The Tax Times: Robocall Fundraiser’s Estate On The Hook For $4.3M In Payroll Taxes

On May 15, 2026, the U.S. District Court for the Eastern District of Michigan entered judgment in United States v. Estate of Richard T. Cole Jr., Deceased, et al., Case No. 2:22‑cv‑12916, holding the estate of a telemarketing entrepreneur liable for more than $4.3 million in unpaid payroll taxes tied to his robocall fundraising business. The ruling underscores how aggressively the government will pursue responsible persons—even after death—when withheld employment taxes are not paid over to the IRS.

Background: A Telemarketing Fundraiser That Didn’t Pay Payroll Tax

The defendant in the case was the estate of Richard T. Cole Jr., identified in court and media filings as a co‑founder of a defunct telemarketing fundraising company that operated large‑scale robocall campaigns. According to the government’s complaint, the company withheld federal income tax and FICA from its employees’ wages but failed to remit those “trust fund” amounts to the IRS over multiple quarters, generating millions of dollars in unpaid tax, penalties, and interest.

The United States filed suit in December 2022 in the Eastern District of Michigan, Detroit Division, to reduce to judgment the trust fund recovery penalty and related assessments that had been made against Cole during his lifetime. After Cole’s death, the case proceeded against his estate and associated defendants, with the government seeking to collect from probate assets based on his role in the company and its payroll tax compliance.

The Court’s Ruling: Personal Liability Survives Death

In its May 2026 decision, the court granted the government’s motion to hold Cole’s estate liable for more than $4.3 million in unpaid payroll taxes. While the written opinion is technical, several themes stand out for tax practitioners and business owners:

· The court accepted the government’s position that Cole was a “responsible person” who willfully failed to collect, account for, and pay over trust fund taxes for the company.

· The government’s assessments and supporting account transcripts were sufficient to establish the amount of liability, shifting the burden to the estate to rebut those figures, which it apparently could not do.

· The court allowed the United States to enforce those assessments against the decedent’s estate, confirming that trust fund and related payroll tax liabilities remain collectible from estate assets even after the responsible person’s death.

The net result was a judgment of more than $4.3 million in favor of the United States, to be satisfied from the assets of Cole’s estate and any other property reachable under federal collection law.

Why Payroll Taxes Are So Dangerous

The case is a vivid illustration of why employment tax noncompliance is often described as “the nuclear issue” in federal tax enforcement. When an employer withholds federal income tax and the employee’s share of FICA from wages, those amounts are held in trust for the United States, and using them as working capital is treated as a serious breach of duty.

Key risk points highlighted by the case include:

· Trust fund recovery exposure: Individuals who have authority over payroll, bank accounts, or bill‑paying decisions can be tagged as “responsible persons” and assessed personally under the trust fund recovery provisions if they willfully allow withheld taxes to go unpaid.

· No corporate veil: The government is not limited to the employer entity; it can and will pursue officers, owners, and other responsible persons individually.

· Liability outlives the taxpayer: As Cole’s estate learned, trust fund liabilities do not evaporate upon death; they become claims against the estate, competing with other creditors and heirs for limited assets.

For closely held businesses with cash‑flow issues, there is often intense pressure to use withheld taxes to cover payroll, vendors, or lenders, but this case reinforces that doing so simply converts a business cash‑flow problem into a long‑term personal collection problem.

Practical Takeaways For Business Owners And Fiduciaries

For business owners, officers, and professional fiduciaries, United States v. Estate of Cole offers several practical lessons.

· Always prioritize payroll deposits. Federal employment tax deposits should be treated as a non‑negotiable expense; if the business cannot make its payroll tax deposits in full, that is a red flag that the underlying business model may be unsustainable.

· Document who is responsible. Boards and owners should be deliberate about who has signatory authority, who approves disbursements, and who oversees payroll tax filings; those roles are precisely what the government looks at in assessing trust fund liability.

· Address problems early. If a pattern of missed deposits emerges, prompt engagement with a tax professional and, where appropriate, the IRS Collection function can prevent a manageable shortfall from snowballing into multi‑million‑dollar personal liability.

· Estate and probate implications. Personal representatives should expect that significant unpaid payroll tax liability will surface as a federal claim against the estate, and they should factor that into decisions about distributions, creditor negotiations, and litigation strategy.

If your business has ever delayed payroll tax deposits to cover other expenses, now is the time to evaluate your risk and discuss options, not after the IRS has filed suit.

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