President of Corporation Held to be Personally Liable for Unpaid Use Tax
In Rolinski v. Michigan Department of Treasury, Michigan Court of Appeals, No. 291667, October 5, 2010 (Rolinski) the Tax Tribunal made an error of law by ruling that there was no genuine issue of material fact regarding a taxpayer's status as a corporate officer who was liable for unpaid Michigan use tax.
Under MCL 205.27a(5), where a corporation fails to pay taxes for which it is liable, a corporate officer that has control or supervision over the return or payment of taxes can be held personally liable for the unpaid taxes. For liability to attach, the corporate officer must have significant, tax-specific involvement with the financial affairs of the corporation. Livingstone v Dep't of Treasury, 434 Mich 771, 780; 456 NW2d 683 (1990). "The signature of any corporate officers, members, managers, or partners on returns or negotiable instruments submitted in payment of taxes is prima facie evidence of their responsibility for making the returns and payments." MCL 205.27a(5).
The Department of Treasury provided copies of corporate filings listing Rolinski as the officer responsible for filing Michigan withholding tax returns for the time period in question. The Department of Treasury included tax returns and checks submitted in payment of taxes signed by Rolinski and another officer. The Department of Treasury also provided a payroll agent notification that was signed by Rolinski, which appointed a third party payroll agent for Michigan withholding taxes. At minimum, the Court of Appeals ruled that Rolinski's signature on a corporate check payable to the State of Michigan, which corresponded to the exact amount owed on the corporation's combined Michigan tax returns, was sufficient to establish Treasury's prima facie case that Rolinski was a liable corporate officer with some extent of control or supervisory authority over the corporation's return or payment of taxes, as required by the statute.
Furthermore, the Court of Appeals noted that the statute did not require that a corporate officer have exclusive authority for all tax affairs of a corporation for derivative liability to apply.