Q&A with the Pennsylvania Department of Revenue

Liability of Corporate Officers for Non-Trust Fund Taxes

Sep 30, 2013
Scenario:

Deadco was a corporation engaged in manufacturing of countertops at two locations in PA. During 2011, the corporation defaulted on its debts and its primary creditor initiated foreclosure proceedings. In 2012, 100% of the assets of the company were sold at auction. Proceeds of the sale were used to pay-down corporate debts, but they were insufficient to completely pay off all of the company’s indebtedness. The company thereafter completely liquidated. In 2013, the Department of Revenue conducted an audit of Deadco and determined that the company had a use tax deficiency of $15,000.

Q:

Since there are no corporate assets which the Commonwealth can levy to pay the use tax deficiency, can the Commonwealth attempt to collect the use tax deficiency from Deadco’s former officers?

A:

From an enforcement perspective, the former officers cannot be assessed for the use tax deficiency as responsible party assessments may only be issued for trust fund taxes (including sales & employer withholding taxes) collected but not remitted to the Department. In the scenario described, the use tax was Deadco’s responsibility to pay, therefore the Department may not enforce the use tax liability against the former officers of Deadco.
 

Leave a comment

Watch: 2019 Q&A with the DOR
Watch: 2019 Q&A with the DOR

Watch Now

A PICPA member login is required to access this content. A full transcript is also available.

Full Transcripts:
Annual Meetings
     
Oct. 2019      Oct. 2018

Oct. 2017      Oct. 2016

  Sept. 2015    Sept. 2014

Full Transcripts:
Quarterly Meetings
Disclaimer

These documents provide a summary of the answers provided by the Department of Revenue to the PICPA Committee on State Taxation at its annual question and answer session. These documents are classified as revenue information issued for informational purposes only for the convenience of PICPA members. Pursuant to 61 Pa. Code Section 3.4, these documents should not be relied upon for any purpose or used in tax appeals. Taxpayers requiring a binding opinion on their specific fact situation may request a written letter ruling under 61 Pa. Code Section 3.3.