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Dr Sistar Yancy and Robert D Townsend



On November 13, 2017, the Department assessed both Robert D Townsend and Dr. Sistar Yancy in the same amount, $7,619.15, for withholding tax, penalty, and interest. On December 12, 2017, the Department received Mr. Townsend’s formal protest of the assessment, and on January 10, 2018, received the protest of Dr. Yancy. The Taxpayer’s were assessed because both were on the board of directors of the Eastern Plains Housing Development Corporation, a non-profit organization dedicated to providing access to affordable housing. The main issue presented in this protest was whether board members of a non-profit corporation can be liable individually for unpaid withholding taxes of the organization. The Department had assessed the Taxpayers because they were listed as officers of the organization on file with the Secretary of State and had signed the employees pay checks. Though both agreed that they had signed checks for the organization, they argued they were not aware of the finances of the organization and had only signed for payments at the direction of the executive director. The evidence showed that the executive director never had all checks signed by one individual and so neither was aware of whether withholding tax had been paid to the state. The Taxpayers also argued that since the organization was a corporation, this protected its individual members from being responsible for its liabilities. The Hearing Officer concluded, however, that the case entirely depended on whether the Department could assess the Taxpayers as employers. Section 7-3-2(C) defines an employer as “the person having control of the payment of wages,” and so, the Hearing Officer determined, an employer cannot be interpreted as simply the individual who signs the checks. The employer is the person responsible for actually paying the wages and, moreover, who is in control of deducting the withholding and should be paying the tax. This having been established, the Hearing Officer ordered the assessments abated and granted the protest.