Texas Sales Taxes: Personal liability of corporate officers and convenience store manager
The Texas Court of Appeals has ruled that a manager of a convenience store was personally liable for the store’s delinquent sales and use taxes, and engaged in a fraudulent scheme to evade payment of the taxes. In Texas, an individual who controls or supervises the collection of tax from another person holds the amount collected in trust for the benefit of the state. If the individual willfully fails to pay or cause to be paid the tax, then the individual is liable as a responsible individual. Further, the dissolution of the business entity does not affect the responsible individual’s liability. In this case, there is legally and factually sufficient evidence that shows the individual was at least the manager of the store, including the: drafting of incorporating documents; overseeing of day-to-day operations; use of corporate email; sole authority for writing checks for the store; authority over the store’s bank accounts; interaction with tax regulators on audits; and preparation of the store’s tax returns. The manager also willfully failed to pay the store’s sales and use taxes and engaged in a fraudulent scheme to evade payment of the taxes by knowingly underreporting taxes by 25%; preventing the taxing authorities from properly calculating the taxes during the audits; and delaying collection proceedings by terminating the company and selling the store during the audit. (Elesawi v. The State of Texas et al., Tex. Ct. App. (7th Dist.), No. 07-20-00182-CV, 04/20/2022.)
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