Tax Type
Retail Sales and Use Tax
Description
License, miscellaneous; Corporate officers'; personal liability; Failure to collect
Topic
Collection of Delinquent Tax
Date Issued
10-31-1996
October 31,1996
Re: § 58.1-1821 Application: Withholding, Litter and Retail Sales and Use Tax
Dear*********
This is in response to your correspondence in which you are protesting the assessment of withholding tax, litter tax and sales and use tax on behalf of your client, *************(the "Taxpayer"). I apologize for the delay in responding.
FACTS
The Taxpayer was the president and half owner of a corporation which had unpaid sales tax, withholding tax and litter tax assessments primarily for the months of November 1988 through January 1990. Upon failure to collect the deficiencies from the corporation, the department converted the assessments to the Taxpayer under Code of Virginia § 58.1-1813. You maintain that the Taxpayer was not involved in the financial operations of the restaurant and did not exercise any authority as to whether the taxes were paid. You also protest the inclusion of the Taxpayer's spouse on the consolidated bill statement.
DETERMINATION
Code of Virginia § 58.1-1813 defines the term "corporate officer" as an officer of the corporation who 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 and (2) had the authority to prevent it. Under the standard of willfulness applied by the courts, all that needs to be shown is that the act was "voluntary, conscious, and intentional." Hewitt v. U.S.. 377 F.2d 921, 924 (C.A. Tex.)
The information provided indicates that the Taxpayer had the authority to pay the taxes owed to the state and knew or should have known about the corporation's tax liabilities. The Taxpayer hired managers to oversee the operations of the business, however, no documentation has been provided to show that any of the managers were authorized to write checks for the payment of the taxes due. The Taxpayer did have the authority to sign checks and, in fact, did sign all the checks from February 1989 through October 1989. In addition, the facts show that tax due was reported to the Taxpayer by the bookkeeper.
Since the Taxpayer had knowledge of the liability, the authority to make payment, but failed to make restitution, the department finds that the assessment must be upheld. However, the Taxpayer has provided evidence showing that he did resign and transfer his share of the business effective November 1, 1989. As such, the Taxpayer will not be held responsible for any tax liability due for periods beginning after November 1, 1989. Attached is a schedule of the revised assessment against the Taxpayer.
The department has at no time considered the Taxpayer's spouse liable for these assessments. Consolidated bill statements are issued to all parties named on an account. The consolidated bill is merely a statement of amounts due and not a notice of assessment.
Based on the facts of this case, the balance of tax owed by the Taxpayer will be adjusted. The Taxpayer's payment should be made within 30 days and may be sent to ****** c/o Office of Tax Policy, Department of Taxation, P.O. Box 1880, Richmond, Virginia 23218-1880. If you should have any further questions, please feel free to contact ******at ******** .
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/104270
Rulings of the Tax Commissioner