The Court of Appeals, in a full-fledged opinion by Judge Cannataro, over a two-judge dissent, affirming the New York State Tax Tribunal and the Appellate Division, determined petitioner, the president and majority shareholder of a construction company, was the person responsible for the collection and payment of employee withholding taxes:
… [P]etitioner and the dissenters argue that the Tribunal employed an incorrect legal test in making its determination, under Tax Law § 685 (g), that petitioner was a person responsible for the collection and payment of employee withholding taxes on behalf of New England Construction Company, Inc. (NECC), a corporation of which petitioner was president and the majority shareholder, and on behalf of which petitioner had repeatedly held himself out as being responsible for payment of taxes. We conclude that the Tribunal committed no such error. Rather, in resolving the question before it, the Tribunal properly considered whether petitioner had the actual authority and effective power to pay the withholding taxes and, thus, was a “responsible person” under section 685. Moreover, substantial evidence supports the Tribunal’s determination that petitioner willfully failed to pay the withholding taxes. * * *
Under Tax Law § 685 (g), a person may be held liable for the withholding taxes of a corporation if the person is “required to collect, truthfully account for, and pay over the tax imposed” and “willfully fails to collect such tax or . . . willfully attempts in any manner to evade or defeat the tax or the payment thereof.” … [S]ection 685 (g) essentially provides that “a person responsible for collecting and paying taxes withheld from employees’ wages is liable for a 100% civil penalty if [that person] willfully fails to collect and pay over the tax” … . Such a responsible person includes “an officer or employee of a corporation . . . who . . . is under a duty to perform the act in respect of which the violation occurs” … . Under the broad terms of this definition, more than one person can be a responsible person under Tax Law § 685 … . Because section 685 (g) was modeled after 26 USC § 6672 (a) … , the terms in the former are to be interpreted in conformity with the latter unless a different meaning is clearly required … . Matter of Black v New York State Tax Appeals Trib., 2023 NY Slip Op 05961, CtApp, 11-20-23
Practice Point: Tax Law 685 makes the “person responsible” for the collection and payment of employee withholding taxes civilly liable for failure to pay the tax.