AS A SHAREHOLDER OR OFFICER OF A C-CORPORATION, AM I PERSONALLY RESPONSIBLE FOR PAYROLL AND INCOME TAXES OWED BY MY CORPORATION?

29 Jan AS A SHAREHOLDER OR OFFICER OF A C-CORPORATION, AM I PERSONALLY RESPONSIBLE FOR PAYROLL AND INCOME TAXES OWED BY MY CORPORATION?

Officers and shareholders are not personally liable for the income tax liabilities of a C-Corporation, nor for any penalties and interest asserted against the corporation. Officers, shareholders and other individuals may be personally responsible for the “trust fund” portion of the corporation’s unpaid payroll taxes. “Trust funds” are monies that are withheld from employee paychecks (income tax withholding and the employee portion of Social Security), to be held in trust for, and paid over to, the government as required. To be held liable for the unpaid trust funds, the individual must be a “responsible person” (i.e. being a decision maker, having check signing authority), and “willful” in their actions (i.e. with knowledge that the taxes have not been paid, they paid other creditors in preference to the government).

 

Shareholders and officers are not personally liable for unpaid income taxes of a C Corporation; however they can be liable for a portion of the unpaid payroll tax liabilities.

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