“Investment Partner” Liable for Unpaid Sales Tax

The Ohio BTA affirmed the Tax Commissioner’s determination in Wilson v. Testa, Ohio BTA, Dkt. No. 2013-1349, 09/19/2014, that taxpayer was properly assessed for unpaid sales and use tax as a responsible party for M&S Auto Group, LLC. Taxpayer argued that his role in M&S was limited to that of an investment partner and arm’s-length participant, and, therefore, he was not a responsible party under R.C. 5739.33. The Commissioner disagreed, finding that taxpayer was “involved in the formation of M&S, held an overall 50% interest in the business, signed two loan agreements at the time of M&S’s formation and personally guaranteed both loans, had check signing authority, found new investors when capital was needed for the business, and paid outstanding sales taxes upon discovering they had not been paid by M&S.”

The Ohio BTA affirmed the Commissioner’s holding. Considering all these facts, the Ohio BTA found it was clear that the taxpayer had responsibility for financial matters and that while he did not run day-to-day operations, his responsibilities were strictly financial in nature.