Individuals who control the finances of a corporation, limited liability company (LLC), limited liability partnership (LLP), partnership, or any other business entity may be held liable for that entity's failure to collect and remit trust fund taxes.
Trust fund taxes are monies that an entity is required to collect or withhold on behalf of the State of Utah. Withholding tax is a trust fund.
If a business entity fails to collect and remit withholding taxes, Utah Code Section 59-1-302 allows the Tax Commission to assess a penalty of 100 percent of the unpaid trust fund taxes on any responsible individual within the business entity. Assessment of the penalty may result in the Tax Commission filing a lien for delinquent taxes. If a lien is filed, it carries the same force as a court judgment against personal or real property of the responsible individual.
A responsible individual is one who, at the time of the tax delinquency, had the power to direct the collection, accounting, or remittance of withholding trust funds to the Tax Commission. A responsible individual can be:
The following actions or activities would be looked at to determine if an individual were responsible:
| sign checks |
sign tax returns |
authorize and sign payroll |
| hire and fire employees |
total or partial control corporate voting stock |
determine which creditors get paid |
Several sources of information will be researched and investigated in determining which individuals are responsible. These resources will be used by the Tax Commission to ensure that trust funds are protected and amounts due are collected in a fair, responsible, and efficient manner:
