Michigan – President of Company Could Not Delegate Responsibility for Tax

SALT Report 1163 – The president and sole owner of a structural steel company was held liable for Michigan sales and use tax under Michigan laws MCL 205.27a (5) and MSA 7.65(27a) (5) which state, “If a corporation liable for taxes administered under this act fails for any reason to file the required returns or to pay the tax due, any of its officers having control or supervision of, or are charged with the responsibility for making the returns or payments is personally liable for the failure.”

The owner of the company argued that he should not be held liable for the taxes as a responsible corporate officer and alleged wrongdoing on the part of the company’s controller for the audit period and delinquencies at issue.  However, the court ruled that a corporate officer cannot delegate responsibility for tax matters to third parties or non-officers.

Further, the owner’s signature on prior years’ sales and use tax and single business tax (SBT) returns was considered evidence of liability. Therefore, the court found that the owner did, in fact, have control and was otherwise charged with the responsibility of making the returns and payment of the taxes.

The court’s final assessment found the owner liable for all unpaid sales and use tax, plus penalties and interest, for the period of October 2003 through December 2006 in the amount of $419,665.15.

For Further Information:

Michigan Tax Tribunal No. 383261 Sova v. Department of Treasury