W. Va. Code R. § 110-15-4a

Current through Register Vol. XLI, No. 24, June 14, 2024

Section 110-15-4a - Liability of Officers of Corporation

4a.1. If the taxpayer is an association or corporation, the officers thereof shall be personally liable, jointly and severally, for any default on the part of the association or corporation, and payment of the consumers sales and service tax and any additions to tax, penalties and interest thereon imposed by W. Va. Code '11-10-1 et seq. may be enforced against them as against the association or corporation which they represent.

4a.2. A corporation, the officers of which are liable for payment of the tax, is any corporation incorporated under the laws of this State, and any foreign corporation authorized to do business in this State or doing business in this State without such authorization.

4a.2.1. A corporation whose charter has been forfeited by decree of court for nonpayment of corporate charter license tax ceases to exist as a legal entity and has no power to engage in business after such forfeiture. The tax liability of a corporation incurred prior to such forfeiture is a debt of the corporation and a liability of its officers. The tax liability incurred after such forfeiture is not incurred by the corporation but by the individuals doing business, and such liability may be assessed against and collected from the individuals, directly and not as officers of the corporation, even if the charter of the corporation is subsequently reinstated.

4a.3. An association is any two or more persons who have voluntarily joined together to transact or engage in business activity, and who are not a corporation or partnership, whether or not the association is authorized or qualified to do business in this State and whether for profit or not for profit. An association includes but is not limited to any business, charitable, fraternal, beneficial, historic, veterans, or labor organization, society, foundation, federation, lodge, club or order, or any subordinate association or auxiliary thereof, that is not incorporated.

4a.4. There is a default by the corporation or association resulting in officer liability when:

(a) the tax is shown on a tax return and the corporation or association neglects or fails to pay the tax within 15 days after notice and demand for payment;

(b) the liability of the corporation is determined by an assessment and such assessment is final and not subject to administrative or judicial review and the corporation neglects or fails to pay the tax within 15 days after notice and demand for payment; or

(c) when an assessment has not been made against the corporation or association and the corporation or association has not filed any return at the time required by law and has failed to file such return after notice of such failure.

4a.4.1. A default occurs whether or not a notice of tax lien has been filed against the corporation or association and whether or not the State has attempted to collect or failed to collect the tax from the corporation or association, and whether or not the corporation or association is defunct, dissolved, or insolvent.

4a.4.2. The filing of a petition in bankruptcy by a corporation does not stay or preclude the assessment of officers of the corporation, since the tax is not dischargeable in bankruptcy.

4a.5. The officers of a corporation or association that are personally liable for consumer sales tax include any president, vice-president, secretary, or treasurer, and any other officers provided in the charter or by-laws of the corporation or association, and any person who is elected or appointed to any position with the authority of an officer, and who performs duties or responsibilities in the management of the corporation. The officers of an association include all members of its governing board and its trustees. A person such as an incorporator, shareholder, member or employee of a corporation or association is not considered to be an officer subject to personal liability.

4a.5.1. A person who acts as an officer or assumes the character, duties or responsibilities of an officer, is presumed to be an officer, and such person cannot avoid personal liability by alleging he was not properly elected. A person who is elected or appointed as an officer without his knowledge or consent, or who does not act as an officer and does not assume the character, duties, or responsibilities of an officer, is not liable as an officer.

4a.5.2. An officer may be liable whether or not the officer was under a duty to pay the tax or was responsible for the payment of the tax, for or on behalf of the corporation or association, and whether or not the officer acted willfully, or with the intent to evade the tax or payment thereof.

4a.5.3. The liability of a corporation, that is owned or controlled by a parent or other corporation, may be imposed on an officer of the other corporation, if such officer performs duties or responsibilities in the management of the taxpayer corporation.

4a.6. An officer is liable for the tax, interest, additions to tax, and penalties for which the corporation or association is liable.

4a.6.1. An officer is liable for all amounts which were required to be paid or which became due and payable during the time the person was an officer. An officer is also liable for all amounts which were required to be paid or which became due and payable prior to the time the person became an officer, if the officer had the ability and authority to pay the amount due from the available unencumbered funds of the corporation or association after such person became an officer.

4a.6.2. If the amount of tax due for the corporation or association has been determined by tax returns or determined by an assessment which was the subject of a petition for reassessment, the officer shall be liable for such amount.

4a.6.3. The liability of officers of a corporation or association is joint and several, so that more than one officer may be liable for the entire amount of tax for the same period. The total amount of tax collected from all officers shall not be greater than the total liability of the corporation or association.

4a.6.4. In determining the consumer sales and service tax liability of a corporation or association, the application of payments or partial payments against the multiple tax debts may be in issue. Any voluntary payment, made by or on behalf of the corporation, that the taxpayer has directed to be applied in a particular manner should be applied in the manner directed by the taxpayer, i.e., specific tax, period, interest, etc. Any involuntary payment, when the taxpayer has no immediate control over the source, such as would result from a levy or offset, and any voluntary payment for which the taxpayer has not directed the application, may be applied in such a manner as to attain the maximum benefit for the State.

EXAMPLE: A corporation owes $5,000 consumer sales tax and $5,000 corporation net income tax. The corporation remits a check for $1,000 and does not direct that it be applied in a particular manner. The corporation remits a second check for $3,000 and directs, on the check or in a letter, that it be applied to consumers sales tax. A bank levy results in payment of $2,000. The State may apply the $2,000 and $1,000 to the corporation net income tax, and must apply the $3,000 to the consumer sales and service tax, and may assess the officers for $2,000 consumer sales tax.

4a.7. The liability of an officer may be determined or estimated and an assessment made against such officer or officers. The assessment may include any liability of the corporation or association for tax, interest, additions to tax, and penalties that is due and payable, and any such liability that is not due and payable because the corporation or association has not filed tax returns at the time required by law.

4a.7.1. An assessment against officers is considered to be a proceeding for the collection of the tax liability of the corporation or association. If the liability of the corporation or association is determined to be due by an assessment which has become final, an assessment against an officer must be made within five years after the assessment against the corporation or association has become final. If the liability of the corporation is determined to be due by methods provided by law other than an assessment, an assessment against an officer must be made within five years after the date on which the corporation or association filed its annual return, or if no annual return is required, five years after the latest periodical return required to be filed in any year is filed.

W. Va. Code R. § 110-15-4a