Representation of Corporate Officers and Employees Held Personally Liable for Trust Taxes
Trust taxes are those taxes withheld from employees (withholding taxes) or collected from purchasers (sales taxes). When a company withholds or collects the taxes but does not remit the taxes to the Department of Revenue, officers or employees within the business can be held personally liable. Personal liability also arises where the business should withhold or collect but fails to do so. Officers and employees within a business must be aware of their personal liability for these trust taxes.
The Department of Revenue looks at corporate records filed with the Department of Revenue and at Secretary of State filings in determining who to assess personally. The Department is not limited to assessing only one person. Every officer or employee in the business who is "responsible" and who acts "willfully" can be held personally liable for 100% of the unpaid trust taxes.
Even if you are a silent investor or an officer in name only, the Department of Revenue could assert personal liability against you. You must come forward with proof that you are not personally liable. Thus, regardless of your level of involvement in the business, if you are an officer or an employee in a business, you may be contacted by the Department of Revenue and held personally liable for payment of sales and use taxes and employer withholding taxes.
At The Litwin Law Firm, P.C., located in Atlanta, we advise corporate officers nationwide about non-payment of trust fund taxes and responsible officer/employee liability for trust fund taxes. Attorney Richard Litwin is an AV-rated* lawyer with expertise in all matters related to state and local taxation in Georgia.
Tax Liability Determinations
Two key factors are generally used to determine whether you are personally liable for trust fund taxes:
- Are you a "responsible" person in the business? The analysis turns on your status in the business and requires more than simply holding a title or being an investor. Did or do you have hiring and firing responsibility? Do you have check-signing authority? Did you actually sign checks? Our law firm can help prove or disprove your level of responsibility.
- Have you acted "willfully"? Did you know that the taxes were supposed to be paid? Do you know whether the taxes were actually paid? What did you know and when did you know it?
Once the Department of Revenue issues an assessment against an officer or employee, the assessment is prima facie correct — it is deemed correct, and the assessed officer has the burden to prove otherwise. Officer tax liability includes not only negotiation with the Department of Revenue but also case investigation and litigation in state court.
Specializing in State and Local Tax Law — Call 866-382-6626
At our Atlanta-based law firm, we focus on state and local tax law. For knowledgeable advice from an experienced tax law attorney, call or contact our law office online.
* CV, BV, and AV are registered certification marks of Reed Elsevier Properties Inc., used in accordance with the Martindale-Hubbell certification procedures, standards, and policies. Martindale-Hubbell is the facilitator of a peer review rating process. Ratings reflect the confidential opinions of members of the Bar and the judiciary. Martindale-Hubbell ratings fall into two categories: legal ability and general ethical standards.
