R.S.Mo § 144.157.1 provides that any person responsible to collect and pay over sales or use tax who willfully fails to do so is personally liable for payment of the tax. [Cf. Internal Revenue Code § 6672 making “responsible persons” personally liable for employment taxes, sometimes referred to as the “trust fund recovery penalty” or “responsible person penalty”, and R.S.Mo § 143.241 providing responsible persons are personally liable for unpaid employment taxes].
Thus, e.g., while corporations are separate entities from associated individuals (shareholders, officers, directors and employees) and the associated individuals are not liable for the corporation’s obligations (i.e., to pay tax), § 144.157.1 makes those persons liable if they are “responsible” to collect and pay over taxes and “willfully” fail to do so. There can be multiple responsible persons personally liable for the unpaid tax.
The determination whether someone is personally liable for unpaid taxes is a factual determination, so often a hard and fast answer is not possible. Persons potentially personally liability include officers, directors, and persons who can or do sign checks and or tax returns.
The next question is whether the suspected persons have the actual authority to determine which creditors are paid. E.g.:
- a bookkeeper may lack the required authority even if listed on the bank signature card and can and does actually prepare and sign checks, where their boss determines which checks are sent out and holds some of the prepared checks (i.e., for the tax). This can be true even where they have some limited authority, e.g., they can pay up to $50 to the soda delivery person.
- A spouse may lack the required authority where they are not active in the business, can sign a check in an emergency (their spouse is out of town and a payment must be made) but would never sign a check without express instruction from their spouse. (It may be better to avoid the question by the spouse not being listed on the bank signature card).
“Willfulness” is generally established when a person with the required responsibility and authority:
1) knows the taxes have not been paid; and
2) chooses to pay creditors other than the taxing authority.
Spouses not active in their spouse’s business should consider avoiding being a corporate officer to avoid the question of whether they are personally liable.
R.S.Mo. § 144.157.3 also imposes personal liability on “responsible” persons even if not “willful” if either:
1) the returns are not filed; or
2) the taxes are not paid.
In other words, responsible persons are strictly liable and willfulness is not required.