Determination Form - New York Division Of Tax Appeals (Page 5 of 5) in pdf

indicated in Matter of Levin v. Gallman (42 NY2d 32, 396 NYS2d 623), the test is:

whether the act, default, or conduct is consciously and voluntarily done with knowledge that as a

result, trust funds belonging to the Government will not be paid over but will be used for other

purposes . . . . No showing of intent to deprive the Government of its money is necessary but only

something more than accidental non-payment is required. (Id., 396 NYS2d at 624-625.)

Petitioner's defense that he did not have the authority to pay the tax is not convincing. To accept his argument,

one would have to disregard his place on the board of directors and his willingness to accept a salary and

continue with the company while fully aware of its refusal to pay taxes. Petitioner was a trusted executive

charged with the preparation of financial and cash flow statements. As a member of the board he condoned the

actions taken by that body, including its decision not to pay taxes, and must bear responsibility for them. There

is simply no evidence to the contrary in the record. Petitioner cannot shield himself from liability by shifting all

responsibility for the collection and payment of taxes to the board, as if it were some independent and distant

body. Just as one cannot not shield oneself from liability by disregarding a duty and leaving it for someone else

to discharge (Matter of Ragonesi v. State Tax Commn., 88 AD2d 707, 451 NYS2d 301), petitioner cannot hide

behind the board of directors here.

The board of directors controlled the chief executive officer, Mr. Westfield, and the executive committee. It

decided ultimately which risks to take and how the dwindling finances of the corporation would be expended.

As a member of the board, a ten percent owner of Holdings and chief financial officer of GER, petitioner had

some measure of control over those decisions which satisfies the test set forth in the Levin case.

Further, as found by the Tribunal in Matter of Byram (supra), a critical factor in holding Byram liable for the

withholding taxes was that he had not established that the board of directors had precluded him from paying the

taxes, i.e., taken a proactive step to thwart the payment of taxes. Likewise, Mr. Jamin has not demonstrated that

the board herein took any such action.

In Matter of Muffoletto (Tax Appeals Tribunal, June 19, 1997), the Tribunal expressly rejected a similar

argument made by a petitioner who, while in desparate need of cash to keep his companies alive, stayed on and

operated the business under circumstances which he knew, or should reasonably have known, did not include

the payment of taxes. Here, petitioner made the same choice and must accept the same consequence.

E. The petition of Joseph Jamin is denied and the four notices of deficiency, dated March 25, 2002, are

sustained.

DATED: Troy, New York

May 12, 2005

/s/ Joseph W. Pinto, Jr.

ADMINISTRATIVE LAW JUDGE

1. The payments listed in this column are those listed on the Consolidated Statement of Tax Liabilities issued to

petitioner on May 14, 2003.

2. There is no evidence of when or how the executive committee was created. It appears it was a creation of the

full board of directors to handle specific matters in a more efficient manner.

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Determination Form - New York Division Of Tax Appeals Page 5