Drew Markell



On October 2, 2017, the Department issued an assessment for withholding tax, penalty, interest in the amount of $40,336.03 to the Taxpayer. On January 2, 2018, the Taxpayer submitted a formal protest of the assessment. The Department had assessed the Taxpayer because as CEO for Santa Fe Medical Group, LLC he was the person with control over payment of the company’s wages. The issue to be decided in this case, then, was whether the Taxpayer was personally liable for the withholding tax. Under statute the employer is a person, officer, agent or employee of that person having control of the payment of wages and that the employer is liable for the withholding tax. The Taxpayer was the CEO of the entity and had access to all financial records and authority over all finances, as well as the authority to direct the responsibilities of others in the organization. When the company went into bankruptcy it retained control of its own finances and was still required to file tax returns. The Taxpayer testified in bankruptcy court multiple times as to the company’s financial obligations but claimed he was unaware of the company’s outstanding withholding tax liability until he was assessed. The Taxpayer suggested that since the company was in bankruptcy a variety of other individuals shared responsibility for paying the company’s taxes. However, the Hearing Officer determined that the responsibility to make the withholding payments rested with Santa Fe Medical Group, LLC and its executives and that the Taxpayer was the executive to whom all others answered. The statute states that the person with control over payment has the final responsibility for paying the employee’s withholding tax and the Hearing Officer cited multiple cases where that individual was found to be personally liable. A case was also cited where the shared control of an account did not reduce the liability of the person whose responsibility it was to assure the withholding tax was paid. This having been decided, the Hearing Officer ordered the assessment to be paid and the protest was denied.