A recent decision from the Ohio Board of Tax Appeals addressing whether an individual was a responsible party that could be held liable for unpaid sales tax illustrates that taxpayers need to take note of what they say during the course of an audit. The individual at issue was assessed after assessments against a business for unpaid sales taxes went unsatisfied. The individual protested the assessment, arguing that he was never an owner or officer of the business and his listing as a “statutory agent” was not sufficient to cause him to be a responsible party. However, based on records kept during the audit, it appeared the individual was the only party to interact with the auditors and had indicated that he was an owner of the business at the commencement of the audit. He took the auditor on a tour of business’ facility, provided sample invoices for the audit period, and indicated he was the individual handling the audit for the company. Correspondence from the Department regarding the audit was addressed to the individual as the owner of the business.
Under Ohio law, if a corporation required to file sales tax returns and remit tax due fails to do so for any reason, “any of its employees having control or supervision of or charged with the responsibility of filing returns and making payments, or any of its officers, members, managers, or trustees who are responsible for the execution of the corporation’s fiscal responsibilities, shall be personally liable for the failure.” The Board noted that while the individual now asserted he did not have access to the documents that were received during the audit, he does not dispute that he was the only individual from the business who interacted with the auditors. The Board concluded that it accorded more weight to the contemporaneous notes and documentation from the auditors than it did to “the self-serving testimony roughly nine years after the audit took place.” As such, the Board ruled that the Commissioner had properly determined that appellant was a “responsible party.” Please stay tuned to TWIST for future Ohio sales tax updates.