United States District Court, S.D. West Virginia, Charleston
MEMORANDUM OPINION AND ORDER
T. COPENHAVER, JR. UNITED STATES DISTRICT JUDGE.
is a motion to dismiss the complaint filed by Country Cove
Assisted Living, LLC (“Country Cove”) on October
13, 2016 and a motion to dismiss the complaint filed by
Willow Bay, LLC (“Willow Bay”) that same day.
United States instituted this action by filing a complaint
with the court on January 5, 2016. In the complaint, the
United States alleges that defendant Sheltering Arms Personal
Care Home, Inc. (“Sheltering Arms”) is a West
Virginia corporation that operates two assisted living
facilities in Fayette County, West Virginia, through its
subsidiaries Country Cove and Willow Bay. Complaint,
(“Compl.”) ¶ 3. The complaint alleges that
Randy Prince is the president and sole shareholder of
Sheltering Arms. Id. at ¶ 4. According to the
United States, “Sheltering Arms is responsible for
paying the wages of Country Cove's and Willow Bay's
employees; for withholding, collecting, and paying over to
the Internal Revenue Service the federal employment taxes
associated with those wages; and for filing the federal
employment and unemployment tax returns associated with those
wages.” Id. at ¶ 3.
One of the complaint alleges that Sheltering Arms filed
“Employer's Quarterly Federal Tax returns”
for taxable quarters ending between September 30, 2007 and
June 30, 2014. Id. at ¶ 5. Based on the unpaid
federal tax liabilities reported as due and owing on those
returns, a representative of the Secretary of the Treasury
made assessments against Sheltering Arms for the unpaid
employment taxes, penalties, and interest for the quarterly
tax periods that ended between September 30, 2007 and June
30, 2014. Id. The United States alleges that as of
August 10, 2015, Sheltering Arms is indebted to the United
States for federal employment taxes in the amount of $183,
021.60. Id. at p. 8.
United States additionally alleges that Sheltering Arms has
unpaid Federal Unemployment Tax Act liabilities including
taxes, penalties, and interest in the amount of $167, 67.74
as of August 10, 2015 and Corporate Income Tax liabilities
including taxes, penalties, and interest in the amount of
$17, 359.80 as of that same date. Id. at ¶ 6-7.
addition, Sheltering Arms was assessed a civil tax penalty of
$1, 020 for its failure to timely file Wage and Tax
Statements for the tax period ending on December 31, 2008.
Id. at ¶ 8. The outstanding balance of the
penalty as of August 10, 2015 is $1, 163.43. Id.
Sheltering Arms has failed to pay the assessment due to the
United States. Id. at ¶ 9.
United States alleges that Sheltering Arms owes it $218,
377.44 as of August 10, 2015, plus interest and penalties
accruing after that date. Id. No explanation is
given as to why the United States seeks Count One monetary
relief only against Sheltering Arms.
Two of the complaint seeks a permanent injunction against all
defendants pursuant to 26 U.S.C. § 7402(a). The United
States alleges that Sheltering Arms has become delinquent in
recent years by failing to file: (1) Quarterly Federal
Employment Tax Returns for the quarters ending on September
30, 2014 and December 31, 2014; (2) a Federal Unemployment
Tax return for the year ending in December 31, 2014; and (3)
Federal Corporate Income tax returns for the taxable years
2013 and 2014. Id. at ¶ 11. Despite efforts by
the Internal Revenue Service (“IRS”) to bring
Sheltering Arms into compliance with its employment tax
deposit and payment obligations, including its recording of
notices of federal tax lien against Sheltering Arms; levying
upon its bank accounts; and agreeing to be paid on an
installment plan, on which Sheltering Arms continuously
missed payments, Sheltering Arms has failed to meet its legal
obligations. Id. at ¶ 12. The United States
contends an injunction is necessary and appropriate because
without one, “Sheltering Arms and Randy Prince are
likely to continue to obstruct and interfere with the
enforcement of the internal revenue laws by pyramiding
employment and income taxes to the detriment of the United
States.” Id. at ¶¶ 16-21.
damages, the United States asks for judgment against
Sheltering Arms in the amount of $218, 312.59 plus statutory
interest and other additions accruing after August 10, 2015.
Id. at p. 15. In addition, it asks for a permanent
injunction ordering that all defendants:
i. Withhold Federal income, Social Security, and Medicare
taxes from the wages of its employees when those wages are
paid and pay them, along with the employer's portion of
the Social Security and Medicare taxes, over to the IRS
according to law;
ii. Establish a bank account in a bank (as defined pursuant
to I.R.C. § 581) designated as “Sheltering Arms
Personal Home Care [sic], Inc., Trustee, Special Fund in
Trust for the United States” under I.R.C. § 7512;
iii. In accordance with federal deposit regulations, make
timely deposits of all taxes imposed by the Federal
Unemployment Tax Act (FUTA taxes) as they become due into the
account opened in accordance with paragraph B, above;
iv. Within two days of each payroll date, make payroll
deposits of withheld federal income, Social Security, and
Medicaid taxes into the account opened ...