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Keywords

trustcorporation

plaintiffdepositionaffidavitpleamotionsummary judgmentcorporationcivil proceduremotion for summary judgment

Related Cases

Automated Typesetting, Inc. v. U.S., 527 F.Supp. 515, 48 A.F.T.R.2d 81-6049, 81-2 USTC P 9687

Facts

Automated Typesetting, Inc., a Wisconsin corporation, was incorporated by Louis E. Blaser in 1962. Louis, Bertha, and Robert Blaser served as officers and directors of the corporation. In 1972, the Blasers transferred their lifetime services to family trusts while continuing to perform full-time services for the corporation. The taxpayer did not withhold federal employment taxes on payments made to the trusts for the Blasers' services, leading to the dispute over tax liabilities.

The following facts are not in dispute. The taxpayer and plaintiff, Automated Typesetting, Inc., is a Wisconsin corporation, which was incorporated by Louis E. Blaser on December 26, 1962. Louis E. Blaser, Bertha Blaser, his wife, and Robert Blaser, their son, were officers and directors of the taxpayer prior to and throughout the period of April 27, 1972 through December 31, 1977.

Issue

Did an employer-employee relationship exist between Automated Typesetting, Inc. and its officers, which would require the taxpayer to withhold federal employment taxes?

Unless an employer-employee relationship exists, there is no duty to withhold federal income taxes, pay federal insurance contribution act taxes, or pay federal unemployment taxes.

Rule

An employer-employee relationship exists when the employer has the right to control the individual performing services, not only regarding the results but also the means by which those results are achieved. The designation of the relationship by the parties is immaterial if the substance of the relationship indicates otherwise.

Rule 56(c), Federal Rules of Civil Procedure, provides that summary judgment shall be rendered if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.

Analysis

The court analyzed the totality of the circumstances and found that the Blasers performed full-time personal services integral to the business operations of Automated Typesetting, Inc. The court noted that the taxpayer had the power to control the payment of wages and that the Blasers continued to perform their duties as officers of the corporation, despite the conveyance of their services to the trusts.

After a careful consideration of the pleadings, depositions, answers to interrogatories, admissions on file, and affidavits, the Court finds that an employer-employee relationship existed between the taxpayer and the Blasers.

Conclusion

The court concluded that an employer-employee relationship existed between the taxpayer and the Blasers, and thus the taxpayer was liable for federal employment taxes on the payments made to the trusts.

For the foregoing reasons, IT IS ORDERED that the Government's motion for summary judgment be and hereby is granted.

Who won?

The Government prevailed in this case because the court found that the taxpayer was liable for federal employment taxes due to the established employer-employee relationship with the Blasers.

The court holds that Louis, Bertha, and Robert Blaser were employees of the taxpayer.

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