Under the Internal Revenue Code, employers are responsible for accounting for and paying over to the IRS taxes that they withhold from their employees. In United States v. Sertich, 879 F.3d 558 (5th Cir. 2018), the U.S. Court of Appeals for the Fifth Circuit held that an employer who willfully fails either to account for or to pay over such taxes commits a felony under 26 U.S.C. §7202. In so holding, the court rejected the defendant’s argument that the statute’s use of the conjunctive “and” means that it is only violated when the employer breaches both the obligation to account for and the obligation to pay over the withheld taxes. The Fifth Circuit in Sertich also rejected the defendant’s claim that the government had failed to establish that he had willfully violated his tax obligations.

‘Sertich’

In 2015, Anthony P. Sertich Jr., a plastic surgeon and owner of two medical entities, was indicted in the Western District of Texas on 10 counts of failing to remit to the IRS payroll taxes that he had withheld from employees between 2008 and 2010, in violation of §7202, and on one count of tax evasion, in violation of §7201. At trial, the jury heard evidence that, while Sertich had filed accurate statements reflecting the withheld taxes, he had used the withheld funds to pay himself millions of dollars and had engaged in extensive efforts to avoid paying over $2.9 million that he and his entities owed to the IRS.