Taxpayer is an Indiana business and retail merchant. The Indiana Department of Revenue ("Department") determined that Taxpayer had not collected and remitted the proper amount of sales tax during the years 2010 and 2011. The Department issued proposed assessments for sales tax, penalty, and interest.
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The Department received a protest from the individual who is the owner and president of the company (hereinafter referred to as "Company President" for convenience). The Company President is not protesting or disputing the amount of the Department's proposed assessment; instead, Company President is arguing that he is not responsible for the payment of the proposed assessment. Company President argues that another person (hereinafter referred to as "Person S") is responsible for the sales taxes owed. Company President argues this because his company "was being run by" Person S.
To that end, Company President argues that "[h]e lives in northern Indiana and had no involvement in the day to day operations of the store." After learning of "illegal activities occurring" at the business, Company President "immediately took control over the store." Company President further states:
[Company President] operated the [store] during June, July, August and September, 2012, then closed the store for good on September 30, 2012. During these four months of operation, there were no issues with the reported sales or sales tax paid. It was not until the recent audit, during which [Company President] cooperated fully and provided much of the documentation that has resulted in this Proposed Assessment, that [Company President] learned of the extent of [Person S]'s theft and fraud.
At the hearing, Company President made it clear that it was not the proposed assessment amounts that were being protested, but rather that the Company President did not believe that he was liable for the taxes. Instead, he believes that Person S is liable for the taxes. Company President's argument to that effect is that he did not participate in the day-to-day operation of the store, and that the company assigned the lease to Person S.
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Company President incorporated the company, and was the registered agent of the company. He was also the owner of the company. And even if, for the sake of argument, Person S was also responsible, that would not preclude the Department from finding Company President responsible for the taxes too. The Department finds Company President to be liable under IC § 6-2.5-9-3 as a responsible officer for the taxes owed.
