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Failure to Follow Michigan Tax Requirements Creates Personal Liability for Corporate Officers

A commonly-recognized feature of many business entities is the "shield" that protects officers, members, managers, and partners from personal liability for the business's actions. However, that "shield" does not protect the officers of a company from all liability. Importantly, if a business fails to pay its taxes, then the key officers of the business can be held personally liable for the unpaid taxes of the business.

In general, if a Michigan business fails to file a tax return or pay its sales or use tax obligation, then the business's principals will incur personal liability for the amount owed. The dissolution of a business does not discharge a responsible party's liability. This provision impacts corporations, limited liability companies, limited liability partnerships, and limited partnerships. Individuals who may be personally liable include officers, members, managers of a manager-managed LLC, and partners for the business who controlled, supervised, or were responsible for the filing of returns or payment of the unpaid taxes when those taxes went unpaid.

If you have questions about officer liability for unpaid taxes, then please contact a Foster Swift tax attorney.

Categories: Compliance, Sales Tax, Tax

Photo of Nicholas M. Oertel

focuses his practice in the areas of Michigan non-property tax disputes, business entity selection, corporate transactions, and information technology.

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