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Sufficient Evidence Supported Finding that Sole Shareholder, Who Did Not Oversee the Day to Day Operations of a Corporation, Was a “Responsible Person” Who Could Be Held Personally Liable for the Failure to Pay Corporate Sales and Use Taxes

The Third Department determined that petitioner, who was the sole shareholder of a corporation, was a “responsible person” personally liable under Tax Law 1131 and 1133 for outstanding sales and use taxes.  Petitioner did not oversee the day to day operations of the corporation, did not sign checks, hire or fire employees, or assist in the preparation of tax returns.  However, she had the capacity to appoint officers and directors, had appointed her husband as the sole director, co-signed an alcoholic beverage license, , and alone signed an application for registration as a sales tax vendor:

Tax Law § 1133 (a) imposes personal liability on any person who is responsible for collecting tax under Tax Law article 28 … . A person required to collect tax includes “any officer, director or employee of a corporation . . . who . . . is under a duty to act for such corporation . . . in complying with any requirement of [Tax Law article 28];” (Tax Law § 1131 [1]). Moreover, a person who is not an officer, director or employee of a corporation is required to collect tax if he or she “possessed all the indicia of control that would impose liability upon an officer, director or employee of a corporation” … . Whether a person has a duty to act for a corporation and is responsible for collecting sales tax is a factual determination to be made on a case-by-case basis … . Such determination turns on a variety of factors, including the status of a stockholder, the authority to hire and fire employees and responsibility for the corporation's management … . In this regard, an important consideration is “petitioner's authority and responsibility to exercise control over the corporation, not his [or her]; actual assertion of such authority” … . Matter of Luongo v Tax Appeals Trib of the State of New York, 2014 NY Slip Op 03714, 3rd Dept 5-22-14

 

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