Ezel / Tax Rulings / VA
VA P.D. 16-105 Retail Sales and Use Tax Withholding Taxes 2016-05-25

Could former owners be personally liable for business taxes arising after they left the company?

Short answer: No. A mutual exit agreement and corrected ownership returns showed that the former owners ended their association with the business on March 1, 2013, before the April 2013-March 2014 tax periods. The converted assessments did not apply to them.

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This page answers the general question as of 2016. Ezel answers yours, under current Virginia tax law, with citations.

Currency note: this ruling is from 2016
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official published Ruling of the Virginia Tax Commissioner (Virginia Department of Taxation), issued as a redacted public document. It is based on the specific facts the taxpayer presented and the law in effect when issued; different facts or later changes in the law can change the result, and another taxpayer should not assume it applies to their situation. Virginia's retail sales and use tax is administered by the Department, but many Virginia local taxes, including the business license (BPOL) tax, business tangible personal property tax, and machinery and tools tax, are administered by local commissioners of the revenue. This summary is informational only and is not legal or tax advice. Consult a licensed Virginia tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Subject

Taxpayers cannot be held as corporate officers as defined under Va. Code § 58.1-1813 for the periods in question.

Plain-English summary

Virginia converted a business's sales- and withholding-tax assessments for April 2013 through March 2014 to two individuals as responsible officers.

The individuals produced a mutual exit agreement and amended returns correcting ownership percentages. Those records established that they were no longer associated with the business as of March 1, 2013, before the assessed periods began.

They therefore could not be treated as responsible officers for those liabilities under Va. Code § 58.1-1813. The Department noted that its Collection Section had already reversed and abated the contested converted assessments.

Citations and references

  • Va. Code § 58.1-1813.

Source

Original ruling text

May 25, 2016

Re: § 58.1-1821 Application: Retail Sales and Use Tax

Dear *:

This is in response to your letters submitted on behalf of * (the "Taxpayers"), in which you request correction of the retail sales and use tax and withholding tax assessments converted to the Taxpayers for the periods April 2013 through March 2014. I apologize for the delay in responding to your request.

The Taxpayers protest any personal tax liability under Va. Code § 58.1-1813 for the unpaid tax liabilities incurred by * (the "Business") for the periods noted above. The mutual exit agreement provided and the amended returns filed to correct ownership percentages establish that the Taxpayers were no longer associated with the Business as of March 1, 2013. Accordingly, I find that the Taxpayers cannot be held as corporate officers as defined under Va. Code § 58.1-1813 for the periods in question.

Based on this determination, the converted assessments at issue are not applicable. I understand that the Department's Collection Section previously reversed and abated the contested assessments.

If you have any questions about this determination, please contact * in the Department's Office of Tax Policy, Appeals and Rulings, at ***

Sincerely,

Craig M. Burns
Tax Commissioner

,

AR/1-6066910102.R

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