Tax Type
Withholding Taxes
Description
Taxpayer was not a corporate officer responsible for delinquent withholding taxes
Topic
Corporate Distributions and Adjustments
Persons Subject to Tax
Withholding of Tax
Date Issued
12-20-2007
December 20, 2007
Re: § 58.1-1821 Application: Withholding Tax
Dear *****:
This will reply to your letter in which you seek correction of an assessment issued to ***** (the "Taxpayer"), a former officer of ***** (the "Corporation").
FACTS
The Department issued an assessment to the Corporation for withholding tax for the period January 2005 through June 2005. Upon failure to collect the deficiencies from the Corporation, the Department assessed the Taxpayer penalties in the amount of the taxes, as well as penalties and interest owed by the Corporation pursuant to Va. Code § 58.1-1813.
The Taxpayer contests conversion of the assessments. He admits that he was an officer of the Corporation, but states that he left the Corporation in January 2005. In addition, he contends that even while he worked at the Corporation, he was not responsible for the payroll or payment of taxes. As such, the Taxpayer contends that he is not a corporate officer as defined in Va. Code § 58.1-1813 and cannot be held liable for the taxes, penalties and interest assessed to the Corporation.
DETERMINATION
When a corporation fails or is unable to pay its tax deficiencies, the Department is permitted to assess the corporate officers for a penalty of the amount of tax evaded, or not paid, collected or accounted for and paid over under Va. Code § 58.1-1813. The term "corporate or partnership officer" as used in this statute means an officer or employee of a corporation, who as such officer is under a duty to perform on behalf of the corporation, the act in respect of which the violation occurs and who (1) had knowledge of the failure or attempt to evade taxes and (2) had authority to prevent such failure or attempt.
The Taxpayer has provided substantial documentation to support his position, including an affidavit from the outside bookkeeper asserting that the authority for the payment of the Corporation's taxes was the responsibility of the Corporation's president. In addition, the Taxpayer has provided copies of e-mail between the bookkeeper and the president regarding the payment of withholding taxes. Finally, the Corporation's 2005 first quarter officers' payroll does not list the Taxpayer as being an officer or employee of the Corporation.
In this case, the evidence demonstrates that the Taxpayer was not a corporate officer for purposes of converting the Corporation's delinquent withholding taxes pursuant to Va. Code § 58.1-1813. Accordingly, the penalties assessed against the Taxpayer in the amount of the taxes, penalties and interest owed by the Corporation will be discharged.
The Code of Virginia section cited, along with other reference documents, are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's web site. If you have any questions regarding this determination, you may contact ***** in the Department's Office of Tax Policy, Appeals and Rulings, at *****.
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- Sincerely,
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- Janie E. Bowen
Tax Commissioner
- Janie E. Bowen
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AR/1-1382333714B
Rulings of the Tax Commissioner