Individuals who are involved with a company engaged in business in New York State …

… could become personally responsible for the business’ unpaid tax liabilities.

A responsible person assessment means the State can pursue the individual’s personal assets in order to collect the business’s tax liability.

(i) Withholding Tax

New York State may pursue individuals to collect a business’s unpaid withholding tax if that person (1) had the duty to collect the tax and (2) willfully failed to perform the duty.  The unpaid tax is assessed against the individual as a penalty and is not dischargeable in personal bankruptcy.

Taxpayers assessed as a responsible person are personally liable for 100% of the unpaid withholding tax, regardless of the individual taxpayer’s percentage of ownership, and may be liable for the unpaid interest.  Note, however, the individual is not liable for any penalties assessed against the company with respect to the unpaid withholding tax.

(ii) Sales Tax

New York State may pursue individuals to collect a business’s unpaid sales tax if that person had the duty to collect the tax.  Taxpayers assessed as a responsible person are personally liable for 100% of the unpaid sales tax, regardless of the individual taxpayer’s percentage of ownership, and is not dischargeable in personal bankruptcy.  If timely assessed, individual taxpayers are liable for tax, interest, and penalties equal to that assessed against the company.  Note that there is an exception for qualified LLC members. For more information, see Responsible Person Assessments Against Members of NY LLC for Sales Tax

Contact us for a consultation on your responsible person assessment.