Tuesday, November 10, 2009

Personal Liability

You are in such trouble! This is going to be a relatively short article. But one that's very important. Based on what the rules are in most states, you need to worry about personal liability. What does that mean? It means you could lose your savings, your vacation house, etc. All because your company really screwed up the sales tax. So read on.

Officers of the corporation
You're liable. Period. Maybe you'll dodge a bullet if you're not involved in the management of the company. Maybe.

Spouses in sole proprietorships or partnerships
You're liable. Particularly if you filed your income taxes jointly. You signed the return. Which means you officially knew what was going on.

You're the controller
If you're an officer, see above. If you're not, but you're intentionally failing to pay the appropriate taxes, and you have authority, you might feel some pain too.

Staff accountants and other employees who complete and sign the return
First of all, don't sign the return. The officer who does have the personal liability should be signing that return. Make sure the auditor knows that you're signing the return because the big dog told you to. The auditor will then go after the big dog.

Here's an illustration of the problem.

See, short one. But very important to your future vacation plans.

Sales Tax Guy

See disclaimer and research the issues thoroughly before making decisions

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