Tax Type
Retail Sales and Use Tax
Withholding Taxes
Description
Liability of Corporate Officers
Topic
Persons Subject to Tax
Taxability of Persons and Transactions
Date Issued
11-15-1991
November 15, 1991
Re: §58.1-1821 Application: Sales and Use Tax & Withholding Tax
Dear*************
This will reply to your letter of May 10, 1991 on behalf of ************** (the Taxpayers), seeking relief of sales tax and withholding tax assessments for various periods between January 1989 and April 1990 .
FACTS
The Taxpayers are investors and stockholders in a ********** area corporation. The Taxpayers' involvement with the corporation was strictly limited to investment only. Another stockholder of the corporation held the position of president and sole director of the corporation from its inception on January 1, 1987 until its sale in April 1990. On March 19, 1991, the department converted all outstanding sales and use tax and withholding tax assessments from the corporation to the Taxpayers' individual income tax account under the corporate officer liability provisions of Va. Code §58.1-1813. The Taxpayers are seeking relief of the assessments on the grounds that they never served as corporate officers of the corporation, nor did they ever have control or responsibility for the payment of the sales or withholding taxes.
DETERMINATION
Va. Code §58.1-1813 addresses tax liability of corporate officers and states, in part, the following:
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- Any corporate or partnership officer who willfully fails to pay, collect or truthfully account for and pay over any state tax administered by the Department.. shall... be liable to a penalty of the amount of the tax evaded..
Subsection B of Va. Code §58.1-1813 goes on to define corporate or partnership officer" as:
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- An officer or employee of a corporation, or a member or employee of a partnership, who as such officer, employee or member is under a duty to perform on behalf of the corporation or partnership the act in respect of which the violation occurs and who (1) had knowledge of the failure or attempt as set forth herein and (2) had authority to prevent such failure or attempt.
- An officer or employee of a corporation, or a member or employee of a partnership, who as such officer, employee or member is under a duty to perform on behalf of the corporation or partnership the act in respect of which the violation occurs and who (1) had knowledge of the failure or attempt as set forth herein and (2) had authority to prevent such failure or attempt.
If you should have any questions, please feel free to contact the department,
Sincerely,
W. H. Forst
Tax Commissioner
TPD/5195K
Rulings of the Tax Commissioner