Paychex Business Solutions, LLC v. United States of America

Filing 77

ORDER denying 69 Motion for Reconsideration. Signed by Judge Susan C Bucklew on 4/3/2018. (JD)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
PAYCHEX BUSINESS
SOLUTIONS, LLC, ET AL.,
Plaintiffs,
v.

Case No. 8:15-cv-1455-T-24 TGW

UNITED STATES OF AMERICA,
Defendant.
______________________________/
ORDER
This cause comes before the Court on Defendant’s Motion for Reconsideration. (Doc.
No. 69). Specifically, Defendant moves the Court to reconsider its June 22, 2017 order denying
Defendant’s motion to dismiss or for summary judgment and granting Plaintiffs’ motion for
partial summary judgment. (Doc. No. 48). Plaintiffs oppose the motion (Doc. No. 72), and
Defendant has filed a reply brief (Doc. No. 75). As explained below, the motion is denied.
I. Background
This is a tax refund case for overpayments made by Plaintiffs during several quarters of
2009–2012. Plaintiffs seek a refund of the overpayment of the employer portion of the FICA
taxes they paid during that time; more specifically, the employer’s portion of the Social Security
tax. The FICA taxes at issue were paid to the IRS by Plaintiffs and relate to wages earned by
Plaintiffs’ clients’ worksite employees. The obligation on Plaintiffs to pay the FICA taxes arose
from agreements between Plaintiffs and their clients, wherein Plaintiffs agreed to handle payroll
for their clients. Plaintiffs specifically assumed responsibility for the payment of wages to the
worksite employees without regard to whether the client companies first paid such amounts to

Plaintiffs. Additionally, Plaintiffs assumed full responsibility for the reporting, collection, and
payment of payroll taxes to the IRS.
The parties do not dispute that overpayments were made by Plaintiffs totaling over $4
million due to Plaintiffs’ miscalculation of the amount of Social Security taxes owed. However,
Defendant disputes that Plaintiffs have standing to seek a refund for the overpayments.
Defendant moved to dismiss or for summary judgment, arguing that Plaintiffs voluntarily
paid over $4 million towards the employer’s portion of the Social Security taxes at issue and that
Plaintiffs lack standing to sue for a refund. Plaintiffs responded and moved for partial summary
judgment, arguing that they were the statutory employers of the worksite employees, as defined
under 26 U.S.C. § 3401(d)(1), because they had control over the payment of wages to the
worksite employees.
The Court agreed with Plaintiffs in its June 22, 2017 order and found that Plaintiffs had
standing to sue for the refunds at issue. (Doc. No. 48). The Court found that Plaintiffs had
control over the payment of wages to the worksite employees, and thus were the statutory
employers under § 3401(d)(1), based on the recent case law and the following pertinent facts: (1)
Plaintiffs specifically assumed responsibility for the payment of wages to the worksite employees
without regard to whether the client companies first paid such amounts to Plaintiffs; (2) Plaintiffs
assumed full responsibility for the reporting, collection, and payment of payroll taxes to the IRS;
(3) Plaintiffs initiated wage payments to the worksite employees on the same date that Plaintiffs
initiated a debit to the client companies’ bank accounts for the wages and taxes, so wage
payments were initiated (and could not be reversed) prior to Plaintiffs receiving the clients’
funds; (4) Plaintiffs used their own bank accounts to make the wage payments to the worksite
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employees, as well as to pay the payroll taxes to the IRS; the client companies had no authority
over, or access to, these bank accounts; and (5) Plaintiffs reported their payments of the employer
portion of the Social Security tax on Forms 941 using their own names, addresses, and employer
identification numbers.
In the instant motion, Defendant moves this Court to reconsider its June 22, 2017. The
Court, however, finds that reconsideration is not warranted and denies Defendant’s motion.
II. Standard of Review
There are three major grounds justifying reconsideration: (1) an intervening change in
controlling law; (2) the availability of new evidence; and (3) the need to correct clear error or to
prevent manifest injustice. Sussman v. Salem, Saxon & Nielsen, P.A., 153 F.R.D. 689, 694
(M.D. Fla. 1994)(citations omitted). The Court notes that reconsideration of a previous order is
an extraordinary remedy to be employed sparingly. See id. (citations omitted).
III. Motion for Reconsideration
Defendant argues that its motion is based on the need to correct clear error or to prevent
manifest injustice. Upon review of Defendant’s motion, the Court finds that it should be denied,
as Defendant has not shown that there is a need to correct clear error or to prevent manifest
injustice. Instead, Defendant is merely attempting to refute the basis for the Court's earlier
decision, mostly making the same arguments that were previously considered and rejected by this
Court. See Allaben v. Howanitz, 579 Fed. Appx. 716, 719 (11th Cir. 2014)(stating that a motion
for reconsideration should not be used to simply rehash arguments that were previously made).
Defendant also raises a new argument in a footnote in its motion. (Doc. No. 69, p. 7,
n.6). However, this argument should have been raised in the original motion, and a motion for
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reconsideration is not an appropriate vehicle for raising arguments that could have been raised
earlier. See Lamar Advertising of Mobile, Inc. v. City of Lakeland, 189 F.R.D. 480, 490 (M.D.
Fla. 1999); see also Johnson v. U.S., 1999 WL 691871, at *1 (N.D. Ga. July 14, 1999)(stating
that “it is not appropriate to raise new arguments in a motion for reconsideration that could have
been raised when the matter was initially before the court”). As such, the Court finds that
reconsideration is not warranted.1

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It is interesting to note that the internal revenue code has appeared to have changed in
response to these type of arrangements. Specifically, 26 U.S.C. § 3511 was enacted (effective
December 19, 2014) to provide that certified professional employer organizations (“CPEOs”)
would be treated as the employer of worksite employees performing services for a customer of
the CPEO with respect to employment taxes when the relationship is governed by a contract that
meets the requirements of 26 U.S.C. § 7705(e)(2), as well as other requirements. Section
7705(e)(2) states that the service contract must be in writing an must provide that the CPEO will
do the following:
(A) assume responsibility for payment of wages to such individual,
without regard to the receipt or adequacy of payment from the
customer for such services,
(B) assume responsibility for reporting, withholding, and paying any
applicable taxes under subtitle C, with respect to such individual's
wages, without regard to the receipt or adequacy of payment from the
customer for such services,
(C) assume responsibility for any employee benefits which the service
contract may require the certified professional employer organization
to provide, without regard to the receipt or adequacy of payment from
the customer for such benefits,
(D) assume responsibility for recruiting, hiring, and firing workers in
addition to the customer's responsibility for recruiting, hiring, and
firing workers,
(E) maintain employee records relating to such individual, and
(F) agree to be treated as a certified professional employer
organization for purposes of section 3511 with respect to such individual.
26 U.S.C. § 7705(e)(2).
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IV. Conclusion
Accordingly, it is ORDERED AND ADJUDGED that:
(1)

Defendant’s Motion for Reconsideration (Doc. No. 69) is DENIED.

(3)

The Court will hold a status conference on April 17, 2018 at 9:30 a.m. to address
any issues remaining in this case, as Plaintiffs have asserted that they “do not
believe trial in this case will be necessary and that the Court’s ruling on the
Motion for Reconsideration will resolve this case.” (Doc. No. 70, p. 2).

DONE AND ORDERED at Tampa, Florida, this 3rd day of April, 2018.

Copies to:
Counsel of Record

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