New York – LLC Members Liable For Company’s Sales And Use Taxes

SALT Report 3499 – In a decision by the State of New York Division of Tax Appeals, limited liability company members Eugene Boissiere and Jason Krystal were found responsible for sales and use taxes assessed against the company.  Originally the sales and use tax, including penalty and interest, assessed against Eugene Boissiere in a Notice of Determination was totaled at $429,014.06.  Jason Krystal was issued a Notice of Determination on the same day for the same amount of tax, penalty, and interest charges.  Negotiations with the Division of Tax Appeals reduced those amounts to reflect their ownership bringing Eugene Boissiere’s liability to $20,202.81 plus applicable interest and Jason Krystal’s liability to $18,510.42 plus applicable interest.

Eugene Boissiere held a 14.9044% membership interest and Jason Krystal held a 13.533% membership interest in the LLC.  Neither member had managerial responsibility, ability to hire and fire employees, knowledge of or control over the company’s financial affairs, or had the authority to sign the LLC’s tax returns.  Furthermore it was determined that neither member participated in the audit or knew the basis of how the tax was computed.  The Division stated under Tax Law 1131(1) “persons required to collect [sales] tax” is defined “to include every vendor of tangible personal property or services, and:

[s]hall also include any officer, director or employee of a corporation . . . , any employee of a partnership, any employee or manager of a limited liability company . . . who as such officer, director, employee or manager is under a duty to act for such corporation, partnership, limited liability company . . . in complying with any requirement of this article; and any member of a partnership or limited liability company (emphasis added).”

Therefore it was determined that the above mentioned provision, among others mentioned in the full determination, establishes the taxpayers liability to pay sales and use taxes as members of the LLC.

For Further Information:

NY DTA NOS. 824467, 824937, 824938