Tax Rules: Final: 5703-9
5703-9-49 Corporate officer liability
(A) As used in this rule and in sections 5739.33 and 5741.25
of the Revised Code:
(1) "Officer" or "corporate officer" means the president,
vice-president, treasurer, secretary, chief executive officer
of a corporation, or any person holding a similar title or
position in a corporation, limited liability company, or
business trust. Any person who holds an ownership interest in
a corporation or limited liability company or a beneficial
interest in a business trust and performs any of the
functions specified in paragraphs (C) to (G) of this rule
shall be deemed an officer. In the case of an affiliated
group of corporations as that term is defined in paragraph
(A)(10) of rule 5703-9-46 of the Administrative Code, any
officer of one corporation in that group that performs any of
the functions listed in paragraphs (C) to (G) of this rule
for another corporation in the group shall be deemed an
officer of that corporation.
(2) "Employee" means a person who works for a corporation,
limited liability company, or business trust, whether for pay
or not. An employee may also be an officer.
(3) "Trustee" means any person responsible for the
management, administration or control of a business trust.
(4) "Business trust" has the same meaning as in division (A)
of section 1746.01 of the Revised Code.
(B) The officers, employees, or trustees of a corporation,
limited liability company, or business trust that fails to
file returns or remit taxes required to be filed and paid
under Chapter 5739. or 5741. of the Revised Code are liable
for the unpaid sales tax, direct pay, or seller’s use tax
liability of that entity under the conditions set forth in
paragraphs (C) to (I) of this rule. The failure to determine
liability under any of those paragraphs does not preclude the
establishment of liability under any of the other paragraphs.
Personal liability may be assessed as provided in section
5739.13, 5741.11, or 5741.13 of the Revised Code.
(C) An officer or trustee is personally liable for the sales
tax, direct pay, or seller’s use tax liability of a
corporation, limited liability company, or business trust if
the officer or trustee was responsible for the execution of
that entity’s fiscal responsibilities on the date on which
the return for the period is filed or is required to be
filed, whichever is earlier. A person has demonstrated such
responsibility if any of the following apply:
(1) The officer or trustee signs any sales tax, direct pay,
or seller’s use tax return required under Chapter 5739. or
5741. of the Revised Code or prepares and submits without
signing any such return;
(2) The officer or trustee signs or prepares and submits
without signing any other tax returns required by the laws of
this state or any of its subdivisions or the Internal Revenue
Code of the United States unless the officer or trustee can
provide sufficient evidence to establish that the entity
divided the responsibility for filing of tax returns in such
a manner that the responsibility for filing sales tax, direct
pay, or seller’s use tax returns required by Chapter 5739. or
5741. of the Revised Code was assigned explicitly to another
officer or trustee;
(3) The officer or trustee exercises management control or
authority over employees whose duties include the
preparation, signing, or filing of returns described in
paragraph (C)(1) or (C)(2) of this rule;
(4) The officer or trustee retains, directs or otherwise
exercises control over outside accountants, bookkeepers, or
other persons who are charged with filing sales tax, direct
pay, or seller’s use tax returns required under Chapter 5739.
or 5741. of the Revised Code on behalf of the entity;
(5) The officer or trustee exercises authority to sign checks
or authorizes the use of his signature stamp or facsimile to
sign checks, drawn on the entity’s accounts, in payment of
tax liabilities;
(6) The officer or trustee determines priorities by which the
entity’s creditors are paid instead of the state. A payment
to a creditor in the form of an in-kind distribution of
entity assets is a payment for purposes of this paragraph;
(7) The officer or trustee uses or manages sales or seller’s
use taxes paid by consumers to the entity as required by
division (A) of section 5739.02 or 5741.02 of the Revised
Code and held by the entity in trust for the benefit of the
state;
(8) The officer or trustee instructs any employee of the
entity to use or manage sales or seller’s use taxes paid by
consumers to the entity as required by division (A) of
section 5739.02 or 5741.02 of the Revised Code and held by
the entity in trust for the benefit of the state; or
(9) The officer or trustee performs any other function which
would indicate control over the fiscal operations of the
entity.
