tax.utah.gov

                                                                 Publication 40
                                                                           Revised 6/04

Personal Liability

for Unpaid Sales, Fuel
        and Withholding Taxes

        Utah State Tax Commission
        Taxpayer Services Division
        210 North 1950 West                                                If you need an accommodation under the Americans
        Salt Lake City, Utah 84134                                         with Disabilities Act, contact the Tax Commission at
        (801) 297-7703                                                     (801) 297-3811, or TDD (801) 297-2020. Please
        1-800-662-4335, ext. 7703                                          allow three working days for a response.
        www.tax.utah.gov

General Information                                              Who is Responsible
The purpose of this publication is to advise individuals with    A responsible individual is one who had the duty or the
control of the finances of a corporation, LLC, LLP, partner-     power to direct the collection, accounting, or remittance of
ship, or other entity, that they may be held personally liable   trust fund taxes to the Tax Commission at the time the
for that entity’s failure to collect or remit certain trust fund delinquency occurred. A responsible individual may be:
taxes.                                                           • An officer, director, or shareholder of a corporation
Trust fund taxes are monies that the entity is required to       • Another corporation or partnership
collect or withhold on behalf of the State of Utah. The
following taxes are trust fund taxes:                            • A partner in a partnership
• State and local sales and use taxes.                           • A lender
• Transient room and tourism taxes on motel/hotel                • An employee of a corporation, partnership or proprietorship
accommodations                                                   • A court-appointed trustee
• Tourism tax on sales of prepared food (restaurants)            • Any other person who had significant control over the
• Statewide and tourism taxes on short-term motor vehicle        finances of a business or who determined which creditors
rentals                                                          would be paid
• Motor fuel, clean fuel, special fuel, and aviation fuel tax
                                                                 How to Determine Responsibility
• Municipal energy sales and use tax                             In reaching the determination that an individual is respon-
• Withholding tax                                                sible, the Tax Commission will ascertain who had the duty,
• Mineral production withholding tax                             responsibility and authority to do any of the following:
• Waste tire recycling fee                                       • Sign checks
                                                                 • Hire and fire employees
Personal Liability                                               • Sign tax returns
Utah Code §59-1-302 provides that if an entity that is           • Sign or authorize payroll
required to collect trust fund taxes fails to collect or remit   • Control corporate voting stock, either totally or partially
those taxes, the Tax Commission shall assess a penalty
equal to 100 percent of the unpaid trust fund taxes on any       • Determine which creditors were paid
responsible individual within the entity. Assessment of the      • Investigate or correct mismanagement
penalty will result in the filing of a lien for delinquent taxes • Be aware of obvious or known risks which resulted in the
which carries the same force as a court judgment and may         failure to collect, account for or pay the tax.
be executed against real and personal property of the
responsible individual.

What Records May Be Used                                      • Testimony of witnesses
   The determination of responsible individuals will be based • Internal Revenue Service documents
   upon research and investigation of the following:          • Employment Security information
   • Tax Commission internal records, including filed returns • Other relevant information
   • Department of Commerce files, including UCC filings
   • Documents prepared by the business entity                Tax Commission Responsibility
   • Other legal documents                                    Pursuant to its statutory obligations, the Tax Commission
   • Bank records                                             will make every effort to ensure that trust fund taxes are
                                                              protected, responsible individuals are assessed, and
   • Corporate meeting minutes                                amounts due are collected in the most fair, responsible, and
   • Testimony of the business entity                         efficient manner possible.

   Items listed in this publication are examples only. Other evidence may also be considered.

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