Ralph Bradbury, the former president of the defunct Continental Express Inc. of Little Rock, said he will continue to fight an $823,166 judgment he recently received for the trucking company’s unpaid payroll taxes.
“Anybody that knows me knows that I’m going to dig my heels in, and it’s going to be one hell of a fight,” Bradbury told Arkansas Business last week.
But going after the Internal Revenue Service in court might be an uphill battle, according to Philip Hackney, an associate professor who teaches federal income tax law at the Louisiana State University Law Center.
“To me, it’s a straightforward dealing with a responsible party associated with paying payroll taxes,” said Hackney, who reviewed U.S. District Judge D. Price Marshall Jr.’s order for Arkansas Business. “On the face of it, I think the court’s absolutely right.”
He said the statute is clear that the responsible party, which is usually the CEO, has to pay the company’s payroll taxes.
“If they don’t, the IRS can come after them,” Hackney said. “It doesn’t matter what story you might have.”
Bradbury sued the IRS in 2011 and said the company’s tax bill he personally received should have gone to the owners of the trucking company, Ed and Bonnie Harvey, and their financial adviser, Marvin Jones. He said they were the ones who controlled the company during the third quarter of 2008, when the taxes were owed.
Bradbury said he was assured the bill would be taken care of, but it wasn’t. The company’s assets were sold in December 2008 to Celadon Trucking Services Inc. of Indianapolis for $24.1 million.
When Bradbury received the bill from the IRS, he challenged it in federal court.
Marshall ruled in March that Bradbury was the responsible party and entered the judgment against him last month for the outstanding amount plus interest.
Hackney said Bradbury might have a better chance of getting the money with his lawsuit against the Harveys and Jones.
Bradbury sued the Harveys, Jones and Continental Express in 2011 in Pulaski County Circuit Court. That case was stayed pending the outcome of Bradbury’s lawsuit against the IRS.
Now that the IRS case is closed, Bradbury’s attorney, Randy Coleman of Little Rock, asked last week that the state court case move forward.
In those court filings, both the Harveys and Jones denied wrongdoing and said Bradbury was the one who should have paid the tax bill.
Considering an Appeal
Coleman also told Arkansas Business last week that he was considering appealing the U.S. District Court judgment to the 8th U.S. Circuit Court of Appeals.
He said he’s pondering the grounds of an appeal. “But I would imagine that it would center around the issue of Ralph’s status as a responsible party,” Coleman said.
Hackney said that he doubted the 8th Circuit would take the case. “I think he’s got a real tough battle on this one,” he said.
He said the statute makes it very difficult for a CEO to evade responsibility for paying the payroll taxes, which was Congress’ intent when it enacted the law.
Congress didn’t “want to have courts go through a lot of consideration of these issues,” Hackney said. “They want it clear and clean. Only in extraordinary circumstances, where you don’t have any responsibility for the situation, you might get out of it.”
Coleman agreed that the law is tilted in favor of the IRS.
“I think we would have gotten a totally different result in the case had we been able to make the Harveys, as the owners of the company, a party in the federal case,” Coleman said. “But the law does not permit that.”
Bradbury said he wants to get the case before a jury. “I have spent four years and a very large portion of my assets to gather evidence and put together a case to have it end in ‘summary judgment,’” he said in an email statement to Arkansas Business.
Ralph Bradbury’s daughter, Rachel Bradbury, is a publisher at Arkansas Business Publishing Group, the parent company of Arkansas Business.