Recently, Entrepreneur Magazine ran a worthwhile article on the issue of personal liability for taxes. As the magazine noted, running a business does not absolve its owners from all personal liability. Personal liability may be asserted in special circumstances, one of which is failure to pay the employees’ withholding taxes.
When an employer withholds money from an employee to pay taxes, the employer is considered to be holding this money in trust for the benefit of the state. If the employer does not, in turn, pay the taxes to the government, as the employer is supposed to, liability may attach. This liability may go to the responsible people, including the business owners.
To read the article in its entirety, click here.