Schoot v. United States
664 F. Supp. 293 (1987)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A federal district court lacks subject matter jurisdiction over a state-law cross-claim for contribution or indemnity between potentially responsible persons in a federal tax enforcement action under 26 U.S.C. § 6672; such claims must be brought in a separate action after the government's case is resolved.
Facts:
- Steelograph Business Interiors, Inc. ('Steelograph') was an Illinois corporation.
- Roger C. Vorbau served as President of Steelograph and was solely responsible for paying the company's taxes and deciding which creditors to pay.
- Robert R. Schoot was an employee of Steelograph who performed only ministerial duties under Vorbau's direction and had no control over payroll or business decisions.
- Steelograph failed to pay over withholding and Federal Insurance Contributions Act (FICA) taxes for several quarters in 1980, 1981, and 1982.
- On August 8, 1983, the government assessed a 100% penalty of $47,194.53 against both Schoot and Vorbau, holding them jointly and severally liable for the unpaid taxes.
- Both Schoot and Vorbau subsequently failed to pay the majority of the assessed penalty.
- At the time of the lawsuit, Vorbau had moved out of Illinois.
Procedural Posture:
- Robert R. Schoot filed a complaint in the U.S. District Court for the Northern District of Illinois against the United States to recover taxes and interest he had paid.
- The United States filed a counterclaim against Schoot for the unpaid balance of the tax penalty.
- The United States then joined Roger C. Vorbau as an additional defendant to its counterclaim.
- Schoot filed a cross-claim against Vorbau, seeking contribution and indemnification for any liability he might incur.
- Vorbau filed a motion to dismiss the government's counterclaim against him and a separate motion to dismiss Schoot's cross-claim against him.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a federal district court have subject matter jurisdiction over a state-law cross-claim for contribution or indemnity between two individuals assessed a penalty under 26 U.S.C. § 6672, when that cross-claim is brought within the government's primary tax collection lawsuit?
Opinions:
Majority - Aspen, District Judge
No. A federal court lacks subject matter jurisdiction to hear a state-law cross-claim for contribution or indemnity at the same time as the government's § 6672 penalty enforcement action. The court reasoned that while federal law does not provide for a right of contribution under § 6672, a right might exist under state law. However, allowing such a claim to be litigated within the federal enforcement action would unduly complicate and delay the government's ability to collect taxes. Adopting the approach from Swift v. Levesque, the court held that the proper procedure is for the party seeking contribution to file a separate state-law action after the conclusion of the IRS's collection case. This approach protects the efficiency of federal tax collection while preserving any potential state-law remedies between the responsible parties.
Analysis:
This decision establishes a key procedural rule for litigating contribution claims related to § 6672 'responsible person' tax penalties. It clarifies that federal courts will prioritize the swift and uncomplicated collection of taxes by the government over the convenience of resolving intra-party disputes in the same action. By forcing contribution and indemnity claims into separate, subsequent proceedings, the ruling prevents defendants from bogging down the main federal tax case with collateral state-law litigation. This preserves potential state-law remedies for co-liable parties but ensures they do not interfere with the primary federal interest of revenue collection.
Unlock the full brief for Schoot v. United States