A New York federal judge has ruled that a woman cleared of responsibility for her husband’s construction company’s $1.7 million tax debts cannot recoup her nearly $95,000 in legal costs, despite a jury siding with her.
U.S. Magistrate Judge James M. Wicks held Friday that the government was justified in pursuing Martha Gonzalez, who had been accused of failing to pay Camabo Industries Inc.’s employment taxes. While a jury acquitted her of responsibility in May, the judge determined that the IRS’ position was “substantially justified,” blocking Gonzalez from recovering costs under Section 7430 of the Internal Revenue Code.
Why the Government Targeted Gonzalez
Judge Wicks pointed to Gonzalez’s own testimony and corporate role as evidence the government acted reasonably. She admitted to signing hundreds of employee checks, facilitating payroll, paying bills, buying supplies, and even using the company’s debit card.
The judge further noted that Gonzalez served as corporate secretary and board member during the contested periods in 2012 and 2013, and even signed loan documents as an owner after selling her shares. These actions, the court said, created “a strong inference” that she bore responsibility for Camabo’s tax obligations.
