Washington Code 69.50.565 – Unpaid trust fund taxes — Limited liability business entities — Liability of responsible individuals — Administrative hearing
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(1) Whenever the board determines that a limited liability business entity has collected trust fund taxes and has failed to remit those taxes to the board and that business entity has been terminated, dissolved, or abandoned, or is insolvent, the board may pursue collection of the entity’s unpaid trust fund taxes, including penalties on those taxes, against any or all of the responsible individuals. For purposes of this subsection, “insolvent” means the condition that results when the sum of the entity’s debts exceeds the fair market value of its assets. The board may presume that an entity is insolvent if the entity refuses to disclose to the board the nature of its assets and liabilities.
Terms Used In Washington Code 69.50.565
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- person: may be construed to include the United States, this state, or any state or territory, or any public or private corporation or limited liability company, as well as an individual. See Washington Code 1.16.080
- Trustee: A person or institution holding and administering property in trust.
(2)(a) For a responsible individual who is the current or a former chief executive or chief financial officer, liability under this section applies regardless of fault or whether the individual was or should have been aware of the unpaid trust fund tax liability of the limited liability business entity.
(b) For any other responsible individual, liability under this section applies only if he or she willfully failed to pay or to cause to be paid to the board the trust fund taxes due from the limited liability business entity.
(3)(a) Except as provided in this subsection (3)(a), a responsible individual who is the current or a former chief executive or chief financial officer is liable under this section only for trust fund tax liability accrued during the period that he or she was the chief executive or chief financial officer. However, if the responsible individual had the responsibility or duty to remit payment of the limited liability business entity’s trust fund taxes to the board during any period of time that the person was not the chief executive or chief financial officer, that individual is also liable for trust fund tax liability that became due during the period that he or she had the duty to remit payment of the limited liability business entity’s taxes to the board but was not the chief executive or chief financial officer.
(b) All other responsible individuals are liable under this section only for trust fund tax liability that became due during the period he or she had the responsibility or duty to remit payment of the limited liability business entity’s taxes to the board.
(4) Persons described in subsection (3)(b) of this section are exempt from liability under this section in situations where nonpayment of the limited liability business entity’s trust fund taxes was due to reasons beyond their control as determined by the board by rule.
(5) Any person having been issued a notice of unpaid trust fund taxes under this section is entitled to an administrative hearing under RCW 69.50.334 and any such rules the board may adopt.
(6) This section does not relieve the limited liability business entity of its trust fund tax liability or otherwise impair other tax collection remedies afforded by law.
(7) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.
(a) “Board” means the state liquor and cannabis board.
(b) “Chief executive” means: The president of a corporation or for other entities or organizations other than corporations or if the corporation does not have a president as one of its officers, the highest ranking executive manager or administrator in charge of the management of the company or organization.
(c) “Chief financial officer” means: The treasurer of a corporation or for entities or organizations other than corporations or if a corporation does not have a treasurer as one of its officers, the highest senior manager who is responsible for overseeing the financial activities of the entire company or organization.
(d) “Limited liability business entity” means a type of business entity that generally shields its owners from personal liability for the debts, obligations, and liabilities of the entity, or a business entity that is managed or owned in whole or in part by an entity that generally shields its owners from personal liability for the debts, obligations, and liabilities of the entity. Limited liability business entities include corporations, limited liability companies, limited liability partnerships, trusts, general partnerships and joint ventures in which one or more of the partners or parties are also limited liability business entities, and limited partnerships in which one or more of the general partners are also limited liability business entities.
(e) “Manager” has the same meaning as in *RCW 25.15.005.
(f) “Member” has the same meaning as in *RCW 25.15.005, except that the term only includes members of member-managed limited liability companies.
(g) “Officer” means any officer or assistant officer of a corporation, including the president, vice president, secretary, and treasurer.
(h)(i) “Responsible individual” includes any current or former officer, manager, member, partner, or trustee of a limited liability business entity with unpaid trust fund tax liability.
(ii) “Responsible individual” also includes any current or former employee or other individual, but only if the individual had the responsibility or duty to remit payment of the limited liability business entity’s unpaid trust fund tax liability.
(iii) Whenever any taxpayer has one or more limited liability business entities as a member, manager, or partner, “responsible individual” also includes any current and former officers, members, or managers of the limited liability business entity or entities or of any other limited liability business entity involved directly in the management of the taxpayer. For purposes of this subsection (7)(h)(iii), “taxpayer” means a limited liability business entity with unpaid trust fund taxes.
(i) “Trust fund taxes” means taxes collected from buyers and deemed held in trust under RCW 69.50.535.
(j) “Willfully failed to pay or to cause to be paid” means that the failure was the result of an intentional, conscious, and voluntary course of action.
NOTES:
*Reviser’s note: RCW 25.15.005 was repealed by 2015 c 188 § 108, effective January 1, 2016.
Findings—Intent—Effective dates—2015 2nd sp.s. c 4: See notes following RCW 69.50.334.