U.S. Circuit Judge Cory Wilson, writing for the three-judge panel, explained that the trial court had misled the jury by suggesting that the employee’s condition alone could be used as an excuse. According to the panel, RSBCO had failed to provide a legally valid justification for the late filing, and the appeals court ordered a new trial. As a result, the Fifth Circuit also vacated an award of attorney fees that had been granted to RSBCO.
In its October petition to the Supreme Court, RSBCO argued that the Fifth Circuit had ignored crucial facts, including the claim that the government, not RSBCO, had proposed the jury instructions that the appellate panel later deemed problematic. The company contended that the jury’s decision was correct, pointing to the overwhelming evidence in its favor. RSBCO argued that even if the jury had been given the corrected instructions, it would have reached the same conclusion.
The tax penalties stemmed from an incident in 2013 when the employee, responsible for filing RSBCO’s informational returns, made errors in filing 26 of over 20,000 returns. The employee, who had a master’s degree in business administration and extensive experience in banking, failed to immediately address errors flagged by the IRS. The mistakes were eventually corrected, but the returns were filed late, triggering penalties from the IRS. RSBCO’s petition highlighted that the employee had been struggling with severe depression at the time, which had caused delays in correcting the filings.
