Louie Casias



On June 24, 2013, the Department issued an assessment for gross receipts tax to the Taxpayer for the periods from March 2006 through September 2011. The Taxpayer filed a protest to the assessment that was later withdrawn. The Taxpayer worked with the Department on the assessment and received a partial abatement. In withdrawing the protest, the Taxpayer agreed to conclusive liability for the tax due for the periods at issue. The Taxpayer ceased business operations around 2014. On August 22, 2016, the Department issued a Notice of Claim of Tax Lien for the remaining tax due, penalty, and interest. The lien was issued to the individual rather than the business because the Taxpayer was listed as a sole proprietorship with the Department. Through his attorney, the Taxpayer filed a protest on September 30, 2016. The Taxpayer argued that the lien should not have been in his name because the company was a limited liability company for the time at issue. The Department argued that there was never any record that the Taxpayer changed his company from a sole proprietorship to a limited liability company (LLC) and that the Taxpayer has already issued a protest withdrawal for the amount of the assessment that was subject to the lien issued. The issues to be determined in the protest are to what extent the Taxpayer is personally responsible to the tax liability of his business and to what extent can the Taxpayer protest the lien based on the assessment and previous protest withdrawal. The Taxpayer argued that he should not be liable for the tax liability because as of 2003 the company became a LLC. During the hearing, the Taxpayer was unable to show evidence that the LLC took over the assets, rights, obligations, liabilities, or tax reporting responsibilities of the sole proprietorship. It was discovered that the Taxpayer never formally updated his business registration with the Department and continued filing with the sole proprietorships combined reporting system (CRS) number. The Department testified that there is a system in place for when businesses changes from one business type to another that results in a new CRS number is issued. Specifically, for a change from sole proprietorship to LLC the company has to close its existing account and open a new account as an LLC. In regards to the protest of the lien, it was determined that the Taxpayer was re-protesting the original tax due and penalty. Even if based on the business changes the protest would be untimely filed and would not be a valid protest. Based on the information provided in the hearing, the Hearing Officer determined that as the Taxpayer did not follow the correct process for changing the business entities business type that the lien was properly assessed to the sole owner of the business. The Taxpayer’s protest is denied.