SALES TAX – Who can be Liable Under the Rule Imposing Personal Liability for the Wisconsin Sales Tax?

The Wisconsin Statutes impose a personal liability for sales and use taxes if a business fails to pay the taxes itself.  Under the rule imposing personal liability for Wisconsin Sales Taxes, a potentially liable person includes an owner, officer, employee or other responsible person of a business that has  responsibility for collecting, accounting for or paying over sales taxes.

What this definition of a “person” essentially boils down to is that it is not only the owner of a business that can be personally responsible…but any person, including employees, can be caught up in the personal liability net if their name appears on the bank signature card, if they write checks to pay bills for the company or they sign the company’s tax returns. These things don’t necessarily mean the person will ultimately liable for unpaid taxes, but it does mean that they may be put in a position to have to prove to the Wisconsin Department of Revenue that they should not be liable.

Therefore, if your husband, wife or children provide nominal services to your family-run business, if they are authorized to make payments on behalf of the company or sign any checks, handle bookkeeping functions or sign tax returns, they can be caught up in a Wisconsin Department of Revenue personal liability problem even though, from a practical family perspective, they never had any power to make sure that sales taxes got paid.

The point is that if you have apparent authority to make sure that sales taxes get paid, you should work to make certain that the taxes are paid. If the taxes are not paid, it could mean a big headache to prove that you were not responsible for the taxes.

Rob Teuber is a tax attorney located in Milwaukee, Wisconsin.  His practice includes Wisconsin state and local tax matters and federal tax problem resolution nationwide.  For more information on Rob Teuber’s federal tax law practice, see www.federaltaxlawforum.com.