The opinion of the court was delivered by: Wexler, District Judge.
Thomas L. Baasch ("plaintiff") commenced this action to
recover the interest and penalties he paid to the Commissioner
of Internal Revenue for the 1981 and 1982 tax years. Named as
defendant is the United States of America ("defendant").
Presently before the Court are the parties' cross-motions for
summary judgment pursuant to Rule 56 of the Federal Rules of
Civil Procedure. For the reasons set forth below, the Court
grants the motion for summary judgment in favor of defendant.
In January 1984, the Internal Revenue Service ("IRS")
informed plaintiff that he had not filed his federal income tax
returns for the 1981 and 1982 tax years. Plaintiff responded by
letter and stated that he had failed to file the tax returns
due to a dispute with his employer, TII Corporation ("TII"),
concerning whether TII should have classified him as an
independent contractor or an employee. At that time, plaintiff
claimed to have filed a "Form SS-8," (entitled "Information for
Use in Determining Whether a Worker is an Employee for Federal
Employment Tax & Income Tax Withholding").
In July of 1985, plaintiff filed his 1981 and 1982 tax
returns. Although each return reflected income of $18,900 and
$24,300, respectively, plaintiff claimed he owed no tax. In
addition, plaintiff indicated on both forms that he "was really
an employee" for purposes of the self-employment tax.
In 1985 the IRS assessed a deficiency in taxes of $1,375 for
1981 and $1,185 for
1982.*fn1 It is to be noted that these deficiency assessments
correspond exactly with the total tax plaintiff himself
reported due on both his 1981 and 1982 returns.*fn2
In addition to the deficiency, plaintiff was assessed
interest and penalties for failing to timely file the tax
return, or pay the income tax due. As a result plaintiff paid
a total of $6,411.25 in taxes, penalties and interest for the
1981 and 1982 tax years.
On September 30, 1988, plaintiff commenced this action to
recover the income taxes, penalties and interest he paid to the
IRS for the tax years in question. He has since abandoned his
claim for the refund of the actual taxes paid, and therefore
seeks to recover only the interest and penalty payments in the
amount of $2,976.25, plus interest.
As a basis for his action, plaintiff argues that TII had
improperly classified him as an independent contractor rather
than an employee for the tax years in question. He further
claims that this misclassification caused the delay in the
filing and paying of his tax returns. According to plaintiff,
if TII had treated him as an employee then it would have
withheld taxes from his salary, and plaintiff would not have
delayed his tax payment. Even if TII did not withhold employee
taxes, plaintiff argues that as his employer TII was
responsible for those taxes. Thus, plaintiff argues that the
IRS should not hold him accountable for the interest and
penalties since TII is responsible for the delay.
Plaintiff additionally claims that he had postponed filing
his returns and paying his income taxes until the IRS responded
to his request for a determination of his employee status.
However, it is to be noted that plaintiff offers no explanation
as to why he failed to make this request until January 1984, or
as to why he did not file his 1981 and 1982 returns until July
Defendant argues that plaintiff's status as an employee or
independent contractor has no relevance to the outcome of this
case. More specifically, defendant contends that plaintiff
still had an obligation to timely file his 1981 and 1982 tax
returns and pay the taxes due — whether or not TII treated him
as an employee. Thus, for purposes of its summary judgment
motion, defendant concedes that TII improperly classified
plaintiff as an independent contractor. Nevertheless, defendant
asserts that plaintiff was still liable for failing to comply
with the tax laws.
As noted above, both parties currently move for summary
judgment. Inasmuch as the parties do not dispute the material
facts of the case, the only issue before this Court is whether
plaintiff, as a matter of law, is entitled to a refund of the
interest and penalties imposed by the IRS for his failure to
timely file his tax returns or pay the taxes owed.
The Court may grant a motion for summary judgment only when
"there is no genuine issue as to any material fact and . . .
the moving party is entitled to a judgment as a matter of law."
Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 106
S.Ct. 2548, 91 L.Ed.2d 265 (1986); Donahue v. Windsor Lock Bd.
of Fire Comm'rs, 834 F.2d 54, 57 (2d Cir. 1987). Furthermore,
the moving party bears the burden of establishing the absence
of a genuine issue as to any material fact. Donahue, 834 F.2d
at 57. The Court classifies a fact as material when it "might
affect the outcome of the suit under the governing law."
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct.
2505, 2510, 91 L.Ed.2d 202 (1985); Quarles v. General Motors
Corp., 758 F.2d 839, 840 (2d Cir. 1985) (per curiam). In