If a business fails to collect and pay employment taxes, the Employment Development Department will not only hold the owner accountable but also any other individuals the agency deems as a responsible person for the business.
California Unemployment Insurance Code 1735 states that any officer, major stockholder or other person in charge of the affairs of the corporation, association or limited liability company, who willfully fails to pay contributions shall be personally liable for the entire amount of the contributions, withholdings, penalties and interest due and unpaid by the business or other employing unit.
Similar to the IRS analysis of the Trust Fund Recovery Penalty, the two key elements of CUIC 1735 are responsibility and willfulness, and the EDD must have both elements before it can impose the 100 percent assessment of liability.
If you are deemed liable, you will be given a notice, as well as an opportunity for an administrative hearing and appeal.
Contact Brown, PC for Support
You can find yourself facing serious consequences if the EDD finds you personally liable for unpaid taxes by a business with which you were associated. Filing bankruptcy or having the liability protection of a corporation will not protect you. If you receive a notice from the EDD of personal liability, you need the expertise of a knowledgeable tax attorney with a proven track record. We represent clients in Los Angeles and throughout California. Please contact the firm online or by calling 817-870-0025 to discuss your matter and schedule a consultation with one of our attorneys.