Form St 04-21 - Recommendation For Decision (Page 6 of 7) in pdf

Form St 04-21 - Recommendation For Decision Page 6

this matter. Thus, he fails the first test required by the statute, that he be a responsible

officer or employee of ABC during the period that that it incurred the underlying liability.

From August 1999 until February 21, 2000, Taxpayer, no longer affiliated with

ABC, was CEO of XYZ, the parent company of ABC. His replacement as president and

CEO of ABC, Blow, was also named as the president and chief operating officer of XYZ

and he reported to Taxpayer. In its closing argument, the Department suggested that as

CEO of XYZ he should have known that the sales tax obligations of ABC were not paid,

and that this made him liable under the statute. There is nothing in the record to support

this argument.

The evidence in the record indicates that Taxpayer had no reason to know that the

sales tax obligations of ABC were not being paid. Taxpayer was no longer an officer of

ABC during the periods in which the underlying corporate liabilities were incurred. The

evidence of record is that he knew in August of 1999 that ABC was in default of its loan

from Money Capital (Tr. p. 16), that the ABC’s tax department prepared tax returns (Tr.

p. 15), that he never prepared sales tax returns, that it was not company policy for him to

review sales tax returns, that he never signed sales tax returns (Tr. p. 16), that he never

personally paid sales taxes on behalf of ABC and that he would have signed ABC checks

only if they exceeded a certain amount. This testimony is uncontroverted and consistent

with documents in the record that establish that he was replaced as CEO and president of

ABC after his resignation in August 1999, that he resigned from XYZ no later that

February 21, 2000, and that he had no responsibility for or knowledge of the unpaid sales

taxes of ABC during the period at issue in this matter.

Form St 04-21 - Recommendation For Decision Page 6