Am I personally responsible/liable for corporate payroll taxes.

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Am I personally responsible/liable for corporate payroll taxes.

I hold 30 in equity/shares of a small healthcare services company. I was
contacted by the CEO and told I am responsible for paying 30 of the corporate
payroll taxes for 2017 and she is demanding 40k. As I understand I am not liable
for S-Corp taxes except those which are passthrough from profits.

Asked on March 28, 2018 under Business Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

That is correct: a shareholder (someone who owns 30% of a corporation, C- or S-) is NOT personally liable for payroll taxes. Those taxes are paid by the corporation, prior to any profits or dividends being distributed to the shareholders.
If the taxes are NOT paid by the corporation and it cannot pay them (e.g. due to insolvency or embezzlemen of the tax payments), then the officer of the corporation who was responsible for managing the taxes (usually a CFO or controller) can be held personally liable for them. But this is only the person who'd been responsible for them, and only if the company does not and cannot pay them.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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