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MORE ON LLCS AND TAX LIABILITIES

June 01, 2007

The recent case holding an owner of a single-member limited liability company liable for the LLCs unpaid payroll taxes is getting a fair amount of play. "Rubin on Tax," a blog I had missed until now, says:

The 2nd District Court of Appeals predictably held that the member was responsible for the taxes. The Court noted that the member "could have had the benefit of limited personal liability if he had simply elected to have his LLC treated as a corporation; he chose not to do so and thereby avoided having the LLC taxed as a separate entity. We know of no provision, policy, or principle that required the federal government to allow him both to escape personal liability for the taxes owed by his sole proprietorship and to have the proprietorship escape taxation as a separate entity."

There is also coverage at Everything Tax Law.

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