Appeals from the Orders of the Board of Finance and Revenue in cases of Appeals of Marco Electric Manufacturing Corporation, CPIT 707 and CPIT 708.
Alan I. Baskin, for appellant.
Robert Patrick Coyne, Deputy Attorney General, for respondent.
President Judge Bowman and Judges Crumlish, Jr., Wilkinson, Jr., Rogers, Blatt, DiSalle and Craig. Judges Mencer and MacPhail did not participate. Opinion by Judge Wilkinson, Jr. Judge Craig dissents.
[ 41 Pa. Commw. Page 299]
These consolidated cases come before us on appeal from a decision of the Board of Finance and Revenue, divided three-two, refusing appellant's petitions for refund of 100 percent penalties assessed under Section 352(e) of the Tax Reform Code of 1971, Act of March 4, 1971, P.L. 6, as amended, added by Section 4 of the Act of August 31, 1971, P.L. 382, as amended, 72 P.S. § 7352(e), i.e., failure to truthfully account for and pay over Pennsylvania income tax withheld by it from its employees. We affirm.
The controlling facts are not in dispute. Appellant withheld Pennsylvania income tax from its employees during 1971 and 1974, issued W-2 statements, retained the funds in its payroll account, but failed to account for the funds to the Commonwealth until after an audit which appellant requested appellee conduct
[ 41 Pa. Commw. Page 300]
in August of 1974.*fn1 From the stipulated facts and the undisputed testimony, it is clear that no fraud was intended or involved. It is equally clear that Section 352(e) does not require fraud for the 100 percent penalty to be operative.
(e) Any person required to collect, account for and pay over any tax imposed by this article who wilfully fails to collect such tax or truthfully account for and pay over such tax, or wilfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall, in addition to other penalties provided by law, be liable to a penalty equal to the total amount of the tax evaded or not collected or not accounted for and paid over. No penalty shall be imposed under subsection (b), (c) or (h) for any offense to which this subsection (e) is applicable.
We are not prepared to hold that every instance where tax is withheld and not paid over is willful. However, we are prepared to hold that when the retained funds remain in the taxpayer's payroll account, W-2 statements issued, and the taxpayer has complete control of the funds at all times, it is willful if the funds are not paid over after two and one-half years.
Appellant candidly accounts for not remitting the withheld tax by stating its responsible corporate officer did not know it was not being remitted. However, that corporate officer equally candidly stated in his testimony that in 1972 when he learned ...