The IRS notified an employer that it had underpaid its payroll taxes for two prior years. After some investigation, the employer discovered that an employee of its third party payroll service had misappropriated nearly $1 million it had transferred for the payment of taxes. The employee routinely underpaid the payroll taxes he forwarded to the IRS on behalf of the employer, and then pocketed the remaining funds. When the IRS informed the employer that it was responsible for the payroll taxes that remained outstanding, the employer filed suit in federal court. The employer insisted that it should not be held liable for unpaid payroll taxes and interest due to the embezzlement of funds it had transferred to the payroll service company for the payment of its tax obligations. A federal appeals court ruled against the employer based on "the well-established principle that a taxpayer's reliance on a third party to fulfill its tax obligations does not relieve the taxpayer of responsibility for those obligations …. The timely filing of returns and the payment of taxes are solely the duties of the taxpayer and are not delegable …. An employer is liable for payment of taxes that must be deducted and withheld from its employees' income. Misappropriation of funds by a third party does not relieve an employer of that obligation." Pediatric Affiliates v. United States, 2007 WL 1113785 (3rd Cir. 2007).