Tax Type
Corporation Income Tax
General Provisions
Description
Liability of corporate officer; Converted assessments
Topic
Collection of Delinquent Tax
Date Issued
02-05-1993
February 5, 1993
Re: §58.1-1821 Application: Retail Sales and Use Tax
Dear ****
This will reply to your letter of July 31, 1992, in which you seek correction of retail sales and use tax assessments against ***** (the "Taxpayer").
FACTS
The Taxpayer was the secretary/treasurer of a corporation, which had unpaid sales tax assessments for the months of July 1990 through December 1990. Upon failure to collect the deficiency from the corporation, the department converted the assessment to the Taxpayer, under Va. Code §58.1-1813.
The Taxpayer contests the converted assessments, claiming she did not have the authority over the corporation's books or possession of the corporate checkbook for December 1990. The Taxpayer also contends that the July 1990 liability was paid and requests waiver of penalty and interest for that period. Finally, the Taxpayer protests the assessments for August through November 1990 on the basis that she did not make the final decisions for the corporation.
DETERMINATION
Validity of the converted assessments
Va. Code §58.1-1813 states that [a]ny corporate officer who willfully fails to pay, collect, or truthfully account for and pay over any state tax...or willfully attempts in any manner to evade or defeat any such tax or the payment thereof...shall be liable for a penalty of the amount of the tax evaded, or not paid, collected or account for and paid over.
The statute defines the term "corporate officer" as an officer of a corporation who is under a duty to perform on behalf of the corporation the act in respect of which the violation occurs and had knowledge of failure and had the authority to prevent it.
Based on the information presented, the Taxpayer was knowledgeable of the failure to remit the sales taxes. In addition, it appears the Taxpayer had the authority to prevent it, as she was able to sign checks. She was the officer who managed the business and was in control of the day to day operations of the business. A representative of the management company which was hired in December 1990 to assist the corporation with its financial affairs stated that the Taxpayer had full authority over the day to day operations and direction was taken from her. Consequently, the converted assessments for the periods July 1990 through December 1990 are upheld.
July 1990 assessment
The July 1990 assessment was paid by the Taxpayer by check dated November 27, 1990, four months after the due date. The Taxpayer states that she was informed by a department employee that penalty and interest would be abated upon payment of the tax. Based on this information, the interest and penalty portions of the July 1990 assessment will be abated.
Payment Plan
The Taxpayer requests that a payment plan be established to pay the outstanding assessments. Based on the facts and circumstances surrounding this case, I find basis for such a plan.
Accordingly, the penalty and interest portions of the July 1990 assessment will be abated. The remaining assessments are correct as made. I will refer this case to the department's Collections Unit, which will contact the Taxpayer to establish terms of the payment plan.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/6436F
Rulings of the Tax Commissioner