Sales Tax - Challenging Personal Liability for Sales Tax

Wisconsin Statute Section 77.60(9) imposes personal liability through the following language:

“any person who is required to collect, account for or pay the amount of sales tax imposed and who willfully fails to collect, account for or pay to the Department, shall be personally liable for such amounts, including interest and penalties thereon, if that person’s principal is unable to pay such amounts to the Department.”

If the Wisconsin Department of Revenue is asserting that a person should be personally liable for the sales tax, that person can look to this rule to determine how to challenge the potential liability. For purposes of challenging the assertion of personal liability for Wisconsin sales tax, this rule can be broken down into many parts.

1. Who is a person?

2. Is that person required to collect, account for or pay the amount of sales tax to the State?

3. If that person failed to collect, account for or pay the amount of sales tax to the State, did they do so willfully?

4. Is that person’s principal unable to pay the amount to the Department of Revenue?

Any one of these items can form the basis for challenging a personal liability assessment or at least provide an opportunity for a resolution short of the person dipping into their own pocketbook (although “who is a person” is less likely to be a viable argument).  When constructing a challenge to personal liability, each of these factors should be analyzed and facts relating to each factor should be developed and documented.

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.