SALT Report 1615 – The Illinois Department of Revenue upheld a ruling that found a corporation’s controller personally liable for the corporation’s unpaid retailer’s occupation taxes. Illinois imposes personal liability on those responsible for filing corporate tax returns and making the tax payments and willfully failing to do so under section 3-7 of the Uniform Penalty and Interest Act.
Section 3-7 states that:
Any officer or employee of any taxpayer subject to the provisions of a tax Act administered by the Department who has the control, supervision or responsibility of filing returns and making payment of the amount of any trust tax imposed in accordance with that Act and who willfully fails to file the return or make the payment to the Department or willfully attempts in any other manner to evade or defeat the tax shall be personally liable for a penalty equal to the total amount of tax unpaid by the taxpayer including interest and penalties.
Further, the Department determined that “willfulness” can be established by showing that the responsible person (1) clearly ought to have known that (2) there was a grave risk that the taxes were not being paid and (3) the person was in a position to find out for certain very easily.
Therefore, because the controller accepted responsibility for filing returns and paying taxes, maintained control over the corporation’s finances, and should have known that there was a risk that some of the taxes had not been paid he was found liable for $4,213.69 in unpaid taxes plus penalties and interest.
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