Outside Accountant Not On The Hook For Company's Sales Tax
Despite the power of the Tennessee Department of Revenue (TDOR), an outside accountant was able to persuade the courts that he was not a person responsible for unpaid sales taxes of a business for which he performed accounting services. The accountant was not an employee or officer of the company and had no authority over the company’s day to day operations. He paid bills, maintained books, and prepared tax returns. Relating to the tax returns, he prepared the monthly sales tax return, attached the amount owed and sent it to the State. It appears that the accountant’s mistake was in signing some of the returns as an officer of the company, because it was too much trouble to send them to the actual officer who would typically sign. As you can imagine, once the sales taxes were in arrears, TDOR went after the accountant, too, since he had signed previous returns. However, he was able to prove that he did not know that there would be insufficient funds to pay the sales taxes before the business closed. In addition to proving that he was clueless, he was able to tack the requisite knowledge, authority and responsibility on an officer of the company.
Bottom line: lucky accountant; don’t ever, ever, ever sign as an officer of a company if it is not true; in litigation, always try to find someone else to blame—in this case it worked. Read the opinion here.