complaint on February 16, 2021.

Similar to the willfulness argument, Richter failed to respond to the government’s timeliness argument in his briefs or at oral argument, despite being notified that such a failure would constitute a waiver. The Court found this waiver to be dispositive and granted the government’s motion to dismiss. Given that the claim was filed well beyond the statutory two-year period, the Court lacked subject matter jurisdiction to hear it.

Conclusion

The Court delivered a split decision on the government’s motions. It denied in part the government’s motion for summary judgment regarding whether Roger Richter was a "responsible person" under 26 U.S.C. § 6672, due to a genuine dispute of material fact regarding his effective power to direct company funds. This aspect of the case will proceed to trial for a factual determination. However, the Court granted in part the government’s motion for summary judgment concerning Richter’s "willful failure to pay" the trust fund taxes, primarily because Richter conceded this argument by failing to respond to the government’s assertions and the undisputed evidence of his knowledge and preferential payments to other creditors. Should Richter be determined a "responsible person" at trial, his willfulness is already established. Additionally, the Court granted the government’s motion to dismiss Richter’s tax refund claim for the first quarter of 2010, finding it untimely and thus outside the Court’s subject matter jurisdiction under 26 U.S.C. § 6511(a).

Prepared with assistance from NotebookLM.