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Sales & Use Tax Tips for August 2010
OFFICER OF A COMPANY CAN BE HELD PERSONALLY LIABLE
Did you know that officers and members of a company can be held personally liable for their company's sales and use tax liabilities?
When starting a business, careful attention is usually given to the type of entity being formed. The right business entity can prevent personal assets of owners and officers from being seized and sold to pay business liabilities. However, this is not always the case. Some liabilities such as sales and use tax liabilities have been personally assessed to the owners and officers of the companies to which the assessments were made. However, this doesn't have to be the only option.
New York, for example, will hold an officer or member of a Company personally liable when the individual has enough control and ability to act on the Company's behalf. These officers or members are considered to have a fiduciary responsibility to be sure sales and use taxes are properly collected and remitted. However, if evidence or documentation can show the officer or partner did not have the power to act on behalf of the Company, the assessment can be removed. This is exactly what happened when New York State conducted a sales and use tax audit of a private medical practice and issued a $529,000 sales and use tax due assessment against the business. The State attempted to hold a partner of the practice personally liable for the entire assessment.
The partner hired Olivier & Associates LLC, and we immediately requested a Bureau of Conciliation and Mediation Service Conference where we presented a non-responsible person rebuttal argument. The result: The entire assessment was cancelled.
To learn more about these or other services or should you have any other questions or require assistance please Contact us today. Or call 1-888-466-2829 to speak with an Olivier &
Associates Sales and Use Tax professional for a no-obligation consultation about your Sales & Use Tax issues.
Please click here for more Sales Tax Tips or visit our website at www.oatax.com for information. For additional insight on common sales tax concerns, please see the Did You Know? section of our website.
* This tip is intended to provide general information only and is not to be considered as a substitute for professional advice.
