Nonprofit and Church Officers and Directors MUST Pay Withholding Taxes in order to Avoid Personal Liability

Nonprofit and Church Legal Trends - Free Edition - January February 2009 (free edition)

“Charles E. Jefferson previously served as the president of the board of directors of a day care center that owed substantial back taxes to the Internal Revenue Service. After Jefferson was personally assessed for the back taxes, he filed suit to recover the amounts he paid to the IRS. The district court granted the government’s motion for summary judgment, finding that Jefferson could be assessed for the day care’s tax liability. Because Jefferson is a “responsible person” under 26 U.S.C. 2 No. 06-4082 § 6672(a) who “willfully” failed to pay the day care’s taxes, we agree with the district court, and we affirm.” Lesson: Directors and officers of nonprofit and church corporations need to be especially careful about their companies' payroll reporting compliance.