CEO Calls into Question His Status as a Responsible Person in Close-Call Decision

(Parker Tax Publishing August 2025)

The Court of Federal Claims rejected the government's motion for summary judgment, holding that there is a genuine dispute as to whether an individual designated as a company's Chief Executive Officer (CEO), was in fact a responsible person for purposes of Code Sec. 6672 (and thus liable for the company's unpaid trust fund taxes). While there was no doubt that the individual held the title of CEO, the court found that he had, by the barest of margins, made a showing that even as CEO, he may not have been a responsible person and thus may not have had actual authority to remit the money owed to the IRS. Warnement v. U.S., 2025 PTC 226 (Fed. Cl. 2025).

Background

INgage Networks, Inc. (INgage) was as a computer software and consulting company. In 2011, INgage hired Joseph Warnement as a consultant. In May 2012, Don Gunther, the chairman of the board, and two other board members asked Warnement to become the company's Chief Executive Officer (CEO). Meeting minutes from May 8, 2012, indicate that the board voted unanimously to add Warnement to the board and approved an employment package for "Joe Warnement to be the new CEO of INgage Networks."

Starting in May 2012 through 2015, Warnement held himself out as CEO of INgage. While he used the title of "CEO" in nearly every relevant context, Warnement maintained that he did not officially accept the title until he signed an employment agreement in 2016. He did not want to officially accept the CEO title because he was aware of the company's financial situation and hoped to avoid any associated liabilities. Warnement said that Gunther and Robert Claussen, the board secretary, oversaw the day-to-day affairs and were the ultimate authorities who approved disbursements, allocated payment priorities, wrote and signed checks, and primarily communicated with the IRS regarding tax matters. William Shroeger, a board member with an accounting background, characterized Warnement as CEO "by title" because he didn't think Warnement ever had an employment agreement. According to Shroeger, Warnement was hired foremost to seek funding to recapitalize the struggling company and was often on the road talking to equity firms.

Beginning in early 2012, INgage suffered from a drastic downturn in business and, as employees started to be paid irregularly, many quit. Lori Bacon, a senior administrator who reported to Warnement, subsequently became the sole person responsible for HR and had to manually process the payroll. The checks were then signed by either Bacon or Claussen.

In February 2013, while reviewing the 2012 year-end financials, Warnement discovered that INgage's trust fund tax liability had swelled to $314,000. After reporting this to the board, Warnement said that the board set the following priorities for INgage's spending: first, employee benefits were to be paid; second, critical vendors were to be paid; third, employees were to be paid their salaries; and fourth, remaining funds would go to paying down the outstanding trust fund taxes. Warnement did not agree with this approach but had no authority and no vote to override it. According to Warnement, once he alerted the board of the payroll tax issues, Gunther, Claussen, Shroeger, and Bacon said they were handling the issue themselves with the help of an outside accounting firm and a tax attorney.

In July of 2013, Bacon sent Warnement an email notifying him that the IRS had called about the past four quarters of Form 941 tax returns, which had yet to be filed. By the middle of 2014, however, INgage was back on track with filing returns for and paying its newly incurred trust fund taxes. Nevertheless, INgage still failed to pay the trust fund taxes owed for the final two quarters of 2012, all of 2013, and the first quarter of 2014.

In January 2016, Warnement signed an employment agreement with INgage to "officially" become CEO. Before signing the agreement, he demanded that the board address the outstanding trust fund taxes by enrolling in and fulfilling a payment plan with the IRS, and he required that they sign a written statement, memorializing the fact that he was not a responsible person during the fiscal quarters in question (referred to as the "tax letter"). Warnement officially resigned as CEO in March 2017 although he remained at the company for a few months thereafter.

In June 2016, Warnement paid the IRS $1,315 representing the tax withholdings for one employee during the seven quarters of unremitted taxes, and he filed a refund claim for the payment. He also made overpayments to the IRS for his 2016, 2017, and 2018 personal taxes, which the IRS did not refund and instead credited to the outstanding trust fund recovery penalties. The IRS determined that Warnement was a responsible person, as defined by Code Sec. 6672, and assessed a penalty equal to INgage's unpaid trust fund taxes owed on May 30, 2016. Although INgage had entered into an agreement with the IRS to repay the outstanding trust fund taxes in installments, that agreement was terminated in September 2017 and the taxes remained outstanding.

In 2019, Warnement filed appeals on the tax assessments on his personal taxes for 2012, which led to a finding by the IRS appeals officer that Warnement was "fully willful and responsible" for INgage's unpaid trust fund taxes during the seven quarters in question. In 2021, Warnement filed suit in the Court of Federal Claims, seeking a determination that he was not liable for trust fund recovery penalties under Code Sec. 6672 and that he was entitled to a refund of his tax payments. The government counterclaimed, seeking judgment against Warnement for the penalties from INgage's unpaid trust fund taxes, totaling $609,681 for the quarters between July 2012 and March 2014, in addition to interest and costs.

Warnement argued that, although he held himself out as CEO in many contexts and others referred to him as CEO as early as 2012, he did not officially accept the title until he signed an employment agreement in 2016 and had limited signature authority. The government countered that Warnement had more responsibility than he claimed and although he may not have had signatory authority on many matters and could not write checks, he was still approving, directing, and prioritizing the disbursement and withholding of INgage's funds beginning in 2012.

If an employer willfully fails to collect or remit trust fund taxes that are credited to an employee, Code Sec. 6672 empowers the IRS to impose a penalty equal to the total amount of the tax evaded on any person required to collect, truthfully account for, and pay over trust fund taxes. Code Sec. 6671(b) provides that any person required to remit such taxes is considered a "responsible person," and that can include an officer or employee of a corporation, or a member or employee of a partnership who is under a duty to act.

Analysis

The Court of Federal Claims held that there was a genuine dispute as to whether Warnement was, in fact, a responsible person for purposes of Code Sec. 6672 during the quarters at issue. While there was no doubt that Warnement held the title of "CEO of INgage," the court found that Warnement had, by the barest of margins, made a showing that even as CEO, he may not have been a responsible person - someone with the actual authority to remit any part of the money owed to the IRS. However, the court also found that Warnement was aware of the taxes owed during the quarters at issue and, if it is subsequently determined that he is a responsible person, then as a matter of law, he acted willfully in violating Code Sec. 6672.

The court concluded that Warnement's use of the CEO title was not dispositive of actual authority. Despite his CEO title, the court said, it was possible that Warnement did not have the actual authority to pay the taxes owed. For example, the court noted that the parties agreed that Warnement did not have check-signing authority during the periods in question. Beyond check-signing authority, the court said, Warnement also provided evidence that in order for him to disburse funds, he required direction or approval from the board.

The court also concluded there was an issue of material fact as to whether Warnement had actual authority over managing INgage's day-to-day finances. While he exercised some degree of apparent authority over the company's day-to-day finances, it was unclear to the court as to what degree of autonomy he had in exercising that authority. The court observed that, although Warnement may have signed loan agreements on behalf of INgage and directed payments to specific employees and contractors, whether those were decisions made at the behest of the board remained an issue to be resolved.

Accordingly, the court denied the government's motion for summary judgment as to Warnement being a responsible person under Code Sec. 6672. But the court granted in part the government's motion for summary judgment as to willfulness, ruling that if Warnement is found to be responsible at trial, that as a matter of law, he acted willfully in violating Code Sec. 6672.

For a discussion of an employer's liability for unpaid trust fund taxes and related penalties, see Parker Tax ¶210,108.

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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