Ralph Bradbury, the former president of now-defunct Continental Express Inc. trucking company of Little Rock, was ordered last week to pay the Internal Revenue Service more than $823,000 for failure to pay payroll taxes for the firm.
Bradbury sued the government in 2011, claiming that the owners of Continental Express -- Ed and Bonnie Harvey -- owed the taxes but refused to pay them.
But U.S. District Judge D. Price Marshall Jr. ruled against Bradbury. The case was filed in U.S. District Court in the Eastern District of Arkansas.
In 2011, the IRS claimed Bradbury owed more than $758,000 in taxes that were withheld from checks of employees of Arkansas Trucking Services Inc., an affiliated company that provided employees to Continental Express. The payroll taxes were collected in 2008 but were never paid to the IRS. The debt has increased because of interest that has accrued.
Bradbury's position "was that the Harveys kept promising him that they were going to put money into the company so that the default on the taxes didn't happen in the first place," said Randy Coleman, Bradbury's attorney.
"Then they sold the company out from under him, but still told him the taxes would be taken care of," Coleman said. "But they did not do so."
Continental was sold to Celadon Trucking Services in 2008 for $24 million. Celadon's chief executive officer at the time, Steve Russell, said afterward that all of the money went to pay Continental's debts.
Erin Healy Gallagher of Washington, D.C., the attorney representing the United States, declined to comment on the case or the judgment. A representative of the Justice Department's public affairs office did not return a request for comment.
A spokesman for the IRS declined to comment on the case in 2011 but said that in the matter of unpaid payroll taxes, "responsible people in the organization can be held liable."
"There is usually one person in the organization that handles that bookkeeping [of paying payroll taxes], but if the fund transfer to the government does not occur, then potentially other people could be held responsible for the payment of that money," the spokesman said.
In an order in March, Marshall said the circumstances did not alter Bradbury's legal responsibility to see that the taxes were paid.
"More than one person may be responsible for payroll taxes under the law," Marshall said. "The precedent is harsh but clear: Whether difficult circumstances come from above or below, they usually do not change a responsible person's status," Marshall said.
Coleman said he plans to appeal the decision this week and also will request to reopen a similar case in Pulaski County District Court, which had been suspended until the federal case was decided.
"Ralph didn't own a pencil in that business," Coleman said.
A small portion of the case was settled, but Bradbury has admitted no liability in the case, Coleman said.
The settlement will not hamper an appeal, Coleman said.
Business on 12/02/2014