(D) An employee is personally liable for the sales tax,
direct pay, or seller’s use tax liability of a corporation,
limited liability company, or business trust as provided in
section 5739.33 or 5741.25 of the Revised Code if, for the
benefit of that entity, the employee performs one or more of
the following actions:
(1) The employee signs or prepares and submits without
signing sales tax, direct pay, or seller’s use tax returns
required under Chapter 5739. or 5741. of the Revised Code;
(2) The employee supervises or controls other employees who
perform the activities listed in paragraph (D)(1) of this
rule; or
(3) The employee exercises the authority to sign checks drawn
on the account of the entity in payment of tax liabilities.
(E) An employee of a corporation, limited liability company,
or business trust who meets one or more of the conditions
listed in paragraph (D)(1) to (D)(3) of this rule will not be
considered responsible if the employee can establish that his
failure to comply with the requirements of Chapter 5739. or
5741. of the Revised Code resulted from orders from an
officer, trustee, or supervisory employee of the entity which
prevented the employee from complying with the requirements
of that chapter.
(F) If the officers of a corporation or limited liability
company own, either collectively or individually, more than
fifty per cent of the ownership interest in the entity, the
shareholder/officers are responsible for the execution of the
fiscal responsibility of the entity and personally liable
under section 5739.33 or 5741.25 of the Revised Code,
regardless of any attempt to delegate such responsibility, if
one or more of the following apply:
(1) The entity filed sales tax, direct pay, or seller’s use
tax returns required under Chapter 5739. or 5741. of the
Revised Code showing the liability without submitting
payment;
(2) The entity failed to file sales tax, direct pay, or
seller’s use tax returns required under Chapter 5739. or
5741. of the Revised Code;
(3) The records of the entity or other evidence indicates
that the entity collected the sales or seller’s use tax
required under Chapter 5739. or 5741. of the Revised Code; or
(4) The owner/officer of the entity actually controlled or
supervised the preparation and submission of sales tax,
direct pay, or seller’s use tax returns required under
Chapter 5739. or 5741. of the Revised Code.
(G) If the trustees of a business trust own, either
collectively or individually, more than fifty per cent of the
beneficial interest in the business trust, the owner/trustees
are responsible for the execution of the fiscal
responsibility of the business trust and liable under section
5739.33 or 5741.25 of the Revised Code, regardless of any
attempt to delegate such responsibility, if one or more of
the following apply:
(1) The business trust filed sales tax, direct pay, or
seller’s use tax returns required under Chapter 5739. or
5741. of the Revised Code showing the liability without
submitting payment;
(2) The business trust failed to file sales tax, direct pay,
or seller’s use tax returns required under Chapter 5739. or
5741. of the Revised Code;
(3) The records of the business trust or other evidence
indicates that the business trust collected the sales or
seller’s use tax required under Chapter 5739. or 5741. of the
Revised Code; or
(4) The owner/trustee of the business trust actually
controlled or supervised the preparation and submission of
sales tax, direct pay, or seller’s use tax returns required
under Chapter 5739. or 5741. of the Revised Code.
(H) If more than one person is personally liable under
section 5739.33 or 5741.25 of the Revised Code for the unpaid
liability of a corporation, limited liability company, or
business trust, their liability shall be joint and several.
(I) The provisions of paragraph (C) to (H) of this rule are
not exclusive and the commissioner may use any available
evidence to establish the liability of an officer, trustee,
or employee for the unpaid sales tax, direct pay, or seller’s
use tax liability of the corporation, limited liability
company, or business trust.
Effective: 12-9-04
Promulgated under: 5703.14
Authorized by: 5703.05
Amplifies: 5739.33, 5741.25
Prior effective dates: 12-7-90